2. science of sales growth in a recession

8/6/2019 2. Science of Sales Growth in a Recession

http://slidepdf.com/reader/full/2-science-of-sales-growth-in-a-recession 1/7

Thought Leadership Research Series

Science o salesgrowth in a recession

sustainable

revenue

growth

2



Science o sales growth in a recession : A Research Report Thought Leadership Research Series 03

IntroductionAs the global economy tightened,most businesses appreciated theywon’t get dierent results by doingthings the same way. But much o thescience or growing sales in arecessionary market is counter-intuitive, and managers whose handswere on the rudder in previousdownturns may no longer be in theworkplace. Few o today’s executivesthereore have ever aced this kind ostorm in their career.

It’s a situation primed orold mistakes to be made all

over again.

A recent study o the experiences oormer executives o Fortune companiesand start-ups who captained the shipthrough the ‘70s stockmarket crash tothe ‘90s dot-com bubble, reveals someuseul home truths.



Science o sales growth in a recession : A Research Report Thought Leadership Research Series 05

So what happens next?

A downward spiral commences.▶

Managers ocus on activity metrics▶

and demand more calls, moreleads, more proposals.

Salespeople chase anything that▶

moves, lling their unnel withunqualied, low potential deals tomeet the activity targets.

Forecasts ll with ction.▶

Managers start weighting the▶

orecast report, which sends themessage they don’t trust their team.

Salespeople invite managers to▶

help close their big deals, knowingthat i the manager can’t win, thesalesperson is o the hook.

Customers invite managers to▶

attend the nal pitch, knowingthey can approve larger discounts.

Coaching stops as managers don▶

the cape o “SuperRep”.

Non-standard promises made in▶

the heat o battle are o-menu orwhat the delivery team actuallydoes, establishing a gap betweenthe customer’s expectations andwhat they then experience.

Repeat business drops as promises▶

are not met.

Margin and market erosion begins.▶

Managers ocus on even more▶

activity metrics, more calls, moreleads, more proposals.

The downward spiral gets deeper▶

and deeper...

I any o these danger signs lookamiliar, you’re in good company. Mostexecutives who turned their companiesaround in ormer recessions rst ellinto the same traps because theyrepresent a natural response in timeso uncertainty. People ocus on riskand get tactical.

But these same executives report thesecret to pulling out o the nosedive isto act against the natural impulse,keep your head, and take a contrarianpath. Those that did so achievedstability and even growth while theircompetitors ell by the wayside.

They cite fve most dangerousmistakes as:

1. Ignoring the problem

Fear and panic can cause indecision.When they do, business leaders canail to evaluate options rigorously, andso make inappropriate decisions tomaintain the status quo. Poorchoices—or sae choices made toolate—cause a company to gobackwards. When the warning signsappear, take swit action.

2. Increasing advertising

For ast moving consumer goods,brand advertising can swaypreerence and so take market shareaway rom competitors in theshort-term. But in complex B2B sales,advertising does not lit short-termrevenue because institutional buyingdecisions require a protracted periodo assessment that outlasts mostadvertising campaigns. So don’tadvertise and expect an impact onB2B sales this year. Instead, convert

advertising budgets into “demandcreation” programs that turn buyerswith latent needs into buyers withactive interest. Also PIMS Associates1

reports how companies that maintainadvertising presence end up growingaster over the long-term than rmsthat drop o the customer’s radar,seemingly swallowed by the downturn.

3. Cutting the price

Buyers in a tight market will naturallygravitate to low prices. But thissimply reduces your margins, whichmust be paid or by cutbacks tooperating expense elsewhere. It leads

to short-term gain but long-term pain;the loss o sustainability. Converselyin the B2B space, higher pricespositioned as necessary to reduce thecustomer’s risk, actually plays betterto executive perception than “gettinga cheap deal”. Sometimes puttingyour price up is the best way to buildyour market with the right customerswho can help you grow, not slow.

4. Freezing sales expenses

Putting a hold on sales costs such astravel, entertainment and training aretypical areas targeted by nervousCFOs. But a study by Mercer reports:

“Only 27% o companies

that indulged in intensive

cost cutting were growingas a result o their pains.”2

As Tom Peters observed in his bookThe Circle o Innovation:

“You can’t shrink your way

to greatness.”3

5. Pushing more calls

Pressuring salespeople into makingmore intrusions on the same numbero prospects actually reduces sales.Speaking on studies o leading

companies across thousands osalespeople or three decades, NeilRackham (author o SPIN Selling and

Rethinking the Sales Force ) concludes:

“The least successul people

are the ones making themost calls. Increasing the

call rate results in ewer

orders, not more.”4

Tenders appear to be an exercise▶

to justiy decisions that arealready made, and not a seriousopportunity to win the business.

Key customers slash budgets or▶

rationalize their number osuppliers.

Deals you thought were ‘hot to▶

trot’ go ‘o the boil’.

Your pipeline bloats with opportunities▶

stuck in a holding pattern, with theseller not achieving any orwardprogress or several months.

Decisions become more complex,▶

involving more people and takinglonger to get across the line.

Price and risk mitigation become▶

main topics or discussion in thenegotiation phase.

