If you own a company, or are a CEO or sales leader, there are certain moments of truth. During such moments, what you do or don’t do NOW, will largely determine where your company or sales team sinks or swims.
What are the differences between the companies that did not survive or survived weaker during economic challenges, and those that outperformed their competition facing those same challenges?
(There are links to studies and articles on this at end of this article)
The challenges might be a slowing economy, changes in competitive environment or emergence of competitors that are increasingly eating your lunch. If sales are slowing, for any reason, why do some firms thrive while most get weaker and some don’t make it?
Let me outline the best combination of moves based upon a comprehensive study of companies emerging from three recent recessions, and my own personal experiences and opinions.
But first, reality is startling. Seventeen percent of companies don’t survive a recession: They go bankrupt or get bought out. Three years after recession, 80% of the survivors had not regained prerecession growth rates for sales/profits. 40% of the survivors had yet to reach pre-downturn revenue/profit levels. Those are sobering conclusions of the HBR study. Yikes.
But, but, but, nine percent of companies significantly outperformed rivals after the slowdown.
Here are the key factors that will determine whether your company will rise or regret during tough times.
Let’s headline the keys then do a deeper dive on what this means for sales growth strategy.
- Improve sales and operational efficiency: Cutting costs does not equal increased efficiency. In fact, to improve efficiencies you may have to increase spend in certain areas.
- Secure the business you have now: Minimize your loss of current accounts. You will soon find out how strong your “relationships” are. Assume nothing. Interact in a meaningful way with current customers more frequently. If you don’t, prepare to pay a very steep price.
- Develop new markets: Customer needs and priorities will change. Be prepared to meet the new needs of potential ideal clients in new markets.
- Strengthen your infrastructure: Bargain prices for assets and improvements will abound. Invest strategically now and be able to respond faster/better to customer and ideal prospect needs than your non-investing rivals when sales start to rebound.
- Plug your gaps: Every sales organization has weaknesses. Identify them and be less weak.
- Leverage your efforts: You must get the most bang for your time and money. The 80/20 rule applies on steroids.
- Extreme clarity about target markets and target accounts: Most importantly, this means deciding (clearly and distinctly) what business you WILL NOT be seeking. For those of you soiling your pants now, this is a major reason why. Don’t repeat it.
- Do not be mumbling “woulda, coulda, shouda” three months from now: Imagine what you would have done the last twelve or eighteen months, the different situation you would be in now, if you could have predicted this disaster. Resolve now to not be saying “woulda, coulda, shouda” in three months as to the things you could be doing immediately.
- Get moving now: Want to know the biggest difference between those who survive or perish when faced with all types of disasters? Those most likely to survive act immediately. When faced with a “decisive moment” they get moving. Boom. Those most likely to perish sit, ponder, evaluate, wait to see what others do, and wait for a “better” time to do something.
Balance the need to cut costs with necessity to invest
Those most likely to sell more than competitors facing an economic challenge are realists. You need to survive if you wish to be around to outperform the competition. Cutting costs is necessary. But investments in some areas is also required if you wish to outperform competitors and pick up new clients and market share that simply would not be possible in normal times.
Improving sales efficiencies is best way to cut cost of new client acquisition
Those that are most likely to outperform focus on improving sales and marketing efficiency rather than across the board cuts. That might mean reducing head count and other expenses, but the end goal is to be more sales efficient. To generate a lead and convert that lead at less cost than you did before. In order to increase sales efficiency, you will cut some costs, but you also might have to invest some time and money to make your sales process more efficient.
Indiscriminate cuts in sales expenses or layoffs may cut costs faster but your ability to compete short-term and when the recovery begins can be crippled. Focus on cuts that reduce your costs of sale long-term. When the recovery begins you will be able to sell more, sell faster, and at less cost per sale. You focused on improving sales efficiency.
Invest to survive and better meet new client needs when demand returns
This might be the best time to invest in your sales process or infrastructure. Reality is that a lot of things that would help you be competitive are going to cost less for a while. There could be a lot of “good deals” on things that would help you meet future demand.
This is also the time to invest in new markets. Major client dislocation is happening now and will escalate as ideal potential clients have new needs and are open to those that can best meet them. There will be fewer competitors and many that survive will be weaker. Ideal prospects are going to have new needs based upon whatever is the new normal.
If you have had your eye on a new market, this could very well be the time to make a bold move
What is your right balance between achieving sales efficiencies and investing in new sales assets/infrastructure and/or new markets?
