Cycles are something we deal with in many aspects of our lives. There are apparent differences each time around, especially as technology and social norms advance. But the secular business trends continue to be consistent over time. Stock markets fluctuate daily and weekly, but over a few years, there are repeating patterns. These patterns should be explored and exploited for sales success. After all, if cycles repeat, you should be all but ready with each round and experience.
I don’t need to be John Maynard Keynes to realize we are in the longest economic expansion of modern history. Look at the stock market or the economy as a whole, and we see an economy deserving a rest, a chance to reset, before continuing its advance. The question about recession is not if but when, with many indicators suggesting sometime during the next 12 to 18 months. No, the sky is not falling, but it makes sense to grab an umbrella when grey clouds are rolling in.
Living in the Future
As sales leaders, our role is to forge the path to the future; we have outsourced the present, the next 6 to 9 months, to our managers. Giving time for sales leaders to focus 12 to 18 months ahead. By coincidence, around the time we are expecting the pullback. Being students of trends and cycles, more data than ever, we should be able to plot out our strategy based on previous experience. And like any wise and intrepid leader, you know that change needs to start when things are at the top, not when they are showing evidence of weakness. You have to act now!
Learning from the Past
Let’s start by understanding where we are; speaking with people in the trade, by most measures, “things are good.” Many B2B sales organizations are looking to accelerate things, not change them. Oddly, while revenue attainment is 101%, on a rep by rep basis, quota attainment continues to hover under 60% (from CSO Insights). This divergence should not be lost on sales leaders. But in a “good-enough” world, with all the demands on professionals these days, you can understand why some front-line managers take a “not broken, don’t fix” approach. And in many ways, these managers are right, they have been delegated to the present, and it’s working. But if you are a CSO, CMO, CFO, etc., and you own and are accountable for the future, you may not have the best foundation to build on.
No point in debating or timing the economy, so the only question you should be focused on is, “how do we get to the other side intact?” Good news – the 2008 downturn was triggered and exacerbated by Lehman Brothers’ subprime delicacies. Normal pullbacks are much less severe, and if we get ahead of them, more manageable. While there are a lot of moving parts, let’s look at two. First, the need to change and when; then where to start?
Now’s the Time
Many will acknowledge a downturn is inevitable, only to ride the current trend as long as we can, and “deal with it,” “cross that bridge…”. But the best time to create change (it doesn’t happen on its own, they called that an accident), is when you are the top. That is when you have room, resources, cushioned falls, courage, and anatomy to go for it.
When the economy turns down, paralysis, in every form, rules. Budgets, time, headcount, resources, everything is on hold until “we see indications of turn around.” That may get a front-line manager through, but not sales leaders. They need to live 18 months from now, yet many wait too long, not thinking past the party. You can explore the full virtues of the S-curve theory to your heart’s content on OpenLearn. For our purposes, we can boil it down to this graphic:
The best way to ensure continuous growth and innovation is to be contrarian and change when everyone is most complacent. Each cycle of new growth and innovation was initiated before the current cycle peak. We know a secular trend is unfolding and where it will lead. Leaders act to get ahead of events, by pulling the trigger before the majority see the need to. If you wait for confirmation, it will be too late. Looking at previous recessions, those reps who had experience and a loyal base managed to eek through. Those couldn’t hang on, left, allowing you to rebuild when things seem to turn around.
Don’t Hide Behind the Number
Sales organizations did a good job recovering, building up new processes leveraging technology, creating roles to meet the demands of the new customer. And by most measures, things are “not broke.” Using LinkedIn as a barometer, there seems to be an endless demand for sellers. Process, People, Technology, all the elements of success; all present; all good.
But let’s go back to two points, quota attainment, and human capital. Consider these statistics from CSO Insights:
- Quota attainment has increased only slightly from 2017, moving from 53.0% to 54.3%. However, this modest growth is not large enough nor consistent enough to be considered a trend. Rates are still below the 2014 rate of 63%.
- Win rates have stayed the same as the previous year at 47.3%. Sellers are still closing less than half of what they forecast to close.
The above quota and win rates look worse for sales development reps and business development reps (SDRs and BDRs), and they are the first contact with your future revenue. If this is what our teams produce in the best economy using full octane fuel, how will they do when the taps are slowed even slightly? Don’t wait for validation; act on those two fronts now.
Our customers go through the same anxiety, confusion, and indecision we do during a downturn, engage them now — schedule meetings with your counterparts in critical accounts. If you have yet to open direct channels with them, do it now. We recommend the 4-Deep approach, where, in addition to the rep and CX, lines of communications should be formed finance to finance, production to QA, and others.
Reach out and be direct and specific, asking what their plans are for when things turn to ‘challenging’? Just that question alone, asked now, will make you different. Explore what they did last time, did they have a plan or flounder with the tide? Does their approach then still make sense now? How have things changed from their perspective vis-à-vis response to a slow down? More information will flow than you anticipate, as always, you must leave your product in the car.
More than ever, this is the time to lead with your Subject Matter Expertise. Share what you see in the market; if you were in the role last recession, share what you saw work and not work. Again, from not a product utilization perspective, but business process and actions, you saw you other customers take. The goal is not a gossip session, but to share your insights, and see how the prospect reacts. Capturing their reactions and initiating a “contingency” plan in case. We all know it’s not “in case,” but when, and you want them to see you as their ‘go-to’ when that future unfolds.
Now ask yourself, how many of my front-line reps were in sales during the last recession? Not many, right? How many of my front-line managers have managed a team during a recession? And let’s extend that, like your current reps, have these managers sold through a real downturn? If we are going to be completely honest, what was your role during the last slow down?
If they have not sold through a recession, you will need to prepare them, their managers, and yourself. The first thing to look at is structure. Your clients will be consolidating, both vendors, and internal roles and functions, forcing you to react. If you have to “consolidate,” shrink your team, who will stay? Will they be doing the same thing just more and better? One client is considering a hybrid of the current SaaS model and the “traditional” approach. The fluid factor allowing them leverage is how they define territories, both as a geo entity and deliverable/expertise levels of the team.
While most people don’t like to talk about who is staying and going, we have to. The current tenure of SDR’s is around 14 months, subtract any onboarding, less than a year. Some you mind losing, others you don’t, in a down economy, there is not that much movement. We are stuck with what we have, and find it difficult to attract talent, not bodies. You want to know who is likely to make your grade, who merits development, and who needs to be managed out.
Introduce Discomfort Now
When things slow down, activity slows, reps get uncomfortable. Introduce some discomfort now, start exposing these people to a range of other roles and groups in your company, certainly in your revenue ecosystem. The first place I would park them is with the customer experience group. They will get firsthand exposure to real-life client’s issues. The good, bad and ugly, warts and all that goes into using, benefiting and at times struggling and frustrated by our product. Seeing how their CX colleagues manage those clients and situations, will help sharpen their ability to get ahead of, or respond to similar issues that come up while selling the product. If there is an in-between step between sales and managing the account, say implementation, have them spend time with them as well. BTW, if you will be holding the above exec to exec meeting remotely like Skype or Zoom. Have them silently observe those, if not live, record them for later use.
There are other steps to be taken, but if you do these two, you can cover a lot of ground. Customers not only sharing plans, but drawing on your expertise and confidence, the very things they seek in a downturn, and you bring it early. Internally, make decisions about people now, not when you will need to be thinking about something else, something in 2022!