Tweet

Selling in the NOW Economy

Guest post by: Tibor Shanto

Article Overview: There is a lot of chatter out there about the great downturn in the economy and its potential impact on you and me. In the sales world, there are a lot of articles popping up all over advising all on how to sell in economic downturns, recession proof selling, five key things to do in a down market, 3 must haves to protect your sales when the sky is falling and a lot more.

Selling in the NOW Economy

There is a lot of chatter out there about the great downturn in the economy and its potential impact on you and me. In the sales world, there are a lot of articles popping up all over advising all on how to sell in economic downturns, recession proof selling, five key things to do in a down market, 3 must haves to protect your sales when the sky is falling and a lot more.

In some ways I am reminded of the old saying that a recession is when your neighbour loses his job, and a depression is when you lose yours. I guess the 21st century version in the States is that a depression is when you lose your house vs. the neighbour. And in sales it must be that a recession is when you have to sell on price, and a depression is when you don't sell at all. But that is where the good news is, no let me take that back, that is where reality must prevail. Unless the sky does really fall and the planet implodes, businesses will continue to buy, which by extension means someone is making sales, so why not you?

As sales professionals you know that in turmoil there is opportunity, loads of opportunities. While businesses may buy less, they will continue to buy; some may in fact buy more due to favourable conditions presented for their products. Unlike consumers, businesses can't just "cut back" in the way that consumers do. Businesses may cut back on fringe things, sometimes some on things like travel and entertainment, but if they tend to stay in business through and beyond the downturn, they will still be making purchases. The buying will continue but it will be different, and if you can identify the difference, adopt and respond, you can sell as much as you did in the past, if not more. Especially if you are and will continue to be professional in your approach.

Yes you can sell more, if you continue to meet the times and your competitors don't, you can have yours and some of theirs too. Great thing about this pruning of the herd phase of the cycle is that it does reduce the number of competitors. But let's not pretend that this will be easy. Just as markets and the economy turned on a dime you will have to as well, and while you are coping with that, your competitors will change too, usually not for the better. The result is that in addition to everything else you have to deal with as a sales professional, you will have a few other, new and sometimes nasty things to deal with. I would however argue that at the core, things are not that different than they were a year or two or five years ago, just more intense due to the current phase of the economic cycle.

Let's take a look at some of these and how to deal with them. The changes can be loosely split into two categories:

1) How your clients and prospects will react and behave

2) How your competitors will react

We will focus primarily on the former, the client/prospect, always a good idea, and more importantly, if you manage that right, the latter tends to be contained.

Needless to say, the pros focus on the customer. Two things customers will do is become even more price conscious than they were before, and, they will be inclined to postpone, defer or just not want to make purchase decisions.

As if price is not an issue at the best of times the current economic climate just compounds and amplifies the issue. More than ever you have to sell on value, and no we don't mean some abstract notion, but tangible value the client/prospect can realize; revenue, profit, cash would be the common ones, but these are exceptional times and you need to bring more. You need to assume a leadership role, and show the client all the benefits they will attain by buying your product from you. This is nothing new and we should be doing it all the time, but you need to turn a price discussion into a total cost of ownership and real ROI discussion.

Doing this will allow you to counteract on one of the things your competitors are sure to do, which is sell not only on price but sell on discounts. Desperate times lead to desperate actions. But you cannot allow yourself to be drawn into this. Discounting in a down market not only costs you revenue and margins now, but will have an ongoing impact when the market recovers.

A simple 10% discount now to meet the challenge of a weak competitor could wipe out all or the bulk of the margin your company may make on a deal. Now you may say "so be it, I make the sale the commission, I did what I had to", but how long can your company stay in business and thrive and develop competitive products if their margins are eroding. How can you truly deliver on going value to your clients if your company is bleeding dry?

Further, if you are planning to stay with your company you are digging a hole that will impact you and the company for years to come. Look at it selfishly, if you do sell on value in hard times, maintain price integrity, not only will you and your company thrive, but when the recovery comes, you will be in a position to increase your price not only based on the value you delivered, the fact that your company has been able to innovate, deliver and improve product. As you get the lift in price, you will earn more commissions, your company earn greater margins, and so on and so on. But if you discount, then when the recovery does come, and you are able to move your price up, all you'll be doing is going back to levels (if that) you were at before the downturn. If you ask me that's no-kinda-deal-at all! Sort of like buying a car and hitching it to a horse, no?

Right about now I would be asking how can I hold the line on price with all the pressure from clients/prospects and weak kneed competitors? As I said earlier by applying all the methods we should be using in good times but more intently, consistently and professionally. The reality is that if it comes down to price it's not the worst thing. At a time when companies are reviewing priorities, slashing projects and budgets, the fact that they are still at the table talking price is a good indication that they are willing to buy. This may be a much better predicament than the other trend at times like this, which is postponing or not making the purchase decision at all.

