Why more can mean less in a downturn

Focusing efforts solely on higher call volumes and increased activity may not be the right way out of the coronavirus crisis

The first emotion is panic, even in the most seasoned sales leader. A downturn is imminent, or already here, and the usual fears assert themselves. Can we maintain revenue? Will we lose customers? If so, how do we replace them? The race is on to get sales volume up so the company can ride out the crisis with minimal damage.

The gut reaction is to press every shoulder to the wheel, but could that do more harm than good? By hitting the phones and stuffing the sales pipeline, could sales leaders be setting the organisation up for an even rockier ride, further down the line?

Monitoring sales activity the right way

Tamara McMillen, non-executive adviser to sales network CSO UK and until recently executive director of sales at Virgin Media Business, understands what it’s like to try to drive sales volume in testing times. She was a senior manager in global sales at MCI during its acquisition by Worldcom and just prior to the bursting of the dotcom bubble, around the turn of the millennium.

“The challenge we face every day is making the numbers happen. But not just any numbers, [ones that make] profitable good business as well as retaining customers. The panic to make this happen is that we start making decisions against our better knowledge and go after everything rather than the right opportunities at the right time,” she says.

Scott Edinger, of Edinger Consulting, found himself in his first sales vice president’s role at the start of the 2001 recession. This set him up to help out a client in the subsequent 2008 recession who, despite ramping up sales volume and increasing orders by 11 per cent, saw revenues shrink by 6 per cent.

“You can chase lots of bad business in a recession,” Edinger warns. “Make more calls, get more deals; that often backfires. It’s the rare exception that a lousy prospect becomes a great client; they become troubling and difficult to deal with until someone wonders why you’re doing business with them.”

It is a fact of life for many sales organisations that a great deal of activity garners comparatively little in terms of sales volume. Enterprise Engagement Alliance’s chief executive Bruce Bolger estimates that 90 per cent of all phone calls are unreturned, 90 per cent of completed calls lead nowhere and of the leads that look promising, only 10 per cent ever come to anything.

McMillen notes that the sales executive’s thick skin is not a myth, but even this won’t carry you through a downturn. “The sales mindset is very important. It’s a profession where we fail more than we succeed and we have to be comfortable with getting ‘no’ or course-correcting.”

Move key metrics beyond sales volume

So how do you build up leads for when this all ends? Monitoring sales activity should, Edinger suggests, focus less on quantity and more on quality. “Use metrics that are predictive of success. Revenue or number of new clients is a scoreboard metric. It doesn’t tell you if you’re making progress. It might be the number of new prospects entering the pipeline that match the ideal client profile. It’s not about the fifty calls, but the ten that advanced from one stage to the next,” he explains.

You can chase lots of bad business in a recession. Make more calls, get more deals; that often backfires

Todd Albright, chief revenue officer at tech provider Datasite (formerly Merrill), agrees, despite his organisation putting through “high-velocity sales” numbering in the thousands every quarter. The company has invested in sales activity trackers and analytics to make sure it’s achieving the optimal conversion rate, but in a downturn he notes that perspectives have to shift.

“We have extensive key performance indicators, but success during a downturn isn’t going to be the number of signed orders or leads in the pipeline. It will be demonstrations or new contacts to reach, or some of the thought-leadership pieces we’re putting together,” he says.

If this makes it seem as though sales organisations should resign themselves to shutting down the sales funnel in a recession, George Brasher, managing director for UK and Ireland at HP, suggests an alternative. “You have to anchor [your fear] with what the customer needs and what solutions you have to put together,” he says. “For example, a lot of clients want to buy laptops and view that as an asset they have to manage. They acquire it on a per seat, per month payment so there’s a different way to procure technology for employees.”

Humanise the sales process

Brasher adds that the key to making a sale in recession is empathy: “You have to think about your customers. Recognise that the situation has changed for them too.

Of the company-client relationship, McMillen adds: “We sometimes forget we’re here to help each other achieve our ambitions. Sometimes this might bring about a deal, but that person remembers us as someone who helped them along the way. How are your priorities shifting right now?”

Care in a downturn isn’t limited to clients. The coronavirus pandemic isn’t just impacting the bottom line, but also the way people have to do their jobs. Monitoring sales activity means not adding pressure. “You have to be cognizant and provide flexibility,” says Brasher. “Employees have gone from an office to a home environment. How do you provide the watercooler-type conversations?”

Brasher adds that HP invests time in making sure communication and connections happen, without piling on extra activity. “We didn’t want to add a ton of process, just focus on the process that is good,” he says.

Metrics and challenges in lockdown

But there are financial realities to be faced and revenue goals to be met. Interestingly, many sales leaders note that sales organisations would find the downturn a lot less troubling if the business maintained a healthier balance sheet overall.

Referencing publicly traded companies, Ebinger says: “They’re acting like they live in poverty from quarter to quarter and it’s unforgivable.” However, Albright adds: “Any sales and revenue strategy is going to be a function of the financial stability of the business you’re selling for.”

But, whatever their financial position, leaders cannot maintain stability if people don’t understand the what and the why of the process. “There has to be good, honest, transparent conversation among the leadership team. We can break it into three views – worst case, most likely and an ambitious scenario – and compare that to the current gap in what we have to deliver; then have a conversation around what that’s going to look like. As sales leaders we have to be very honest about what we can achieve,” says Albright.

Instead of flailing about driving as much activity as possible, a recession is the ideal time to reflect and review, according to Edinger. “The sales team’s job is the execution of company strategy and, if you get them panicked, they’ll neglect that,” he says. “Every call should be are you with the right company, the right level, the right profile? The recession is the right time to refocus and say our sales function is the execution of our strategy. That’s where the rubber hits the road.