In my newsletter several weeks ago, I hypothesized that we may experience a recession. It is our job as leaders and sales professionals to prepare for such an eventuality. You don’t want to be caught off guard and find yourself in the dangerous place of being reactive.
Well, it looks like the likelihood of a recession is a lot higher.
According to the Financial Times, the UK economy shrank in March by 0.1%. Stagflation looms, which can cause even more anxiety. US inflation remains at a 40-year high of 8.3% consumer price index (CPI) increase in April. Not necessarily a marker of a recession — but a strong indicator of potentially weaker consumer spending in the future which can lead to a recession.
So, what to do? 10 key points for sales leaders
What I share with you below is a distillation of incredible advice from sales leaders and professionals, as well as my own experiences. All the advice has come from people who have successfully grown during recessions.
Whether you are a sales leader, company founder, or sales professional, you can apply these points to your advantage to set yourself up for growth in a recession.
It is very easy to get swept up in the maelstrom of negative energy, fear, uncertainty and doubt caused by a recession.
This is an awful place from which to make decisions. Stress makes you stupid. Research shows that cortisol, the stress hormone, can erode important neural connections and can shrink your hippocampus (the region of your brain devoted to memory), and the emotional centers of your brain. Stress hormones also create free radicals that can kill your brain cells.
The result is that you become more forgetful; you will find it difficult to focus, and it will be harder for you to drive towards achieving goals and you will struggle to make better decisions.
What to do: Make sure to separate the signal from the noise. In a recession, there will be a lot of “noise” in the media and marketplace. It can be difficult to identify reliable information, especially on buyer trends and changes.
If you are a leader, use your knowledge and experience to recognise noisy information versus accurate and reliable information to inform your decisions.
Remember: It’s only temporary
All recessions (so far) have been temporary. That means they can present opportunities for you to grow and outpace your competitors who may be paralysed by fear.
Christophe Martel is a business veteran who has led businesses and sales teams through recessions over the last 35 years. He likens recessions to a Formula 1 race where you have a chance to “win in the turns.” Turns are the recessions, and your ability to overtake your opponents during those turns can determine your position at the end of the race.
Gartner found that senior leaders of successful companies accelerate performance during times of uncertainty. They strike the right balance between strategic discipline and bold action. They are also careful about what they focus on.
By remembering that recessions are temporary, you relieve yourself of the burden of the perception of disaster and the handicap this can create in your decision-making process.
What to do: What you focus on is your reality. So, if you focus on the disaster, then you will be in constant fight-or-flight mode. Instead, focus on the transitory nature of recessions, and recognize that this creates an opportunity for you to outpace others and set the stage for your success over the next few years.
Don’t be tempted to discount
Recessions are times when you must have an elevated view of yourself and the value of your products and services. If you get sucked into the recession narrative and that money is suddenly tight, then you will likely go down the road of discounting — a road that leads to a negative buying experience.
You might be thinking “How can discounting be harmful to the buyer? Surely they would benefit from such a situation.”
Imagine you are a buyer who is being courted by a desperate seller: a seller who is constantly knocking at your door with a discounted offer that is progressively getting lower and lower as they become more desperate. That is not a good experience for the buyer. They will either avoid working with you or have a lower perceived value of you.
Such an approach also has a negative impact on the seller. The more you discount, the more you reduce your belief in the value of what you offer. Together with the negative buyer experience, these 2 perceptions create a negative spiral that will severely damage your success.
What to do: Remember that mindset is everything. If you are a sales or business leader, then you must ensure you create an environment where you are protecting your sellers’ mindset from harm. Empower them to have a higher view of their own self-worth and the value they can deliver. With the right approach, you can demonstrate to your buyers why your offerings are exactly the antidote they need to weather the harm caused by a recession.
Present a united leadership front
Sellers don’t just look to their sales leader for reassurance. In a recession, sellers will also look to the whole leadership group (HR, Product, IT etc.) for support. They will notice any break in the leadership chain and this can lower their confidence, even if the sales leader is doing all the right things.
Your brain is designed to very quickly recognise saliency or incongruency. All it would take is 1 person in the leadership group to go off track and the whole thing crumbles. In times of heightened anxiety, even the smallest deviation can create a large effect.
What to do: If you are a business leader or sales leader, it is vital you ensure that the whole leadership group agrees on the right narrative: Specifically, everyone must be clear on why a recession is actually good for your company. Communicate this with clarity, and make sure that you are the pillar of confidence and leadership that your colleagues can rely on.
Prepare for new buying patterns
There is no getting away from this: Purchasing habits change in a recession. The successful sellers are those who embrace this and seek to deeply understand how and why those patterns are changing.
What to do: There are several ways that you can acquire a deeper understanding of what is changing:
- Leverage your account managers and “intellectually curious” sellers to speak with customers and learn about those changes. (“Intellectually curious sellers” is a term used in research conducted by IBM and HBR contributor, Steve Martin, who found intellectual curiosity was a common trait amongst high performing sellers.)
- Capture & share. Make sure that you support your AMs and intellectually curious sellers with methods to capture what they learn and share their findings with the rest of your sales team. Everyone needs to understand those changes!
