August 31, 2020

Actions Sales Leaders Need to Take During a Recession

By Steve Benson, Founder and CEO, Badger Maps

What happens when the economy experiences an unfortunate downturn, and suddenly your customers—as well as your sales team—face an uncertain future? 

Here are some actionable steps sales managers can take to ensure their teams not only survive a poor economy, but also step up to meet the challenge.

Recognize and Overcome New Challenges
When the economy suffers, many companies suffer with it. By staying aware of the challenges created by this changing landscape, you’ll be better prepared to react and adjust. 

Recessions can cause a sense of desperation that drives your competitors to do things they otherwise wouldn’t consider, such as liquidating inventory, giving away free consulting or services, and discounting in unsustainable ways.

Sales teams also face challenges from their prospects and customers, resulting in newfound resistance. This includes overall disengagement, an aversion to in-person meetings, and more conservative spending. 

In general—and especially during difficult economic times—spend decisions tend to come from the top of the organization. To get deals done in this environment, sales teams need to reach the right level at the prospect company and clearly prove the value of their offering in dollar terms.

Your customer and prospect’s procurement teams will likely get aggressive with demanding discounts and better terms, which can drive down your margins—and in the case of payment terms, your cash on hand. Prepare your team for these tough yet inevitable negotiations by training them to double-down on value. 

Remind reps that procurement departments usually aren’t in charge of whether or not a company will make a purchase; they are in charge of getting the best price for a purchase that the decision-maker already decided to make. Always remember: Your reps should never concede something without getting something in return.

If you have a product with tightening margins, consider compensating your reps on profit margin instead of revenue. If your rep’s compensation plan is aligned with revenue, that 15% discount will only cost them 15% of their commission. However, if the compensation plan is aligned with profit and you have a 30% profit margin, that 15% discount costs them half their commission. 

Your reps will defend the margin better if their compensation is aligned with the profit line rather than the revenue line. This is a common structure in industries with tight margins, and right now many businesses in growth industries with historically high margins are suddenly facing smaller ones. 

Adapt Your Messaging and Communication
In a tough economy, it’s a great time to revisit your messaging—not only what your reps say to prospects, but what your company website says too. Many companies frame their value proposition as “We will help you do better at XYZ.” 

However, in tough times, consider adapting your messaging to better resonate with how your customers are feeling right now, by telling them, “We’ll help you do more XYZ with less.” Show your prospects how your product will help them to maximize their money, whether through saving money, improving manpower efficiency, or streamlining resources.

I made this change at my company, Badger Maps, a routing app for outside sales, where pre-COVID our message was, “We’ll help you sell 20% more with your field sales team.” Today, when customers are struggling with tightened budgets, team reductions, and lost revenue, the message has evolved to, “With Badger Maps, your outside sales team will generate the same revenue with a team that is 20% smaller.” 

This is a subtle difference, but the second message meets customers where they are at this moment. Try to do the same with your messaging.

In addition to your customers, your own team is probably feeling uneasy right now. Managers need to shift their communication in stressful times to account for the doomsday gossip that often spreads rapidly throughout organizations during tough times, leading to rash employee decisions and morale problems. Sales leaders should communicate with their teams with transparency, realism, and specificity. 

It’s vital to provide an action plan that will allay team fears help them focus on selling. Ask yourself, “Do my employees understand my plan if things get worse, stay flat, or get a little better in the short term, midterm, and long term in regards to specific actions that we will take as a group?” 

I told my employees that if we didn’t meet certain growth milestones by a certain date that the whole team would take a 20% pay cut, but that we wouldn’t have layoffs. People will work better if they have confidence and security in a plan and they can make personal decisions around it. Uncertainty wastes time.

Recruit the Right Talent
Your team is only as good as its reps. For the last five years of economic strength, finding the best talent was a challenge. Now, there is an abundance of great reps looking for work who would make an excellent addition to your team. 

If you have the resources, it’s a good time to enhance your team. Recruiting during a recession requires sales leaders to adjust and bring in people with the right skills to meet the times. Job postings should clearly outline the skills applicants should bring and what will be expected of them in the role. 

In the evaluation process, ask candidates to overcome an objection, give a pitch, and negotiate with you. It’s important they exhibit the right set of skills needed to help your team perform at its best. Once you’ve hired someone, ensure your onboarding process reflects the new economic situation to empower your new team member to hit the ground running.

Steve Benson is the founder and CEO of Badger Maps, the number one route planner for field salespeople. After receiving his MBA from Stanford, Steve joined Google, where he became Google Enterprise’s Top Sales Executive in 2009. In 2012 Steve founded Badger Maps to help field salespeople be more successful with multi-stop route planning. He also hosts the Outside Sales Talk podcast where he interviews industry experts on their top sales tips.