How Sales Leaders Can Prepare Their Sales Team for the Next Recession

It’s not a matter of if, but when. The growth market we’ve been experiencing the past few years has been exceedingly long by historical standards, thus the risk, and likelihood of a recession rises everyday. Research from Bain shows that companies that prepare in advance for a recession significantly outperform those who don’t, both during and after the recession. 

Recessions that catch organizations by surprise end with predictable (negative) results. But for well-prepared organizations, recessions present opportunities to take advantage of and gain market share. 

The best time to take advantage of the opportunities that a recession presents is before the recession hits. Bain research shows that prior to the past recession, both eventual winners and eventual losers in a group of 3,500 companies worldwide experienced double-digit growth rates. Once the recession struck, however, performance began to diverge sharply – the winners continued to grow while losers stalled out. Not only that, the performance gap actually grew during the recovery period. What did the winners do differently than the losers? They pursued a variety of sales strategies that were designed specifically to enable them before the economic downturn. 

In this blog post I share four sales strategies sales leaders can take to prepare their sales teams for the next recession.

Hold Your Salespeople Accountable to Qualifed Opportunities
For most salespeople, when a downturn hits, they chase any and all opportunities. This is a big and expensive mistake because it wastes time and resources. Salespeople lose track of which accounts and opportunities consume most of their time and how they spend the time they do have with customers. Compounding the problem is they have no idea how much time (and frustration) their recruiters are spending on each customer and opportunity. When sales leaders allow this behavior to fester,  it sends the wrong message to the sales team, and the recruiting team. Ultimately, salespeople don’t have an objective view of profitability by customer or opportunity.  This is where the sales leader must step in.

To counter this problem, sales leaders can take the following actions:

• Define your minimum gross profit margin percentage (every deal must be equal to or greater than “X” in gross profit margin as a percentage)
  
• Define your minimum total deal value in gross profit dollars (every deal must generate “X” gross profit dollars before working)
• Conduct exercises with your reps and recruiters where they are given scenarios to practice executing the mathematical formula for constructing the financials of a deal (I.E. Bill Rate, Pay Rate, Burden, GP)

Next, sales leaders must regularly communicate these expectations and hold team members and their opportunities accountable to these standards. 

Resist the Urge to Discount
Another common mistake sellers make during a recession is they are quick to offer discounts. During a recession it’s natural for customers and sellers to lean into price as the most important factor during the sales process. But it is not your price that is holding your customer back from buying; it’s the fact that they don’t want to spend any money, on anything, period. Even during a bull market, companies don’t want to spend money unless they absolutely have to. Corporate buyers only buy out of absolute necessity. This is magnified during a recession.

Reducing your price or discounting is not going to get your deal over the goal line. Instead, you have to sell the value of the problem your solution or candidate is solving. In other words, you need to quantify the financial impact of the customer’s problem you proposing to solve. If you can’t quantify the cost of the problem your solution or candidate solves, then no amount of discounting will make a difference.

Not only that, there is so much more that goes into a buying decision. For example,  denominations of value that salespeople should focus on include economic value such as reducing costs, increasing revenue, improved asset utilization, or time value such as accelerating time to market with a new product or service, or quality value such as better customer service, higher quality product (candidate) or solution.

As a sales leader, it’s important to address this issue. Connect with your sales teams and convey the importance of winning the right kind of business.  Your salespeople have undoubtedly developed some bad habits during the boom market. Salespeople need leadership that demonstrates discounting is not the strategy for booking deals 

Finally, be sure to focus your sales team on creating opportunities you are confident your recruiting team can deliver on. A recession is not the time to start working opportunities outside your wheelhouse or recruiting candidates from a new skill set, niche, market or geographical location. Stick to what you are best at and keep your people focused.

Get Your Executives Engaged Early in the Sales Process 
Typically, if an executive from the organization selling the product or service gets involved in the sales process, it’s usually at the end of the sales cycle, to close the deal. But this tactic actually detracts from the sales team and their credibility with their customer. In fact, many salespeople find this behavior to be condescending.

Instead, start planning now the ways in which you can get your executives engaged early in the sales process. By early I’m talking about sales discovery. Because executives have astute business acumen, they are more likely to identify opportunities to help clients address issues or capitalize on opportunities that haven’t yet surfaced that average salespeople just don’t see. But this can only happen by engaging early in the sales process. 

When executives get involved in deals late in the sales cycle, the only thing they can really change is the price. 

During the great recession I worked with an IT staffing firm where the three owners made it a priority to partner with the sales team by getting involved early in the sales process on every deal. Over the next eighteen months they actually grew revenue by over 25% and grew margins by five percentage points. Suffice it to say, the sales team loved it; not just because of the deals they closed, but because of what they learned from the experience.

Sales Managers Need to be Leading and Coaching, Not Selling
During a recession, it’s all hands on deck. To win business, it is common for sales managers to pick up the phone and sell. But this is a mistake.

First, this practice undermines the role and value of each salesperson because the manager is now doing their job.  

Second, this practice doesn’t scale. You can’t continue to rely on your sales managers to win every deal. This is how sales managers become the “chief problem solver,” and one of the primary reasons why organizations struggle to scale revenue growth.  Even if your sales manager is a “rainmaker,” they’re not going to carry the quota for the entire team. Eventually your reps have to learn how to cultivate and close deals, during a recession. 

Third, and most important of all, this practice takes managers out of the role in which they can have the biggest and broadest impact on revenue growth. Sales managers are the best sales management assets for improving sales performance, if you let them lead and coach.

You don’t see coaches replacing their players with themselves on the basketball court or football field do you? When players run off the court you always see the coach running up to the player to share a few words. Salespeople need this same kind of coaching because like players on a basketball team, salespeople can’t see their blind spots.  Coaching focuses on developing the reps skills, behaviors and competencies. 

Sales leaders, encourage your sales managers to coach their reps early in the sales process (coaching closest to money is a waste of time).  By engaging your sellers early in the sales process, such as call planning, you ensure your reps are calling the right people, (most sellers are comfortable engaging influencers but not decision-makers), and are preparing the right questions to ask. Sales managers can also review their value messaging, value proposition and rebuttals to potential objections. This is how sales managers influence outcomes. 

Just because the economy ticks downward does not mean your business has to do the same. As the Bain Research shows, there are plenty of organizations that grow market share, increase revenue and expand gross profit margins during a recession. Focusing on these sales strategies can make you one of them.