Recession is looming: Get your sales team battle-ready

Recession is looming: Get your sales team battle-ready

Recession is looming: Get your sales team battle-ready

Recession is looming. The US and UK are both positioned for one. China is rapidly devaluing the Yuan. Here in South Africa, the economy is already contracting.

Don’t let this take your sales team by surprise. Changing market conditions can be an opportunity for the well prepared, but can also catch the unprepared sleeping. A 2008 Bain & Co. study found that during the last recession more than 20% of companies in lower quartile in their industry jumped to the top quartile – that’s a huge jump! They also found that more than 20% of ‘leadership’ companies fell from the top quarter into the bottom quarter!

Those sales teams who are prepared can see massive growth, but alternatively, those who are not can see a massive drop in sales.

Here’s four things your sales team should do to prepare to thrive during the next recession.

 

1. Improve your agility – now

 

During a recession the game changes, so you want to be in a position where you can easily respond to change. The pressure of difficult times often forces efficiencies and cost-savings. But why wait until times are difficult? Reshape your sales team now and take the advantage. While your rivals are doing forced cost-savings you can be focussed on taking advantage of the changing market conditions. Don’t wait until you are forced to, prepare now.

 

2. Sell more to your existing customer base.

 

During a recession, customers spend less so sales teams need to increase their share of the customer rather than a share of the market. What this means is that you are more likely to meet your targets by up-selling and cross-selling to your customer base than reaching out to acquire new customers. This makes sense because it costs up to ten times more to acquire a new customer than to sell to an existing one.[1]

One of the first things to be reduced during a recession are marketing and sales budgets. With reduced money and head count acquiring new customers becomes harder. So, if you want to meet your targets it’s much easier to look at your current customer base for up-sell and cross-sell opportunities. This will help you maintain the status quo but if you’re wise you’ll also…

[1] Pricing for Profitability: Activity-Based Pricing for Competitive Advantage By John L. Daly (2002), p85. Published by John Wiley and Sons. ISBN 0471221597

 

3. Focus your energies on your most profitable types of customers.

 

During boom times, it works to be experimental and explore different customer types. But when things are tighter, it makes sense to know who your most profitable customers are and target your energies at them – and people like them. Once you have done this, if you really want to excel during a down turn you should…

 

4. Increase your marketing spend.

 

It sounds counter intuitive but a McGraw-Hill Laboratory Study[2] showed that companies that continued strategic spending during a recession out-performed those that didn’t. And they also experienced a revenue growth of 275% during the first year of recovery. If you think about it, if everybody else pulls their marketing/sales spend, then things will be cheaper and your spend can have a greater reach. If you prepare now, you can store up an arsenal to spend during the down turn, and see a much greater bang for your buck than you’re achieving now.

[2] McGraw Hill Laboratory of Advertising Performance (LAP). 1985.

 

What now? 

 

Sounds good, you may be thinking. But why are we at The CRM Team writing this article? While we make it our business to help sales teams flourish generally, we have lots of experience at helping sales teams become more agile, and target their customers better.

We’d love to help you prepare for the next downturn, so that you don’t just survive, but actually increase your sales.

Compared to aggressively hiring new sales representatives, CRM is a technology that can be implemented rapidly with a great return on investment. It makes sense for any company. Put simply, CRM can provide real business benefits for your sales team in times where every dollar counts.

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Customer engagement means business growth. It’s that simple.

Recent research by Gallup proves just how much customer engagement matters. Clue: a lot. Engaged customers provide a 23% premium over the average customer when it comes to share of wallet, profitability, revenue, and relationship growth.

Consider this:

  • Engaged consumer electronics shoppers spend 29% more per shopping trip than disengaged customers.
  • Engaged hotel guests spend 46% more per year than disengaged guests.

The Business Case for Better Engagement

Customer service managers know how important engagement is. They also know what it can do for a business.

For its yearly survey, ThinkJar recently asked customer service managers to list their top three initiatives for the next five years. Customer engagement came in second place for the next two years. It got the number one spot for the following three.

