Strategies for Creating a Recession-Proof Business
It’s the “r” word no one wants to utter, but many experts worry that a potential recession could be looming somewhere out there on the horizon. While the data doesn’t suggest a major downturn is imminent, and things like strength in the labor market and financial system could fend it off entirely, there are numerous warning signs that have economists cautioning that “the economy faces headwinds.” And for many salespeople it will be the first recession they’ve experienced.
Regardless of whether it’s six months or five years away, mild or steep, the risk of a downturn is always there, and that means the time to develop a recession-proof business is now.
As with most things in business, there are plenty of advantages to being both proactive and positive. Rather than scrambling when a downturn hits, you can use the relatively calmer periods to tighten up and optimize any areas of the organization that need attention. That’s good for business whether we’re in boom times or tough times. And when those tough times do strike, your organization will be well-positioned to take advantage of the unique opportunities that often present themselves during a downturn — instead of struggling to stay afloat.
Start With Developing a Recession-Proof Customer Strategy
At a company-wide level, it’s critical to have a plan in place now for making decisions, managing risk and leveraging resources — and your customers can inform your strategy in all of three of these areas. Organizing around your customers will help you prioritize your resources around the most high-value opportunities while also making sure that your processes and people are aligned to not only compete successfully for new business but also keep current customers loyal, even if their business temporarily drops off.
Here’s what a recession-proof customer strategy might look like.
Be very clear about where you win.
Get granular here, by target demographic, deal size, industry and other identifiers. Then do the analysis to determine where you win more vs. less often.
- Conduct account reviews. This is a consultative conversation where you demonstrate that you are their partner. Salespeople need to get account reviews scheduled now, not when times get tough and the customer knows you want to sell them something. Ask them how they are going to manage the unexpected future. What are their strategic priorities moving forward? Help them build contingency plans. In other words, be an extension of their business.
- Protect your margins so that you’re actively focused on your most profitable offerings and, even if top-line revenue flattens or even declines, the bottom-line means steady.
- Focus on solutions that address recession problems. Lean on lines of business (e.g., consulting work, specific services and products) that can help customers in times of trouble.
- Above all, don’t panic, and don’t chase bad business. Instead, plan and prioritize accounts and prospects. Focus on those with recession-proof budgets and better chances of succeeding.
Focus on delighting existing customers.
Minimizing attrition is critical, so keep existing relationships strong. It’s hard to get new customers in a sluggish economy, and it’s even harder to make up the deficit of losing a customer in a downturn.
It’s also likely that you have untapped opportunity to grow your reach within existing accounts. That’s the job of your account managers. They know these businesses and should be having the conversations to expand the adoption of your solutions deeper and wider into established accounts as opposed to looking for individual “leads.”
- Find out what your customers are saying. Don’t assume. Hold brainstorming sessions to find out potential solutions to their new needs and allow your staff to feel engaged and involved.
- Keep the focus of conversations on customer needs. When salespeople are desperate or anxious, they’ll often revert to bad habits, like spending too much time talking “about us” and not enough time listening to understand the customer’s needs. And customers can sense that desperation. In good times and in bad, the customer relationships that thrive and last are the ones that are rooted in uncovering and fulfilling needs.
- Work with customer service professionals to handle complaints and cancellations. By effectively working through these difficult conversations, they can often retain the customers. Find out through questioning what their needs are and the real “why” behind cancelling. It’s important that your service reps go into these conversations with a plan in place. Otherwise, the customer will go to lowering pricing, which damages profit margins.
There are a number of simple steps you can take with existing customers to support a recession-proof business, regardless of how big or small the account is, such as:
- Asking them what they need from you. It sounds basic, but you’d be surprised how often untapped needs remain that way because salespeople never asked the question.
- Asking them for referrals. This is another seemingly obvious “ask” that doesn’t always happen. If your customers are happy with your service and solutions, there’s no reason not to ask for a referral. They may know others in similar situations who could benefit from what you have to offer.
- Keeping your brand visible. During recessions, some companies tend to go into hiding. They cut back on marketing. But those that invest in branding, visibility and, in particular, sharing information that provides value fare far better on the other end. Instead of trying to make up for lost ground, they effectively expand their brand presence and awareness, giving them a head start when economic conditions rebound.
- Increasing lifetime value and cross-selling. Salespeople are an extension of the organization’s efforts to remain visible and provide value. They should be asking, “what problems can we help you eliminate?” As long as they’re taking a customer-focused approach and continuing to create value and fulfill needs, their customers should welcome hearing from them.
