Selling Against Economic Headwinds
Is your sales team making these four mistakes that could make it more difficult to sell during an economic downturn? Here’s how your company can adapt
by Jay Spielvogel, Venator Sales Group, LLC.
A colleague recently asked me, “What are the top mistakes salespeople make when the economy begins to slow down?”
I explained that during great economic times, most companies tell me their salespeople are good at closing business with existing accounts, bidding on inbound budgeted projects in new accounts or prospecting on smaller “quick-hit” opportunities. On the flipside, the challenge during recessed economic times is that while the phones may be ringing with lower level stakeholders calling to gather info and pricing, larger-scale budgeted projects are more scarce and inbound small projects only maintain cash-flow, but do not provide real growth.
One of the early warning signs of economic headwinds is when the sales pipeline begins to dry up. In response and out of desperation, most sales teams react to any interest by forfeiting the company sales process, qualification questions and due diligence in favor of getting quotes out the door. Rather than addressing these mistakes, most companies will simply throw more sales support and technology at the issue, reducing profitability and increasing the cost of every sale.
For most sales organizations, the vision during an economic slowdown is to quickly capture larger, more strategic accounts. Many take the first step toward this goal by assigning targets to the sales team. This is a good start, but unfortunately, only scratches the surface.
The key to real success is for sales management to help their reps first develop an understanding of how power and influence work within these target accounts. Why? Because when the economy begins to weaken, people become more risk averse, need more consensus on every decision, and have much less individual power over discretionary budgets. Selling during an economic slowdown requires that salespeople navigate their way through all the stakeholders in a target organization, They also need to align with the right influencers who can champion a project and the right decision makers who can approve it. This is an exhaustive, but crucial effort that most salespeople will avoid in favor of conveniently throwing pricing and resources at lower level stakeholders.
So how do sales organizations recalibrate for the oncoming economic cycle? First, we must reverse-engineer the way our people sell by correcting these top four mistakes that are typically made during a strong economic period.
Sales reps not working the entire decision team in each account. Most reps will efficiently focus their sales efforts on the front-line managers. During a slow economy, these prospects are more than happy to receive a proposal that could streamline process, improve support and make their job easier. Typically, these mid-level managers mistake the nod of approval to evaluate a solution or vendor with the approval to make the change-decision and spend the money. However, the solutions they present to upper management are highly scrutinized against other priorities as well as any perceived business disruption. It has never been more critical to gain access and alignment with all the decision makers.
The rep utilizes the “checkerboard approach” where they assume every stakeholder has the same concerns and issues. They have a one-size-fits-all presentation that they pitch to every stakeholder, instead of pivoting and changing the messaging based on the type of stakeholder they are meeting with. Salespeople who thrive during a slow economy understand the lack of communication taking place internally at their prospect’s organization. They are aware that the low-level stakeholder is driven by personal issues and concerns rather than company initiatives. Instead of this one-size-fits-all approach, reps need to see a prospect organization as a chessboard, where each stakeholder is an individual with their own objectives and desired outcomes.
Giving up too easily. The rep assumes that if one person tells them there is no budget or need, then this is the case for the entire company. A salesperson who thrives in any economy understands that there are different doors into a company. If one stakeholder says no, there are others within the organization with need and budget who can still say yes.
This is the number one sales management mistake. Managers coaching reps efficiently rather than effectively. When opportunities are harder to come by, most managers will efficiently focus their pipeline reviews on “closeable” deals forecasted at 50% or greater. The challenge at this point in the cycle is that mistakes have already been made by the salespeople and it is too late to fix them. During an economic slowdown, reps need the most guidance on deals that are forecasted between 10-50% to avoid costly mistakes. If coached and managed correctly, these early stage opportunities will stand a much greater chance of closure.
Peter Drucker, celebrated by BusinessWeek magazine as the man who invented management said, “Efficiency is doing things right, while effectiveness is doing the right things.” The temptation during a slow or slowing economy is to efficiently do things right, but the cost of not effectively doing the right things will most certainly become more apparent as the tide recedes.