Don't Let The Economy Be An Excuse For Poor Performance

In an uncertain economy, sales organizations may be tempted to tighten spending, reduce training costs, and implement a hiring freeze. However, one expert says that activities like these may do more harm than good. Read what Bob Miller of Miller Heiman has to say about maintaining sales success regardless of economic conditions.

by Bob Miller, co-founder of Miller Heiman

July 7, 2008

T ypically, when revenues decline by 10 percent over the previous year for two quarters in a row, sales organizations hunker down. There are layoffs and cutbacks. Sales training may be reduced or eliminated. And invariably there's a hiring freeze. Makes sense, right? Wrong! It seems natural and sensible to tighten your belt in anticipation of lean times. However, a careful analysis of how top sales organizations handle economic downturns suggests that a more counterintuitive  approach will nearly always yield stronger results.

When Times Are Lean
In fact, cutting back in a down-turned economy is the worst thing a sales organization can do. Instead, when prices rise, factory orders drop, unemployment surges and other economic indicators signal rough times, sales organizations should redouble their efforts, specifically: with current accounts. Every successful charitable organization knows that the best sources for donations are people who have already donated. While this may annoy donors who don't relish the dinner time telephone pitches from the same charity they gave to last year, it works! Similarly, in any economy it's easier to sell to current customers than it is to find new ones. I'm surprised by how often salespeople and their managers forget this. Your customer base already knows you, so stick by them! A slow economy - when other organizations are desperate for new business and may offer big discounts just to nab customers from the competition - is the perfect time to leverage your customer relationships; remind them you were there for them before times got tough and you'll be there when conditions improve. They'll appreciate the message and the attention - and they'll tend to reward your loyalty with their own.

They’ll ask themselves whether their original assumptions were valid. (“What is our NASCAR/U.S. Open/Olympic/Little League/Bowling Team sponsorship actually getting us?”) Keep the investments that have value to you and your clients, and drop the ones that do not. Some sponsorship opportunities may have had value at one time but are now nothing more than “pet projects.” Similarly, when times are good and you’re not feeling financial pressure may be the best time to question other spending assumptions. “Do we really need a corporate jet? Is our corporate golf club membership as valuable today as it was 20 years ago? What is the value of sending out several thousand generic holiday cards each year compared to, say, sending customers a note to tell them how much we appreciate their business?” Only a thorough analysis of such investments will tell you whether your original assumptions still hold and if the money is well spent. Common wisdom may tell us that “deals are done on golf courses.” Yet, in many sectors, golf and other iconic activities are increasingly seen as relics of an old boys’ club that is rapidly disappearing. Bottom line on good times: If you cannot make a solid business case for an investment when money is flowing in, you’ll never be able to make a solid business case for it. So, use a good economy as an opportunity to think outside the box; question your own investments and keep only the ones that are of value to you and your customers.

With Accounts That Got Away
Again, it's easier to sell to people you already know than to forge new relationships. That's why, in a recessionary period, it's smart to seek out former customers or reach out to previous prospects who chose a different product or service over yours. After all, in a downward economy, your competitors may be going out of business, laying employees off, cutting back or putting into practice a host of other bad ideas that make their customers feel ignored. Why not take advantage of that? In times like these, a face-to-face visit may win back an old customer or persuade a former prospect to give you another shot at their business - especially if they're feeling ignored by your competition. With new business.

Your competition may be making poor tactical choices in reaction to an economic slowdown. They could be cutting back, letting go of sales or support people and negatively impacting service levels. Their customers may feel the sting and appreciate a new business opportunity. When the economy is slow, you may be able to pick up some new business but only after you've worked on your existing client base, former customers and previous prospects. Even though it's easier to go after old business than new business in tough times, most salespeople value new sales more than sales to existing customers (I find this is nearly always true in the U.S., often true in Europe and less so in the Middle East and Asia). This "western approach to sales" may stall or altogether cripple a sales organization that fails to question its own traditional thinking - choosing what seems intuitive or what they've always done in the past - even when past results were less than stellar. As I mentioned earlier, a lot of sales organizations lay off staff during recessionary periods. While on the surface, this may appear to make sense, it's the exact opposite of what they should be doing! The fact is, no company ever reached the Fortune 500 on the basis of budget cuts. With that in mind, top sales organizations will take advantage of a slow economy and hire people while the competition is letting people go. After all, more feet on the street will land more sales.

Use the time to get everyone out and selling – including your first line, district and area managers. Give them a quota, get them dialing for leads, maximize their time on the street and minimize their time in the office. That may mean fewer meetings and less involvement with reporting. Get operations or production (or whoever is responsible for implementation after a deal closes) involved earlier and get sales away from deals as soon as they close. Also, down times are good times to check your sales marketing alignment. You may discover and resolve conflicts that affect the bottom line that could result in a much needed cash infusion when sales are leveling off. Take the time to investigate whether sales and marketing are singing from the same hymnal. Do salespeople feel they’re getting good leads? Do marketing people really understand the ideal customer profile? Are both organizations keeping their eyes on the same prize? If not, there’s never been a better time to recalibrate their visions and focus them on the same goals.

The bottom line on down times: A slow economy is an excellent opportunity to improve the quality and size of your sales force, double up your efforts to get people on the street and capitalize on the strengths of your executive team.

When Times Are Good
A similar counterintuitive approach – requiring no less discipline – should be considered when revenues are good, orders are pouring in and the stock market is soaring. While it is human nature to throw money around when there’s money to be thrown around, top sales organizations tend to do the opposite: in a soaring economy they’ll examine every line item in the budget in search of unnecessary spending. They’ll question corporate sponsorships.

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About Bob Miller
Bob Miller co-founded Miller Heiman Inc. in 1978. Bob developed the initial Strategic Selling® program in the early 1970s and has continued to develop new content and relevant sales courses, all of which were incorporated into Miller Heiman, Inc. He continues to work full-time with Miller Heiman today in a consulting and advisory capacity, focusing primarily on product development.

 ©2008 Miller Heiman, Inc.  All rights reserved. Use of these materials is by permission of Miller Heiman, Inc.