November 22, 2011

Growing Sales During a Downturn

By Justin Shriber

While it’s true that an economic slowdown makes selling more difficult, it’s also true that many sales teams are struggling needlessly. Why? Because they’re holding on to strategies that contributed to past success, instead of adapting to new economic realities. To quote the head of sales at a leading networking-equipment manufacturer, “We need to change up our game. The old sales model we used to rely on – the one that delivered many great quarters of results – isn’t working for us now.”

Is your sales team hanging on to any old habits that used to get great results? Here’s a list of what should go out the door when the economy slows and how you can take steps to adapt successfully.

Out: Management and motivation by numbers. In: Better coaching.

In boom times, sales leaders rely on numbers to keep morale and momentum high. After all, when the numbers look good, keeping score can be highly motivating. As a result, managers become used to highlighting great results in order to inspire ongoing success.

During a downturn, however, sales organizations quickly get a realistic picture of their limitations. At such times, excessive focus on the numbers and a lack of substantive coaching become demoralizing and, in many cases, actually accelerate the decline in sales performance. Instead of focusing on numbers, companies can adapt to a weak economy by deemphasizing the scoreboard and empowering sales managers to become great coaches. Here’s how to get started:

1. Find great coaches and put them on a pedestal. A leading professional-services company recently implemented a 360-degree review process to assess which managers were building the most effective teams. Results were distributed to all managers, and high achievers were asked to mentor their peers.

2. Develop a training curriculum that teaches managers how to coach. A seasoned sales executive from a Fortune 1000 software company acknowledged, “There are no naturals when it comes to coaching. Everyone needs to learn the skill. Training in this area is crucial.” This company hired an external firm to teach managers to be better coaches. After initial training, managers met with their trainers on a biweekly basis to review progress.

3. Provide new tools and systems that coach reps on how to achieve better performance. A leading financial services company recently found that investing in new technology during a downturn can pay off. By implementing new software that coached reps on the next best step during a sales cycle and using business-intelligence tools to identify potential cross-sell opportunities, the company grew revenue by 10 percent.

Out: Laissez-faire sales management. In: Setting small, achievable goals.

When sales are strong, companies can afford to let their sales reps off the leash. Reps who have plenty of deals in the pipe are therefore more willing to exercise new sales techniques during actual sales cycles. But when deal flow decreases and sales cycles lengthen, reps have fewer opportunities to perfect their selling skills. As pressure to close each deal grows, reps often retreat to familiar – but less effective – selling tactics, such as discounting. These approaches frequently end up backfiring on a grand scale; discounting conveys no true competitive differentiation and results in lower win rates and diluted margins.

In such an environment, management needs to create opportunities for reps to master sales techniques before sending them out to compete in high-stakes deals. The great football coach Bill Parcells once said, “When you set small, visible goals and people achieve them, they start to get it into their heads that they can succeed. They break the habit of losing and begin to get into the habit of winning.”

Sales leaders can start to profit from implementing small, achievable goals in various ways. To start, every sales organization should have a playbook that outlines the key scenarios they will face, how to best position solutions, and how to deposition the competition. Ideally, representatives from sales, product development, and marketing will have a hand in developing the playbook, and it’s often helpful to bring in a third-party facilitator who can provoke discussion and act as an objective sounding board.

Once playbooks are developed, reps should be tested on their ability to apply them in sales scenarios. A leading investment-management company begins every sales meeting by selecting a handful of sales reps at random to deliver the corporate pitch. The sales executives never allow the presentations to be delivered as planned. Instead, they confront reps with a series of challenging objections collected from the field.

Lastly, effective companies use performance-management tools to highlight successful behaviors. While these systems track overarching milestones, such as the total amount of revenue reps are expected to book during the year, they also keep reps focused on small, tactical efforts. One sales organization used a performance-management tool to track a three-step process designed to accomplish this end: reps had to complete a certification test on delivering the company’s value proposition, gather specific pieces of information about target companies, and allocate 15 percent of their week to executive outreach via phone and email. Using the performance-management tool, managers tracked progress against each of these steps and identified where reps were falling short. They then set daily or weekly goals with these individuals to improve performance. In four weeks, the company increased the number of executives it met with by 80 percent.

Out: The idea that only sales is responsible for selling. In: The idea that everyone is responsible for selling.

A third trap that companies fall into during a strong economy is the attitude that only the sales organization is responsible for selling. During times of rapid economic expansion, nonsales divisions are often overwhelmed as they struggle to keep pace with a growing workload. In such environments, companies streamline responsibilities: the sales organization sells, the products organization produces, and the service organization supports.

During an economic downturn, however, every employee must go on the offensive in pursuit of increased sales. But involving all employees in the selling effort requires a high degree of coordination. Such coordination starts with a common set of objectives defined at the executive level and disseminated throughout the company.

Objectives may vary, but each one should link the company’s core revenue and profit initiatives. For example, a Fortune 100 software company recently launched a new product line. Company executives realized that if they relied solely on the sales force to sell the product, they’d fail to meet aggressive growth objectives. This drove the decision to designate members of the product-development team as “evangelists,” tasked with stimulating demand through strategic speaking engagements and the production of promotional materials, such as white papers. Thanks to their in-depth knowledge of the product, these employees became important extensions of the sales team and helped shape early-stage opportunities that sales could then pursue and close.

Integrated systems are also vital to a company’s ability to unify, because they centralize all information about a customer and make that information accessible by all divisions. When employees know how peers are engaged with a customer, they can enhance, rather than detract from, sales efforts. Customer support, for example, may take time during a service call to reinforce the value of new products the sales team is currently pitching to the customer.

A leading data security firm recently discovered the power of integrated systems. Only six months after deploying a unified CRM and enterprise resource planning suite, it saw profit margins climb 33 percent faster than revenue. This increase stemmed from the fact that the new systems fostered a unified selling effort across sales and support.

A Winning Team

Insightful sales leaders understand that sales organizations built during boom times often break when the economy stalls. They react by retooling their teams; putting a greater focus on coaching; setting small, incremental goals that lead to big success; and enlisting the entire company in the sales effort. In doing so, they achieve sustained growth and lay the foundation for long-term success.