Economists have been warning that the risk of a recession continues to grow. As far as historical standards go, the current period of economic expansion has lasted quite longer than most. Companies that prepare in advance for a time of negative growth are often those that survive them the best. In some cases, companies can actually grow even if the economy as a whole is retracting.
According to the Harvard Business Review, fiscal performance diverges sharply after as soon as the economy begins to stall. Taking the opportunity to prep your sales team for any future problems can go a long way toward ensuring that your firm is ready to deal with the increased risk of an economic recession.
Ironically, the most important lesson for sales teams to learn could be when to walk away.
Knowing When to Move On
It’s likely that a majority of sales teams have a tendency to lose track of which of their accounts take up the most of their time. Few have any way of quantifying just how profitable a customer is. It’s even harder for them to figure out whether a product line or a particular series of transactions are actually pulling their weight.
Learning when it’s time to walk away from a deal that’s simply taking too long is very important. While it might seem counterintuitive to suggest that working with a fewer number of consumers might lead to higher profits, it very well could because of the fact that this frees time up to focus on those who are most interested in a company’s message. That being said, there certainly are times when you’ll want to amp up your lower-value sales channels, especially if it looks like the value of money is becoming weaker in the economy.
Don’t walk away from existing revenue streams simply because they’re small. Instead, focus on ways to grow them. Consider starting new effective PPC and web marketing campaigns, since these are often easy to automate. Therefore, they won’t take time away from other chores that your team has to attend to.
You may even consider changing over to inside sales, depending on the overall size of your organization and how much a potential recession would impact your market segment.
Shift Your Sales Team’s Focus
Inside sales is a vitally important field for any growing business, and it’s become a nearly mandatory field for larger firms to master. Reaching customers solely through phone, email or SMS conversation might seem like it’s part of a cold calling operation, but there’s a big difference between these and a proper inside sales campaign.
Good campaigns will focus largely on following up with existing leads and converting them into sales as opposed to generating large numbers of leads from outside sources. Those who are finding it hard to generate leads for this kind of operation will want to figure out if their sales and business strategies are really aligned or not.
Managers will, at times, confuse strategy with mission statements and sales forecasts. This eventually ensures that more money gets spent on initiatives that don’t really maximize overall value. A good way to figure out whether the company’s lens has the right focus is to ask if everything is geared toward competing based on cost structure or the willingness to pay by a customer.
All firms can more or less be divided into those that try to hit a particular price point and those that figure their products and services are of enough of a premium grade that their target customers will pay a little more to take advantage of them. A firm that finds it difficult to describe their operations based on this dichotomy might find it difficult to survive a recession, so it’s important to work out these goals now while there have still been several quarters of consecutive growth.
Realigning your goals can even help to deal with margin compression events.
Reacting to a Drastic Change in Margins
Products that already have tight margins are usually those that are most impacted in an economic downturn. Consider switching over to a system where reps are comped based on profit margins, which will help to assuage concerns over margin compression to some degree. If margins are currently around 25 percent and reps give away 10 percent discounts, then you’ll need to sell twice as many deals to be profitable compared to the original price. If your reps have a comp plan that’s in line with revenue, then they won’t feel that their commission is getting eaten into too much.
Comp plans that are primarily aligned with profits as opposed to margins will start to eat into the commissions of your representatives, which in turn can dramatically hurt performance. This becomes all the more obvious when consumers stop spending as much money as they used to and some of your accounts start to suffer.
Assuming your firm can afford it, this might also prove to be a decent time to recruit additional talent, which can further help to weather tighter margins.
Recruiting Personnel During a Recession
Unfortunately, few universities offer sales as a career path. That means you’ll need to be a little more creative with your recruiting methods since you normally can’t simply find new trainees fresh from college as other fields might. While most recruiters emphasize listening to potential hires, you’ll really want to listen closely to your candidates and hear what they want out of a job. This can tell you far more about them than any prior academic experience.
Employer branding can be used to your advantage as well. There isn’t a single business that’s completely recession-proof, but proper communication of your company’s message can help to improve the chances that someone might want to sign with your sales team. That can help you weather the storm while also helping fresh personnel find jobs at a time when doing so can be a challenge.