But let's forget about us for a minute and think about what the buyer is going through. What are they basing their decision on? To start, most people recognize when something is clearly priced too high; conversely, they also recognize when something is priced way too low. So what are they willing to buy? What can they afford to forego? What are necessary to the purchase?

Well beyond price there are a number of other things that determine a buying decision. Availability is one, after all it may be a bit cheaper but if the client has to wait for the product or service to be delivered, will that have an impact on the total cost structure of their product/service and impact their ability to compete? We do work with some bulk fuel sellers, a true commodity. A cent a litre on 100,000 litres purchased monthly adds up. Until the day that they fail to deliver, and then that penny seems to be worth less in the face of lost opportunities or clients. A trucking company willing to deliver on the cheap is fine until your production line is idle due to a late delivery.

It is up to us as sales people to explore potential issues, to demonstrate the quality we represent through the process we use to sell. It may be difficult to raise some issues for fear of losing the sale, but it is more difficult to let a client down. Through you selling and interview process, you can help the client understand the total risk, and total value of their decision to buy on price. As a client once told me, "I don't have to be the cheapest every day, but I do have to deliver overall value all the time,"

In all the examples we have discussed you need to remember and understand the reality that your client also has to compete in the same tough market, and is trying to balance price and value they deliver. Our clients have to elevate their game to deal with the market realities or they will fail to compete, that will not result from them continuously cutting back on spending or discounting their product. I believe it was a Bell executive who once said "you can't save yourself into growth." So more than ever, you need to take a leadership role in the sale, become an agent of change. Helping your client understand and deal with changes they can and need to make.

Credit, financing and other terms also play a big role in the total cost structure. They may save a few bucks with the other guy, but it may tie up their cash or credit facilities, limiting their flexibilities and ability to act in other areas. So you need to work through the numbers in a way that presents the whole picture, not just the one obvious component.

Some time ago, we did some work with a financial services firm that consistently got 7 to 10 points above the average rate charged by other lenders, no they weren't loan sharks, and they didn't target high risk borrowers. They targeted entrepreneurs with an eye for growth and an understanding of how to fund that growth. For those who took the time to look at the whole picture, they were able to demonstrate the value and opportunity in putting the money to work.

The extra cash allowed them to buy more raw materials at a better negotiated volume driven price. Extra production allowed them to turn out product at a greater volume, at a lower cost per unit, this also improved their return on assets. By selling greater volume they were able to sell at more favourable terms allowing them to reinvest the money quick and accelerate the cycle. This increased velocity allowed them to generate more working capital quicker, increase capacity and margins even with the higher cost of capital.

It took work for my client to engage, involve and educate her clients. She had to have a better understanding of the inner workings her clients' businesses' and how to relate the situation in terms that went beyond just interest rates, those that went more to real total returns. Without that, growth would have been slower, they would have had a different position vis-á-vis the completion; they may have had to hold the line on customer support, and margins and returns would have continued at a less rapid pace. Her sales process allowed her to attain the holy grail of sales relationships: a partner. All with more expensive money, and they all came back for more, rarely discussing the higher rates.

She also realised that this wasn't for everyone; she understood and thoroughly qualified opportunities investing time and resources only in those that fit the profile. She had a clear set of criteria for qualifying prospects, using her time efficiently. As you will also have to, you need to define what you are looking for, how to qualify it and how to let it go when it turns out it doesn't fit the profile. One way to mitigate the price issue is to avoid prospects that are strictly price driven. Part of the process is to segment your territory or market, understand which clients are most likely to help you meet your objectives in the process of you helping them attain theirs. There are a number of practical tools to help do this, but as with most things in sales it is not about the tools, it is about process, outlook and execution. No point in creating qualifying criteria if you don't adhere to them, especially when times seems tough, you can't just abandon all the rules for a quick hit with lingering effects.

But isn't it better to spend time with the right client/prospect willing to act rationally than to be part of a "how low will you go" line up. One good full price customer who gets it is worth three discounters who are just going to continue to beat you up, harass you day in day out and suck up your resources. It's a trap of a different sort, once you bite you'll be stuck because you need the revenue and you've put in the time. You can say that you're going to go out and find new customers, but the phone rings, and it's them with more questions or demands; or its finance calling to see when the invoice will be paid, so now you have to call them. Come to the light side Willy Lowman.

Other components of the structure include but are not limited to factors such as research and development which speaks to innovation and your company's and products ability to support the clients' objectives, another area where price can't compete. Your ability and willingness to respond to clients in areas such as invoicing; your propensity to advocate for the client, and a number of other areas. If you can demonstrate that your company will continue to move forward and deliver continuous improvement to the offering, then you will be in a position to hold price, after all there is a direct return on their investment and they too will be able to pass on the cost for the same reason.

