Preparing Your Team For Selling In A Recession
You are in the camp of either thinking we’re already in a recession or rapidly heading towards one, so I thought an article on how to prepare your sales teams for selling in a recession might be a good topic.
First of all the definition of a recession. I’m not going to use the textbook definition because it was recently changed for the first time in history. So I’m going to simplify it for those of us like me who are not economists. A recession is when there is too much money chasing too few goods. Technically, this is the definition of “demand-pull inflation” but it works for this article and more accurately describes what we’re facing due to supply chain issues and materials shortages. What causes this is typically the federal government blowing trillions of dollars into the economy needlessly. This is what we’ve seen in the last couple of years.
So how do you sell in an environment such as this?
Well, the first thing to understand is that in this type of economy you don’t have to worry about price increases for your customers. It is a given. They are seeing it everywhere from buying groceries to filling up their gas tanks to paying for energy. I have a client that has been passing along steep price increases for months now and I don’t think I’ve heard one time that a customer pushed back. Typically, they just accept it as the new normal. This isn’t to say that they like it, but it does tell us that we don’t have to fear doing it as everyone is seeing it in every aspect of their lives.
I also think that there are parallels between what financial experts are telling us about how to navigate a recession to what a sales team needs to do to navigate a recession.
For example, “make your dollars go further.” Makes sense, but how does this translate to sales? The answer is to focus on your customer, not yourself. Are there other products or solutions or approaches you can take to help your customer’s dollars go further? If you are not asking about how their departmental or CapEx budgets have changed, you won’t know how to go about recommending alternative paths to save them money or making what money they are spending, go further. Find out what they are struggling with and provide solutions. Maybe you are passing along price increases, but you can also get creative and see if you can reduce their consumption of the goods/services you are providing them. Think 360 view, not 2D view.
Another piece of advice in the personal finance world is “get rid of debt.” How does this translate to the sales world? Perhaps you can get creative and work out terms with your customers that a) get you paid faster and b) help them avoid growing their debt pile (or even reduce it). Maybe you can offer more favorable pricing (making their dollars go further) if they pay in 10 or 20 days vs. 90. This helps them from falling behind and incurring interest or other debt to continue buying from you.
Maybe their problem isn’t lack of cash, it’s lack of supplies to make their goods. If that’s the case, talk about LTA’s (long-term agreements) or blanket contracts, etc. levers that allow you to bring in the products they need and have them on hand when they need them and avoid shutting them down which can be a huge cost to the business.
If they are like most companies in the US today, they have a lack of employees. I’m not sure where all the people went exactly, but it is a universal problem in all business verticals today. I’m having a lot of these conversations, pretty much every day. So I go into questioning mode… I look for ways to streamline my client’s operations. Can they approach the work they do differently, hit production levels, or meet customer demand with fewer people? Can they automate processes that are currently labor-intensive? Can they restructure the services they offer so their employees are more efficient? By asking these questions I may be able to recommend a different approach that can make up for the lack of people. It’s easier for me to look at it from the outside looking in vs. my clients who have longstanding processes and procedures without much change. They don’t know what they don’t know and they don’t know how to ask the questions to get them there. So it’s incumbent on the sales professionals to ask these questions and provide solutions.
If we are in for a more protracted recession which we may be, perhaps similar to Japan in the 1990s since we’re following pretty much the same governmental approach of spending money like blowing water through a fire hose, then I think there are a few more steps to take to prepare our sales teams for this time.
For example, in terms of their client base, get them thinking about growth. Both depth and breadth of client base development. Selling more services to existing customers (depth) and bringing on new customers you traditionally either avoided or didn’t have the time to prospect (breadth). Think “fishing with nets” vs. “fishing with spears”. When times are good and business plentiful, most sales teams focus on tightly qualified prospects and spearfishing approach to bringing on new business. In a recessionary period, your teams need to “fish with nets.” It’s not as glamorous and you do occasionally net an old tire or license plate, but it does give you more client base to choose from and sell to.
Finally, the other recommendation I’d make, which initially may seem to contradict my recommendation of fishing with nets, is to “cull the herd” so to speak. Similar to the personal finance advice of shedding debt, you may need to consider firing some customers, so you have time to fish with nets and bring on new clientele that you currently don’t have time for. For example, you may need to get rid of those highly needy clients who typically don’t buy very much from you, with whom you are in a constant battle with pricing and terms, and who generally take more time than they are worth. It’s hard to think about firing a client in a recession, but it’s easier to wrap your head around when you remind yourself you only have so much time and you need to maximize that time in building new relationships and bringing on new business to diversify your base. If you focus on your ROI of time, you will quickly be able to identify those clients who are a drain, rather than a benefit to your business.
Other than that, just hold on and get ready for a ride! We don’t always know the outcome of a problem such as a recession, particularly those like this self-induced one. However, the great thing to remember, and one of my favorite thing about sales is, the harder I work the luckier I get! It’s about activity, activity, activity. Keep hunting, farming, and providing value and you will make it through this!