You need to answer that question. Right now.
9 Keys to outperform your rivals in recession
Let’s expand a bit on the points above. The concepts of improving operating efficiencies, moving into new markets and investing in new assets come from the HBR article I cite below. There are other links to articles I recommend you read.
- Improve sales efficiency
Focus on cutting some selling costs but also possibly make investments in some areas with the goal of permanently reducing costs of acquiring a qualified lead and converting it to a new account. Focus on improving sales productivity and effectiveness. Selling more faster and at less cost.
- Secure the business you have now.
Assume nothing. If you are a weaker competitor your rivals are going to do everything possible to better meet the new needs of your clients. They will try to rip your clients from your cold clutching hands. Head that off at the pass by doubling or tripling your communication with accounts. Be helpful. Be genuine. Be of service. Secure your current relationships at all costs. Those costs will pale compared to what it will take to get a new account for the next few years. When in doubt do more.
- Develop new markets
This seems a contrarian thought when so many are worried about survival. But if ever there was a time to be bold this is it. Clients are going to have new needs and be open to better options. Their current providers may be bankrupt or just hanging on and unable to meet their needs.
- Strengthen your infrastructure
You need stuff to sell more and more efficiently. Information, data, expertise, scripting, process, tools, training systems. Things you put off before due to cost may very well be available for far less now. To improve prospecting and sales productivity this may be the time to invest in assets, infrastructure, guidance to improve your systems and competitive advantage.
- Plug your sales gaps
Let’s face it. Pretty much every sales team has weak spots. Weak spots that were not a priority when the economy was healthy. Maybe your sales database crm is bloated with thousands of outdated low probability leads, maybe your script paths were weak, your reps were varying from plan and winging it too much, your proposal and sales conversions were lower than they could have been. Maybe you had some marginal performing cream-skimming non-creators of sales demand and revenue growth that you tolerated.
Gaps must get plugged right now. Marginal performers? Nice knowing you. Bloated databases filled with outdated lousy leads? Gone in a keystroke. Reps winging it on your dime? No more tolerance. Get moving.
- Leverage your efforts
There is no time. There is less money for most. You need to work the 80/20 rule on steroids right now. You must decide where to allocate time and money for best results with the same care that a surgeon decides to cut.
Not all actions are equal when it comes to your ability to survive and be able to outsell your competition. You won’t be able to do a lot of things, maybe most things, but you must absolutely do the things necessary to put you in the best position to outsell others when demand rises.
- Extreme clarity about target markets and ideal client targets
I can really sound like a jerk quick right here. Deciding who to target for best sales results in tough times also means clearly defining who you WILL NOT target.
When the economy is great the biggest reason sales teams would underperform (IMHO) was failure to laser focus on the highest-probability highest-value targets. Sales leadership was often content to let their sales teams work a database or leads that were the equivalent of a manure pile which contained a gold nugget or two, rather than jackhammer into a solid boulder of gold easily identified.
If you have any hopes of surviving an economic challenge or sales slump, or having any chance of beating your rivals in the race for new clients that has already started, you must have absolute clarity on who to target, who not to target.
- Avoid “Woulda, coulda, shouda” Deja vu
Reality is that we probably didn’t do half of the things that we knew had to be done and should have been done to improve sales efficiency and productivity before the downturn. Many are holding their heads in their hands lamenting their woulda, coulda, should of’s.
Three months from now, six months from now, don’t be filled with sorrow and regret, and suffering the consequences of the things you could be doing right now, but never did.
- Get moving
If you are a business owner, CEO or leader of a sales team, you must get your organization moving in the right direction right now.
Think it is tough now? If you decide to do nothing of substance and wait for a ‘better time” when facing tough economic challenges, your financially stronger or more strategic hustling rivals will start peeling off your best accounts. Then you will be a real professor of pain.
This is a “decisive moment” in the life of your business or sales career. You must act now on the right strategic response and balance defensive (cost-cutting to survive) and offensive tactics (new investments, new markets) to emerge able to compete and quite possibly outperform competitors.
The study I cite found that over three recent recessions 17% of companies did not survive. Three years post-recession less than 10% had outperformed rivals to achieve breakthrough performance. The rest were struggling to get back to where they were.
If you are currently facing a sales challenge, where are you going to end up?
Article that highighted some key points in this post and got me thinking about others.
Roaring Out of Recession
Other articles with surviving recession strategies
When A Recession Comes, Don’t Stop Advertising