Uncertainty is resurfacing among business leaders.
Measurements like these suggest that we are entering a new phase of the business cycle. Previously robust business conditions are receding. Sales leaders are asking themselves how they will adjust. These forward-thinking professionals are adopting a long-term approach to position themselves for an uncertain future.
Here, we look at the specific moves proactive sales organizations are making to ensure success prevails even when a solid economy does not.
Refocus on Coaching
Enduring through a difficult economy means focusing on the long term. Achieving this focus requires coaching. However, not all coaching styles serve this goal. To be effective, leaders must adopt a developmental coaching style. Doing so means asking questions to help others self-assess and self-discover ways to improve performance. Developmental coaching is an effective strategy for a difficult sales environment because these questions foster a sense of control among sales professionals. In time, sales professionals become eager to grow and take responsibility for what they do.
Developmental coaching contrasts with directive coaching. This short-sighted approach is characterized by telling sales professionals what to do. It’s easy to resort to telling when business conditions worsen. However, this style puts all the responsibility on the leadership and undermines the sales professional’s critical thinking skills. A directive approach prevents buy-in and erodes the sales professional’s accountability.
Prioritize Long-term Measurements
Long-term measurements prevent knee-jerk reactions that are common in an economic downturn. In fact, an analysis from McKinsey shows that “long-term firms added $7 billion more in market capitalization on average than other firms between 2001 and 2014.” This finding comes from examining firms that choose to rely “less on accruals and accounting methods to boost reported earnings” and instead focus more on fundamental value drivers. Some key long-term metrics include:
Attrition: The median cost of turnover is 21% of an employee’s annual salary, according to Center for American Progress. Leaders can keep attrition down by keeping employees engaged.
Contract Value: Maintaining a long-term outlook means focusing on the quality of wins, not the quantity. Larger wins demonstrate the sales professional’s ability to more fully engage the customer’s range of needs.
Profitability: Profitability discourages sales professionals from aggressively cutting prices to push a win through the pipeline.
Balance Spending and Saving
Cutting costs is a natural response to a slowing economy. The problem, however, is that it’s not an effective response. Research published in the Harvard Business Review examined the outcomes across business that prioritized reinvestment and those that did not. They reviewed more than 600 companies across the period ranging from 2001 to 2015. They learned that those companies that spent an average of 50% more on R&D “cumulatively grew on average 47% more than that of the other firms, and with less volatility.” Moreover, the earnings of the firms with greater investment “grew 36% more on average.”
Cutting costs without the balancing effect of reinvestment elsewhere will prevent growth. Selling organizations need to think about the investments that will equip their sales professionals with the higher-level skills needed when customers become reluctant to purchase. At Richardson, we have seen an average revenue gain of 5-12% per annum across our clients.
Develop an Agile Approach
As the economic cycle changes, so do customer needs. These changes occur fast, sometimes shifting over the course of just a few days. Therefore, sales professionals must be able to track these developments. They must be agile. Recently, “agile” has become a buzzword; however, here it means something important. An agile approach to selling is characterized by a customer-centric practice of continually updating one’s understanding of the customer’s business challenge. Sales professionals can adapt the principles of an agile strategy by committing to four concepts, each aiming to answer a key questions:
- Assess: What is the strength of the opportunity, and does the solution fit?
- Strategize: Is there is a clear and compelling connection to the customer’s strategy?
- Prepare: Which stakeholder can serve as a customer coach, and how do we engage them?
- Engage: How do we communicate our solution’s connection to the customer’s unique needs?
Access the Customer’s White Space
Building new customer relationships is difficult in a weakening economy. Therefore, sales professionals need to grow the accounts they already have. Consider that increasing customer retention by just 5 percent increases profits by 25 to 95 percent, according to research from Bain. Retaining and building existing accounts means accessing the customer’s unserved needs, their white space. Doing so means constantly engaging customers.
First, sales professionals must identify the customers who likely have additional needs. Then, sales professionals must evaluate the strength of their relationship with key stakeholders. Doing so reveals how the customer’s strategy, goals, and objectives align with the solution. Remember, fully engaged customers offer 23 percent more “in terms of share of wallet, profitability, revenue, and relationship growth compared with the average customer,” according to Gallup.
Deliver Clear Communication
Leaders must clearly communicate their commitment to the long term. Doing so doesn’t mean ignoring short-term sales goals. Instead, it means positioning short-term goals in the context of the more strategic or longer-term plan. Without clear messaging, teams will not coalesce around a long-term mindset. Moreover, the cost of poor communication is immense. A survey from The Holmes Report determined that the total estimated cost of poor communication across 400 corporations reached $37 billion.
Leaders must remember that uncertainty is contagious. That is, uncertainty among the C-suite team regarding business conditions will quickly pervade all levels of the business. Therefore, leaders need to offer regular communication about the plan to move forward. Clear communication is:
Relevant: Sales professionals need insights and research that are actionable.
Inclusive: Leaders should seek feedback from sales professionals and learn what challenges they face.
Consistent: The messaging should always connect to the same set of overarching goals.
To learn more about how to build a sales plan designed to weather a slowing economy, check out our latest white paper, How Sales Organizations Can Prevail against Economic Headwinds