Customers’ expectations have changed:

  • Customers’ need for quick, accurate answers has increased. According to Forrester Research, in the past, expectations came from personal experience or from friends and family. No longer. Now, online communities mean everyone contributes. Leading organisations providing exceptional customer service increase customers’ expectations still further.
  • Millennials and Generation Zs are beginning to enter the marketplace. These digital natives expect something different: journeys, not interactions.
Read the full ThinkJar report to explore why customer engagement matters more than ever. Open the full report here and find out:

  • Why, when it comes to customer engagement, it’s the long term and not the short term that matters. Lack of follow-through can be the make-or-break factor.
  • What percentage of customer support contacts come from ‘repeat customers’ – those who didn’t get an answer first time round.
  • What proportion of customers expect a self-service solution on a company’s website.
  • How many customers would rather use a self-service tool than interact with an agent.
  • What proportion of customer queries a good self-service system can generally handle.
  • Why self-service platforms lower organisation costs and improve customer satisfaction.

Get the full ThinkJar report here.

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Selling is tough.

You’re faced with the constant pressure of winning deals in a world saturated with competition. So, the idea of disqualifying a lead probably makes you apprehensive.

A lead is a lead, right? Whether it brings in R50k or R300k?

We disagree.

And it’s a lesson we learnt the hard way.

The time we made this mistake

Sales mistake
In our early days, a lead came in that grabbed our interest.

We took it through our qualification process and a red flag was raised. The typical deal size for our business is R750k. But this prospective customer had a budget of just R100k.

Instead of disqualifying the deal based on our own tried and tested qualification process, we decided to take on the new customer. Saying to ourselves, “Surely we can make a plan?” – How many times have you heard a salesperson say those words?

A week into the new project, our biggest customer came to us with an urgent requirement worth five times the budget of this new customer. The problem was, we couldn’t fulfil on this requirement because our consultants’ time was now consumed by the smaller deal.

The realisation: We’d spent all our time and energy on a field mouse. And it meant that we missed the antelope.

What we learnt from this mistake

Learning
Qualify OUT as well as in!

In our last sales article, we emphasised the importance of having a structured sales process and the need for defined gates. And the first gate in any sales process must be Qualification.

Our mistake made us reassess our qualification process (we use B.A.N.T). We asked ourselves some hard questions and looked at what went wrong. What we discovered was: we faltered when it came to qualifying OUT (just like all businesses). And it wasn’t because we didn’t follow B.A.N.T.

On the contrary, the prospective customer ticked all the B.A.N.T boxes. What we didn’t do was look beyond Budget, Access to Power, Need, and Time. We didn’t follow our instincts. We knew this prospective customer wasn’t the best fit but we decided to say “yes”… because it’s hard to disqualify a lead.

BANT
So, now when we’re faced with the hard choice, we remind ourselves of an analogy used by entrepreneur, Tim Ferriss.

In his book, Tools of Titans, he talks about “hunting field mice vs antelope”:

“A lion is fully capable of capturing, killing, and eating a field mouse. But it turns out that the energy required to do so exceeds the caloric content of the mouse itself. So, a lion that spent its day hunting and eating field mice would slowly starve to death. A lion can’t live on field mice. A lion needs antelope. Antelope are big animals. They take more speed and strength to capture and kill, and once killed, they provide a feast for the lion and her pride. … So, ask yourself at the end of the day, ‘Did I spend today chasing mice or hunting antelope?'”

Mouse vs antelope
Your business can’t survive on field mice.

The resources needed to complete a job for a field mouse, are the same needed for an antelope. A field mouse might tick all the B.A.N.T boxes. But it doesn’t mean it’s going to be good for your business. So, you must extend your qualification process, and trust in your instincts as a salesperson.

Next time you need to qualify a lead, stop and ask yourself…

  • Is this engagement worth tying up the resource?
  • Is this project right for our business?
  • Is the prospective business a good fit?
  • How will this deal affect our ability to fulfil on future deals?

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