Sales are or amounts ar less than▶

orecast.

Salespeople spend time on▶

low-yield activities likeprospecting because the qualityand quantity o leads romMarketing is too low or dries up.

Your orecast is murky when you▶

look out urther than six months.

You win deals, but can’t repeat▶

success across the salesorce.

You lose deals and don’t know why,▶

or when they becameirrecoverable.

Good salespeople bail out into▶

management roles in otherdepartments or leave the companyaltogether.

Asked how theirorganizations dealt with

these challenges, they said

the typical gag refex is to:

Spend more on advertising.▶

Cut back on salespeople.▶

Cut back on training & coaching.▶

Cut back on pricing.▶

Tell salespeople to “work harder▶

and smarter”.

Five dangerous mistakesThey report a range o signs that it’s time to rethink how

your company sells:



Thought Leadership Research Series 07Science o sales growth in a recession : A Research Report

Five winning ideas

1. Create value

A tight market will change thepriorities o your target customers. Asthey ace new challenges, they lookor answers. So equipping yoursalesorce to shit rom “valuecommunicators” to “value creators”becomes a key part o your growthstrategy. The “talking brochure” typeo selling no longer works because itadds no value.

By thoroughly doing your homeworkon target accounts, anticipating theissues they’re about to deal with, andapproaching them with answers eventheir own people don’t have, youstandout in the crowd, and show yourorganization to be relevant.

The goal is to make the

type o sales calls yourcustomers would want to

write a check or becausevalue was exchanged.

When you end sales calls that produceno excitement and lead to no mutualcommitments to move orward, it’s asales call that ails both companies atthe table.

2. Chunk your oer

When customers ace uncertainty,ewer high-cost projects clear thelaunch pad. Thereore, helping clientsacquire your oerings in smallermodules that can be signed o atlower levels o the organization hasbeen shown to produce more revenue,as well as serving as a oot in the dooror expansion and consolidation whenthe market rebounds.

This doesn’t mean the productmanager needs to invent anythingnew. It means salespeople need to beselective about what chunks o theiroering they emphasize and packageto each customer.

Consider trimming mention o aspectso your product or service that aren’tcore to the client need (the “nice tohaves”). At the same time, emphasize“must have” eatures that add to theclient experience, sell their value andeven justiy a premium. Or seek outpartner products to combine withyours in dynamic new ways.

Involve your customers when reningyour messaging. Enlist their guidanceand engender a “we’re all in thistogether”esprit de corps . When doing

so avoid any language that smacks odesperation. They must understand yourmotive is in placing their needs rst.

3. Map your unnel

Gain a laser ocus on the dynamics oyour sales unnel. Enlightened leadersuse dicult times to take stock o themechanics o where sales come romand how to improve the system they passthrough. They map their sales processby getting answers to the ollowing:

What problem do we solve better▶

than anyone else (dierentiation)?

Who most has that problem and▶

where do we nd them (targeting)?

What are the cognitive steps those▶

prospects go through rom beingunaware o their problem, to being asatised customer (buying journey)?

What ah-hah moments propel a▶

prospect rom one stage in thatjourney to the next (sub-sales)?

How can Marketing and Sales help▶

those sub-sales happen (roles)?

What does average, ast and slow▶

look like through each stage(velocity)?

How many move orward and how▶

many leak rom the unnel, at eachstage (planned attrition)?

What is the average contract size▶

(revenue)?

When you know these metrics, you’reable to start with the revenue gureyou need to achieve this year, nextyear and the year ater that, and cancalculate backwards to know howmany opportunities you need stackedat each stage o the sales unnel, eachmonth, or the right number and v alueo deals to close each quarter. This

inorms how many new leads areneeded monthly, and going back evenurther, how many new cont act namesMarketing needs to start connectingwith at the very start o the demandcreation process. It also inorms whenhiring is needed to keep reps at the

optimum person-to-customer ratio,and can track orward to show whennew problems and prospects will beneeded to oset peaking in the initialtarget market.

4. Circle the wagons

In a recession when pickings are lean,you will ace increased assaults onyour customer base by hungrycompetitors. So protect yourclients—especially those that providehigh margin. Identiy the clients youcannot aord to lose, and initiatespecic programs to retain theirloyalty. Get away rom vague solutionsand get known or delivering tangibleresults. This means agreeing outcomemetrics or the work you perorm, andshowing your accountability orachieving these. It iners anagreement with these clients that youwill track and communicate the valuedelivered, and deal with anyshortalls. 2010 data rom executivebuyers who swapped suppliersindicates that in most cases theydidn’t churn because o price or anyparticular dissatisaction, but becausethey just didn’t know i money spentwith existing suppliers was well spent…because nobody had bothered toclose the loop with them ater makingthe initial sale.

Spotting and dealing with the danger signs is one part o the equation. The other is engaging

in new activities that drive success. Past recession-beating executives suggest the ollowing:



Science o sales growth in a recession : A Research Report

5. Coach perormance

Doing this is dicult i the salesmanager does not go into the eld toobserve their salespeople in ront ocustomers. They cannot divine theirteam member’s strengths andimprovement needs rom behind adesk. Here are suggestions successulmanagers use to drive growth:

Map the activities that help▶

customers move through the

unnel. Agree with salespeoplewhat actions they can take toachieve those progressions. Focusthem on achieving this, along withthe qualication, planning andpresentation needed at each stage.