- Leverage your marketing team, especially if they are a mature function who have close connections with the buying community. Your marketing team should have great customer and market insights through either primary research or secondary providers they pay for.
- Speak to your partners. Your partners also sell to your buyer profiles, and they should have additional insights and experiences to share.
- Speak to your internal buyers. I am shocked by how few sellers actually speak with their colleagues to understand how they buy. If you sell products & services to HR leaders, then speak with your own HR leader to understand what is important to them and how they would like to buy from someone. Speak with your procurement team or a relevant leader aligned with who you sell to. Ask them how their buying patterns would change in a recession.
Get brutally clear on your value proposition
While your existing value proposition may have served you during the “good ” times, it’s unlikely to serve you in a recession.
In a recession, timelines shorten to the length of the current fiscal period. It will no longer be acceptable for you to demonstrate ROI that is beyond the 1-year time horizon (or the buyer’s fiscal end period, whichever comes first). Any further than that and your solution will quickly become a “nice to have” and will be deprioritized.
What to do: First, review your value proposition and make sure that you have a strong case for delivering value within that shorter timeframe.
Second, some sellers make the mistake of relying on others to lead the adaptation of their value proposition — e.g. marketing or even company founders. This is a mistake. Sales is far closer to the buyer community than any other function. You as the seller must own this.
Third, now is the time to ensure that you can clearly articulate your compelling value proposition. That means you need to become extremely quantifiable in what you are proposing will be the benefits of your solution. Don’t rely on features or past successes. You need to show how the buyer’s life will be better with you in it. The clearer they are on this, the more confident they will feel to place their reputation on the line for you. Even a C-level decision-maker will be challenged (often by the CFO) for every single line item. Give them the tools to help make this easier for them.
Think hard about firing/hiring
Don’t be too quick to fire people based on just their performance prior to a recession. I have seen several examples of sellers who struggled before a recession and then something switched and they became high performers. I have also seen the opposite.
What to do: Take the time to really dig deep into your team and truly understand each person; what motivates them, what they care about, what are their strengths and where can they develop? Remember: Recessions should not be an excuse to cut away at your talent. It should be a chance to strengthen your team and create immense loyalty in them.
Note: Downturns also pose a risk to your top talent. Smart companies know that such top talent is extremely valuable in a recession and they will do their best to poach them from you. Your behavior during times of stress will determine how connected your top talent will be to you and your business. If that starts to fray, then you risk them becoming open to offers from your competitors. Again, get close to your top talent. Understand what makes their job easier and harder. Double down on the former, and seek to solve the latter.
Host regular deal clinics
During tough times, connections are vital. They provide encouragement, understanding and an incredibly valuable forum for people to share ideas and learn from each other.
Facilitating regular deal clinics will be vital during a recession. I recommend at least one a month. These sessions should be no more than one hour, and you want each seller to come prepared with a deal that they are working on and would value advice from their colleagues.
It is important that you facilitate advice to mainly come from your team, not just from you. You want to strengthen the bond in your team so they can support each other more during a recession.
Since you only have an hour, I recommend that you have no more than 5 people in one clinic so that each person has a chance to share and receive advice.
Sell to the heart as well as the head
Monetary value is table stakes. In a recession, you need more. You need to show “personal value” to the buyer.
Personal value comes in the form of personal desires, fears and values. Take the time to understand what they are for the buyer and why they would personally value your solution. If they are a client, learn why they personally like working with you and using your product. There will come a point when, even with a strong quantitative ROI, your buyer may still be challenged and the difference will come down to personal value, not business value.
I am sure this will surprise many of you reading this. Gartner conducted a study which found:
- Personal value has 2x more impact than business value
- 68% of buyers who see personal value will pay a higher price
- 71% of buyers who see personal value will buy a product
Their conclusion? Emotions matter more than logic and reason in a B2B buying process.
Protect your sellers
I have been known to repeatedly say this: sellers are at the sharp end of where your company touches the buyer community and market. The flip side is that non-sellers are not as close to the market. As a result, they do not appreciate the magnitude of a tough environment in a recession because they are not in direct contact with buyers and the soup of emotions at play.
They may not understand the need to change approaches and could question such decisions. They may insist you continue with past procedures and processes that may not serve you in a recession. You will need to take some time to explain to your colleagues what you are doing and why it is important. Share the insights you have gathered from buyers to validate your decisions and invite them to support you in this difficult period.
It is also worth noting that you will need to do this more than once. Recessions are volatile times and, as I stated earlier, people are driven by fear and their biology focuses them on the short term. This means that their memories will become shorter. They will often forget the magnitude of what you have shared with them, or at the very least their understanding will have diminished. Make sure you plan to inform them of the situation and remind them of the support and understanding you need from them.
Remember that recessions are temporary and growth always follows. There are so many examples of individuals and companies that have grown exponentially during recessions because they made the right decisions and took bold steps toward those decisions. I personally had some of the best sales successes during the 2008 recession and I was not the most talented salesperson. If I can do it, you certainly can.