It's interesting how often we're hearing the words recession or slowdown in conversations around us recently. Even people who previously had little interest in finance, economics or world affairs are talking about oil, gas and gas prices, the banking industry and stocks.
While some of us are not yet affected by the stagnating economic conditions, some businesses have been harder hit, already forcing staff cuts and re-engineered business models. Others are tightening their belts in other ways as the threat of recession looms larger.
So what does that mean for us as salespeople, or as business owners who sell for a living? It means we'll all have to make some changes.
So why adapt?
Selling in a tough economy is completely different from selling in the market conditions we've enjoyed over the last five to 10 years. People have been able to say things like "oh I don't need to cold call, business comes to me," or "I get all my business from word-of-mouth" and "I don't need any more clients, I'm busy dealing with the ones I've already got."
Right now, those people are getting a wake-up call. Salespeople I hear from are finding out that existing clients are taking longer to make decisions, putting certain projects on hold. They're finding their levels of business dropping (in some cases quite dramatically) and customers are becoming more focused than ever on price -- driving down margins and profit and, in some cases, actively seeking out alternative suppliers.
So what does this mean for the average salesperson? They need to adapt their selling skills, re-examine their businesses and increase new business activity levels -- much higher than they have been in the past -- if they want to have any chance of making it through the impending recession.
Why selling now is easy
So why is selling so easy in a soft market? Because you can get away with selling on personality. If people like you enough as a person or as a company, you'll get business based on your personal relationships. Even if your price is a little higher, your delivery a little slower and your product slightly inferior to others, you'll get business on the strength of your friendship with the decision maker.
In a soft market, you also can get away without meeting the final decision maker. You can speak to users of the product or service, or people who influence the decision and rely on them selling to the final decision maker for you, without having to meet them.
In a soft market clients don't actively seek out alternative suppliers, even when they aren't completely happy with you or your company. They don't actively look at the prices they're paying for what you do and they don't negotiate as hard over contracts or pricing.
So what do we need?
A recession changes the playing field. Salespeople who've been successful in a soft market aren't necessarily going to perform in a tougher market. There are various sales skills you must have, develop or adapt to have a better chance of success in a recession. Interestingly, these particular skills are probably the ones that have gone undeveloped when things were easier.
I was speaking at a large event a few weeks ago, and I asked, "How many of you have been on a training course to develop your sales skills in the past year?" Only a handful of people put their hands up. When I expanded this to the past two years, and even the past three years, only a few more hands went up. The majority of audiences had not been in a sales training course at all over the past few years. Now that the market has become tougher, how do you think they are going to perform?
So let's look at the essential skills you need to have, develop or adapt to be successful in a recession or slowdown.
Handling objections
Most people insist their objection handling skills are pretty good or better, yet when it comes to the crunch, they're often found wanting.
The challenge is, if you're used to dealing with existing clients, perhaps in an account management role, what sort of objections do you get? If you've done your job properly in managing the account, you probably don't get very many and they aren't very difficult to deal with. You shouldn't be getting many at all, apart from possibly an objection to price when you're negotiating a new contract or deal, which is probably more of a negotiation tactic, anyway.
In the current climate, even existing clients are giving you tougher objections to deal with, as well as more of them. If you're not able to deal with them well, you might find yourself struggling to retain existing customers, never mind get new ones.
And here's another important point. If your role has become more account management over the past few years, how prepared are you when you suddenly have to go out and chase more new business? How sharp are your objection-handling skills? Because the objections you'll face from new customers will be completely different to the ones you face from existing customers.
Think about it -- how much trust, rapport and likeability factor do you have with your existing customers? How much do you have with a potential new client -- who doesn't know you, doesn't trust you and probably hasn't heard of you? Never mind the fact that they've probably got an existing supplier (that you're going to have to move them away from) in most cases?
Can you see how your objections handling skills might need a little sharpening up?
Cold calling
In a soft market, cold calling is one of those things that gets put on the back burner, isn't it? People say things to me like 'oh I don't need to cold call' or 'all my business comes from referrals' or 'I only deal with existing customers' -- those are the people who are struggling right now, and some of them have left their jobs already.
Some people who've been in a role that's mainly been about account management for the past few years are now being asked to cold call for new business. As existing clients get 'pickier' about what they want from a supplier, negotiate more on fees and margin so there is less profit in the work and some leave, get taken over or close down themselves, more and more salespeople are being asked to take on more of a new business focus.
For most of them, that means cold calling. Yet if they haven't done it for years (and some possibly not at all), they're going to be rusty at best and terrible at worst. Some of them are even looking for another job right now. The problem is, the account management jobs just aren't out there at the moment, as many companies are looking to save on wage costs and reduce headcount and new business opportunities seem to be more available than account management ones.
Negotiation
Most salespeople are not prepared fully for client negotiations. I don't mean that they don't know the client and do their research (you do that, don't you?) but more that there is an imbalance of power when it comes to negotiations. The client always seems to have the upper hand, which is made worse if the salesperson appears desperate for the business.
The clients see signs of desperation very early and use those against salespeople when it comes to negotiation. Especially if in the conversation before the negotiation starts you've been taking about how touch things are in the economy for example. The client may well have been on some negotiation training as well -- but the salesperson probably hasn't in most cases -- can you see how this might lead to the client having the upper hand in any negotiation?
Clients know things are tougher. Most of them are probably having to negotiate with their own clients and try to defend their own margins. However, don't forget that often the easiest way for a client to retain margin and profits is not to objection handle and negotiate well to defend their own prices, but to give in to their clients demands and then try and get their supplier's prices down to retain as much margin as possible.
Negotiations also tend to happen when the salesperson isn't prepared for them. They pop up in a meeting with the client, making conversation and getting on well, when the client suddenly says something like 'we just need to go over some pricing on this product/service we buy from you, and it's a bit expensive in the current market'. And suddenly you're in the middle of a negotiation with no chance to prepare! Can you see how this might lead to difficulties in negotiating to get the outcome that you want?
Closing
In a soft market, when clients really want what you offer and the main focus is on getting added value for their business, things seem to go a little easier in sales than they are right now.
When the market gets tougher however, the focus of clients can shift from partnership and relationships to cost, margin and profit -- often at your expense as the supplier. Business becomes more transactional rather than relationship-based and therefore more difficult to differentiate your offering, retain existing margins and ring-fence clients that now could be tempted to use your competition.
In addition, clients are a little more anxious over making purchasing decisions and committing cashflow than they would be in a softer market. This means that decision timescales have increased and therefore sales cycles are expanding -- in some cases up to twice as long as normal.
It's becoming harder and harder to tie down clients to making a purchasing decision and therefore the closing and gaining commitment skills that weren't needed as much when the market was 'softer' are now essential for salespeople and business owners who want to do well.
So think about you and your team's selling skills. Are they ready to face the objections, rejections, negotiations and challenges they're going to face in this market? Or do you think they need some help on the sales skills side?
Andy Preston is one of the United Kingdom's leading experts on sales and sales management topics. You can see more about Andy at www.andy-preston.com. You also can see more about Andy's bite-sized training for small businesses at www.salestrainingbreakfastclub.com.