Again, you have to get involved in your clients' business. Not the day to day operations, but where they are, why they are doing things the way they are, how they could change or improve areas, and help them avoid risk and accelerate opportunities. This does mean you will have to be more selective, lead, and be proactive even more so than in up markets, but that is a by-product of the down economy.

The other tendency many buyers have during times like these is to postpone purchase decisions. Saying they can live with things as they are now vs. the change we represent. This is clearly more of an issue with purchases that are not mission critical products/services. Having said that there are many purchases which may not on the surface appear to be mission critical but could in fact be a real difference in the NOW economy. For example a CRM package, a new communications system, at the risk of sounding self-serving, sales training. At first all may appear to be expenses, and therefore easy to postpone, but looked at in the proper light, a new document management system that pays for itself in 9 months could be a prudent choice even though it is a capital outlay.

The opportunity is lead the process and educate the prospect on the upside for them. This does not mean "lecturing" the prospect, but we discussed above, leading the process of mutual value definition. Not focusing on your value proposition, but executing a mutual and interactive process, where the client and you are able to define agree on and attain value.

The other key is to be selective. Many prospects will not buy, and that is OK, what's not OK is you continuing to pretend that they will buy when all the objective (and usually subjective) signs indicate that they will not buy, at least now. It is crucial that you have a clear process for qualifying opportunities, and the wherewithal to remove the pretenders from your pipeline. This takes planning and discipline. But as you can see from a couple complementary pieces in the daily blog edition of The Pipeline, the risk in hanging on because times are tough are high, and the cost, time, is non-recoverable. Again the key is to have a pipeline with sufficient number of real prospects who are actively involved in the sales, and continue to meet your qualifying criteria. If not then you are wasting time and resources. Many reps have opportunities in their pipelines that really don't belong there, if they were removed, their pipelines would be frighteningly thin. Remember, a fat pipe equals options; a pipe full of anaemic and anorexic opportunities is not the same as a pipe full of healthy plump opportunities.

In both of the conditions discussed above, the key is to remember that if you sell well, in a consistent and professional way, following and methodically executing a defined sales process, you will succeed in all markets where people are buying. Unless the sky is falling, we all have to sell in the prevailing economy, the NOW economy.

What's in Your Pipeline?

Related Articles
  All economics is local
  Why Is Selling The Greatest Job?
  Guy's Index of Absurdity: The Top Ten Ways to Tell If Things Are Really Bad
  Timely Tips for Unlocking Great Sales in Today’s Tough Economy
  Newsworthy Trends in Franchising
  Selling Skills for today’s economy
  Sales Tip – Top 3 Selling Crimes: Bring in the Sales Crime Stoppers!
  Increasing the Velocity of Your Selling Cycle
  5 guaranteed ways not to sell your business
  It's Not the Economy - It's Your Attitude!
  Want to UP Your Bottom Line Quickly in Today’s New Economy of Buyers?
  Stepping Beyond Consultative Sales
  How to Avoid Getting Economy Related Objections
  3 Easy Steps to Sell More By Selling Less
  What Sales People Need in a Down Economy
  When Is It Time To Sell Your Franchised Business?
  The Enemy in Sales
  The Economic Crisis: Is It Really Over?
  4 Must Know Strategies To Thrive In Any Economy
  How to Sell More Effectively in a Recession

Article Tags: Pipeline management, planning, prospecting, renbor, sales activity, sales execution, sell better



Related Forum Posts
Re: Kevin's Case Study #10 - When to become an entrepreneur? - When the bug bite you. A lot of successful entrepreneurs started in their teens or at school. Selling sweets to fellow students or lemonade to firends in the neighbourhood.
Re: This is Marketing Warfare! - Hey GT, I guess this was from a while back, and it'll test your memory a bit but could you possibly elaborate on Unique Selling Proposition? Can you give us some examples of good USPs?
Blog pinging - Thanks Martin - yes, I do ping and it has been very effective. I'm currently on the first page of Google for Mastermind Group and on the second page for Selling to Small Business.
Business magazines - Fast Company is pretty good if you're into technology although it can be very on the edge. Entrepreneur has become one giant advertisement and I cancelled my subscription. Selling Power also has some useful content if you're looking at improving your sales skills / presentations.
Re: Newbi here - thanks for your responses guys.. I really appreciate it. Well, I have learned from realhomebasedsuccess dot com that there are home based business opportunities and ideas that could be our option such as: -Selling Goods or Providing Services Online -Making Money through Direct Marketing -Becoming an Affiliate Marketer -Getting Paid on a Click Thru but I was thinking which is the best one and most effective in terms of generating consistent Ongoing Profits. What do you think? do you have any insights?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Good News Travels Fast

The Digital Diet by Daniel Sieberg

Ten Things You Can Do To Be a Better Leader

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.