Reinforce (or establish) the connection between customer service and sales.
Your customer service or contact center reps usually have the customer’s ear better than anyone, which means they’re in the perfect position to uncover unstated needs and opportunities. Especially in a challenging economic environment or a highly competitive market, excellent customer service can be your company’s secret weapon.
But getting your service professionals on board and thinking in different ways about their role will require appropriate coaching and training, because many reps balk at the idea of being involved in “sales.”
The first step in bridging the gap between service and selling is aligning “what it means to serve” with “what it means to sell.” Both involve identifying and filling needs and creating value for customers.
Identify, develop and incentivize the right behaviors.
When there’s a sense of budget-tightening and market disruption ahead, some companies make the mistake of pulling back on their training and development efforts. In fact, this is precisely the time when you need to make sure that your teams are fully equipped to handle new challenges and complexities and that they have the support they need to stay engaged and on track.
In terms of your recession-proof business and customer strategy, there are some key questions that will help you evaluate where your team is today and what areas need particular focus, including:
- Are your teams getting into enough of the right customer discussions? While your reps may have already been through some training, it takes ongoing reinforcement and practice to keep skills sharp. Considering how fast things are changing and how much everyone is juggling today, upskilling and refreshing previously learned skills are critical.
Keep in mind, it’s not just about skills, though; it’s about attitudes and beliefs as well. When people don’t feel confident in their abilities or that they have what it takes to be successful, it tends to create a self-reinforcing cycle of behaviors that ultimately proves them right. The buying process is already getting longer. It takes an average of 12 contacts — emails, voice mails, face-too-face meetings and phone conversations — to make a sale. Persistence, focus and resilience win the day, and your salespeople need to be mentally prepared for that reality.
- Are managers coaching consistently and on the right things? Our research shows that frequency and time spent on coaching matters. The more managers coach, the better the company’s sales performance. Specifically, managers need to be skilled at coaching not just to activities but to the more significant influencers of success, including goal-setting, achievement drive, confidence and mindset.
Slow periods are an excellent time for doubling down on coaching and development. Managers should be spending more time with reps in the field or in conversations and helping them make every customer conversation count.
As part of this, managers need to be intentional about what kinds of behaviors they’re reinforcing and rewarding. Which behaviors are most value-added in the customers’ eyes? Managers should focus on moving sales reps away from the low-value administrative tasks that distract them from engaging with customers.
- Is tech enabling or getting in the way of customer engagement? This is a good time to take a hard look at all those tech and sales enablement tools and seeing what’s really needed and creating value. AA-ISP found that 80% of sales reps had tech stacks consisting of 10 or more tools. If you’re not getting real value from some of them, stop spending the money on them. Not only will you save on the expense, it could also help create better customer engagement.
- Are sales being directed toward the most profitable products and services? Salespeople have to be clear on the value of your products and services and how they tangible make a difference for their customers. Managers should reinforce their confidence and belief in product so that, for example, premature discounting doesn’t kick in. This is essential for protecting your pricing strategy, margins and profitability.
- Is your compensation plan rewarding the right behaviors? Everything needs to be aligned to drive the actions and behaviors you want to see and the outcomes you want to get. As you think about your compensation plan, also consider how else you can galvanize your people around shared purpose and mission. Get teams together to brainstorm and share ideas and customer feedback. Use peer mentoring with newer reps. Celebrate the wins, both large and small.
Be the leader your team needs.
All levels of sales leaders need to be open and transparent, especially when things feel uncertain. Share what’s going on, trends, customer feedback and customer successes.
Most of all, let your people know that you believe in them and have confidence in them. People rise — or fall — to their leaders’ level of belief in them. Pay attention to what you’re communicating, both in words and actions, and focus on expanding the area of what they view as possible.
Slowdown, downturn or false alarm, it’s always smart to maximize the talent and sales team performance you have in-house before trying to hire from outside the organization. The job market remains tight, but even if you find a potential candidate, there will be a longer ramp-up time with someone new, and no guarantees they’ll make it.
Your Recession-Proof Business: An Evergreen Strategy for Success
While there are many uncertainties about what lies ahead, one thing is consistently true: Whenever a recession hits, the best-prepared companies are the ones that will come out ahead on the other side of it. Put your customer at the center of your strategy — and make sure your team has the mindset and skillset to deliver on it — and you’ll be among the success stories, regardless of what’s happening with the economy.
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