Give new hires specic but realistic▶

metrics to achieve that take intoaccount the act that the averageramp up time is now 7.4 months.Catch them doing things right andreinorce the positive. Whenimprovement is needed, providecontext, examples and suggestions.

For experienced salespeople, ocus▶

perormance coaching on the 60%o salespeople in the middle o thebell curve (not the top 20% andnot the bottom 20%). The middleo the bell is where the biggestgains will be made.

Set clear expectations or an▶

accompaniment day and agree thesalesperson will remain in controlso customers don’t staplethemselves to the manager.Managers should never hand outtheir business card or be seenapproving any decision—they deereverything to the salesperson.

Brie beore and debrie ater▶

every call. What outcome do wewant? Why would they write acheck or this call? What wentwell? What could have gonebetter? Managers oer motivationand direction as n eeded. Alwaysgain and give commitments andollow through.

Ater spending whole days with▶

team members, trends will bespotted. Common needs are best

dealt with during sales meetings ina peer setting. Every salesmeeting should include a trainingcomponent based on observationsin the eld. Push the administrationand company news to emails. Useace-to-ace time with salespeopleto hone their skills.

Run a quarterly perormance▶

appraisal one-on-one and alwaysin person (never via webcam ortelephone). Review perormanceto date. Plan what the salespersonneeds to create a sustainable,rhythmic approach to revenueattainment. Direct them. Enablethem.

As unique needs arise, partner▶

with human capital specialists andtraining departments asappropriate (but don’t abdicatethe training role in salesmeetings).

The argument that sales managersmust have rst been successulsalespeople is less true than sayingthey need to understand the levers osales perormance, and be trained toidentiy gaps and coach theirsalespeople to greatness. This

requires deliberate, systematicprocess thinking skills; a blend oengineer, analyst and psychologist.

There is increasing evidence that therole o sales management avors stawith a let-brain bias where thedominant traits are reasoning, speech,writing and number skills. This is incontrast to the right-brain processeso creativity, imagination, quick witsand visual processing that are moresuited to the salesperson. It doesn’t

mean salespeople should not bepromoted to the management role,only that in the absence o properlyproling i a candidate exhibits theright behavioral t to the rolerequirements, doing so blindly can bea risky proposition where mistakesare magnied by the number opeople under each sales manager’sstewardship.

Thought Leadership Research Series 09



Thought Leadership Research Series 11Science o sales growth in a recession : A Research Report

To avoid reinventing thewheel, learning romexecutives who weatheredpast recessions is a sound

approach to reducing risk. In yourown organization, your alumni, oryour online social network, there mayreside active or emeritus ocers withdeep experience to share. Talk to them.

Pick their brains.

But one thing is certain when anailing economy mimics a black hole:piecemeal remedies ail to achieveescape velocity. Cutting back on cost,though logical, is the opposite o whathas pulled businesses throughrecessions in the past. Increased

investment in the salesprocess, governed by greaterdiscipline, is a more reliable approachor achieving sustainable revenuegrowth, even in dicult times.

End Word

Roberts, Keith.1. What Strategic Investments Should You Make During A Recession To Gain

Competitive Advantage in the Recovery? , Journalo Strategy & Leadership, Vol. 31, Issue 4.

Wall Street Journal 2. – Europe

The Circle of Innovation 3. , Random House

Rackham, Neil.4. Strategies for Hard Times ,Huthwaite

End Notes



Copyright © 2010 SalesLabs Inc. All Rights Reserved. New York. London. Sydney | www.saleslabs.com

This communication provides general inormation current at the time o production. The inormation herein does not constitute advice and should not be relied onas such. Proessional advice should be sought prior to any action being taken in reliance on any o the inormation. SalesLabs Inc. disclaims all responsibility and

liability (including, without limitation, or any direct or indirect or consequential costs, loss or damage or loss o prots) arising rom anything done or omitted by

any party in reliance, whether wholly or partially, on any o the inormation. Any party that relies on the inormation does so at its own risk.

SL100303-1

About SalesLabs

SalesLabs is a global leader in revenue growth strategy consulting & training. Across 40 countries and in eight

languages, we improve implementations o sales, marketing & management process, by providing pragmatic

approaches to sales perormance that are research-based and eld-tested.

www.saleslabs.com

ServicesA complete health check diagnostic on your▶

sales & marketing ecosystem, to spot best

practices and gaps.

Realignment o marketing, sales &▶

management to their true roles in the

customer’s buying process.

Science-based selection, induction, training and▶

mentoring o your sales & marketing human capital.

Research, briengs, call coaching and▶

opportunity or account management

methodologies & skills.

Improved demand creation, lead qualication▶

and acquisition o new business.

Modeling your nancial data against our Blueprint▶

Growth algorithms rom Standard & Poors to

identiy your roadmap to exponential growth.

2. science of sales growth in a recession

Documents