Every seller, sales leader and C-level executive recognizes that recessions create special challenges. Clearly, budgets tighten, decision-making autonomy decreases in every organization (i.e. smaller expenditures have greater scrutiny from senior levels of client organizations) and companies understandably look for ways to "tighten their belt." One of the most effective ways a sales organization can respond is by retaining existing clients when recessions hit.

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Why Sales Teams Must Adapt in a Downturn

It's important to realize that recessions will routinely occur. They are part of the natural business cycle. Where most sales organizations fail in these circumstances is through missing the opportunity to adapt their sales tactics to the challenges their customers are experiencing.

Our research indicates an amazing statistic: more than 82% of sales organizations use the same retention process in both good economic times, as well as during a recession. This failure to adapt tactics yields significant drops in retention. The retention rate of those that know how to adapt is over 91%, while the retention rate of the 82% of "non-adapter" organizations is slightly below 73%! Even more startling, the growth rate of new business acquisition during a recession for those in the 18% averages 17 percentage points higher than those in the 82%! This raises an interesting question: what are the other 18% doing to thrive during recessions that most of their competitors are not doing?

Top Sales Challenges in a Recession

Recessions create several challenges for those responsible for retaining/growing existing accounts:

  • New decision makers get involved. Specifically, spending/budgeting decisions have far greater scrutiny from senior levels in the customer organization. In addition, new decision makers often become part of the renewal/retention process including select professionals from other parts of the customer decision committee.
  • Different definitions of "value" and "outcome" inevitably occur as new decision-makers get involved. Greater scrutiny from every level also means that evaluation of expenditures from the perspective of "must-haves" vs "nice-to-haves" becomes part of cutting expenses.
  • Generally, existing customers lose clarity as to the value they are receiving. This is what happens when expenditures come under unusual scrutiny. This puts additional pressure on the retention/renewal/growth objective.

Recession-Proof Sales Strategies

So, what strategies work? The answers are straightforward. Unfortunately, while they are simple, they are not easy to implement. Each of the following requires specific skills to execute effectively.

  • Counsel existing customers to articulate the value they are getting. Too often sellers, account executives, customer success reps, etc. lecture the customer about the value they have received. However, "counseling" is very different from lecturing. Those responsible for retention/renewal/growth of existing accounts need to have the skill to implement the two most fundamental rules that research has determined separate the "tellers" from the "counselors".
    • Customers will always put a higher value on what they say and what they conclude than they will assign to what they are told

UNLESS Rule Two is in play:

    • Customers will always put a higher value on what they ask for than they assign to what is freely offered.

The skills of consultative selling are vital for anyone responsible for retention/renewal/growth of existing accounts. These skills are immensely valuable even in good economic conditions

  • Adopt a consultative sales culture. Sellers who are comfortable with a single sales stage called "Discovery", have been conditioned to provide demonstrations and/or presentations as early in the sales process as possible, emphasize date and features as important to the customer, etc. These sellers retain far fewer customers (i.e. 18% less) than those with consultative selling skills. While consultative selling skills are valuable in either challenging economic times or boom times, the application of these skills in recessions requires adapting to the unique context that recession-generated concerns of existing customers create.
  • Proactively address client concerns. It is remarkable what field research has revealed about how sellers ignore client concerns. Over 65% of sellers behave as though ignoring the concerns of their clients have will make these concerns go away. Quite the opposite is true. In recessions, all concerns become more intense. Sellers need to adopt both a mind-set and a strategy that encourages customers to express concerns. Once the customer does express one or more concerns, using clarifying questions to understand the underlying issue, demonstrating empathy and using conversation inquiry that allows the customer to explore and express their concerns more deeply is essential.
  • Improve sellers’ skillset to improve customer conversations. This involves equipping sellers with the ability to employ active listening, demonstrate empathy and equipping sellers with a structure for dealing with difficult customer conversations will greatly improve retention rates. Research has verified that there is no quicker or more dramatic technique for establishing rapport, openness and trust than the skill of active listening. Following a simple approach of A, E, I makes using this skillset far easier to employ:
    • Acknowledge
    • Empathize
    • Inquire
  • Boxing out the competition. Most sales organizations are surprised to learn that research reveals an increase in customer churn during recessions. As a result of customers redefining the value they seek, carefully scrutinizing expenditures and sellers not altering their approach accordingly.

Retaining Clients When Budgets Are Tight

There is nothing more important than maintaining existing accounts whenever the economy goes through tough periods. In addition to the strategies above, there are additional actions that can protect existing accounts for taking their business elsewhere. It's important to note, these are ADDITIONAL actions which are of great value during economic downturns, best employed after utilizing the techniques outlined above.

  • Proactive outreach and Quarterly Business Reviews (QBR). Obviously, existing client relationships require some cadence of contact no matter the economic temperature. But there are specific cadences and agendas that are particularly effective in recessionary times. Data show that the most effective cadence is once-per-quarter and the agenda is about creating an atmosphere of review and planning. Think of these (i.e. plan each) as a mutual QBR. Focus on what was accomplished, challenges that emerged/are emerging, plans/actions for the coming quarter.
  • Identifying how changes from the status quo are creating issues the customer wants to fix, accomplish or avoid. Focus on uncovering those that the customer is feeling urgency to address right now.
  • Explore how making longer-term agreements may provide unrecognized value to the customer. If the sales team does not have consultative skills, taking this approach can backfire completely. Simply offering a long-term deal will appear self-interested. Offering a long-term deal in exchange for a discount sends the wrong message. If this approach is to be taken, it MUST involve a skillful application of the "Two Rules" cited above.

Adapting your sales approach during a recession or a time of uncertainty doesn't have to be a puzzle. Book a call with us today to learn the right approach for your team to not only retain clients but to grow revenue.

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