The Slowing Economy: How Solution Sellers Should React

While a few bloggers and political pundits are inaccurately labeling the slowdown in the United States’ economy as a “recession” (two or more quarters of economic contraction), and others suggest that worldwide economic disaster may be imminent, the truth is somewhat less dramatic or sensational. The International Monetary Fund projects a growth rate of 0.8% for the United States through 2008. Certainly, the U.S. economy is in the doldrums, and it is possible that it could slide into a genuine recession, though that is becoming less likely. Further, the IMF’s outlook for the rest of the world is relatively brighter, with a projected overall economic growth of 4.1%. Emerging markets are expected to grow about 6.9%, with China being the most robust example with a projected 10.0% anticipated economic expansion this year.

So, our first bit of advice for sales professionals is this: don’t panic. Yes, economic conditions are certainly less vigorous than they were a year ago, but that doesn’t mean that customers won’t buy the goods and services they need.

Over a year ago, we posted some practical advice for sales professionals trying to succeed in slowing economic conditions. That advice is still pertinent today, and so we reprint it here, with some new emphasis added:

First, any changes in economic conditions mean that buyer concerns about risk will be increased, and as a result, salespeople then have an opportunity to convert latent pain into admitted, active pain. In other words, in a slowing business environment, if you can find a way for your product or service to help protect your buyer from economic threats, you can use this to create new opportunities. Our research shows that latent opportunities that you create with the customer — thereby making you “column A” in their evaluation because you are helping to set the requirements for the solution — have a very high win rate: as much as 85% or more. They may take longer to establish, but they are clearly worth the effort.

In a thriving economy, it’s relatively easy for salespeople to fill their pipeline by waiting for active opportunities to come to them. However, when money gets tight, active opportunities dry up fast. The best salespeople balance their pipeline with both active opportunities and latent ones. Think of your sales pipeline like an investment portfolio — a balanced portfolio of both active and latent opportunities protects you much better from risk in uncertain times.

Also, when economies slow, the perception of risk by customers becomes exaggerated, and the final buying decisions are increasingly likely to be delayed, or lost to “no decision”. If you find that your sales opportunities become more difficult to close, and they slip from one period into the next, then you are likely seeing the effect of a rising perception of risk by buyers as a result of economic factors. Great solution sellers recognize this perception, and adjust their focus at the end of selling cycles to help with transition and implementation issues — by helping the customer to establish a clear vision of how they can install and use your solution with a minimum of risk.

This contrasts sharply with what most salespeople do: they simply react by cutting price or offering other kinds of substantive concessions. Ironically, aggressive discounting at the end of the cycle can actually increase the perception of risk by customers. They may wonder, “Why did you quote me a higher price before? Is this now the best price? What kind of price could I get if I delay further?” This begins a death spiral of further delays, followed by additional discounts, until all profit margins are completely squeezed out — which is bad business for both the seller and the buyer.

In short, sales opportunities don’t come from maintenance of the status quo. They arise out of changes — positively or negatively — in the market. All good salespeople know how to milk opportunities in times of plenty, but the best solution sellers also know how to create new opportunities in times of scarcity, too.

Here are some additional things that sales professionals can do to succeed, even in trying times:

• First, re-assess your territory, and identify the accounts with the highest potential for new business. In tough times, many salespeople run to their current accounts and try to milk more sales from their “cash cows”, thinking it safer to work with customers with whom they already have an established relationship. This may in fact be true, but not always. If a current customer has no new business initiatives in play, or if they cannot begin one, then their potential for generating revenue will be limited to ongoing or recurring streams only. Solution sellers protect their current accounts (as we’ll see below), but they focus most of their time trying to generate latent opportunities in high potential accounts. To do this, they establish clear criteria for ideal prospects for their capabilities — defined by the problems they can solve which produce the most value — and then compare this criteria to the conditions of their assigned accounts in their territory, conducting research as required to find or validate data. From this analysis, salespeople can then select the top-ranking accounts with the highest business potential, and execute multi-touch business development campaigns to stimulate interest and generate new opportunities with a very high probability of winning.

• Find new “white space” in your existing accounts. Research the critical business issues or “pains” for each of your current accounts. Rank order these in importance to your customer, from most strategic to the most tactical. Now make a list of all the capabilities that your organization can provide — products, services, or partner offerings. For each account, mark off the capabilities that your customer has already purchased from you. Then line up your remaining offerings with the pains of your customer, starting with the most strategic, and working your way down. For each high-priority business issue that you can match with unsold capabilities, you now have a potential opportunity to pursue. Now estimate the possible value (to you) for each of these opportunities. Identify those opportunities that have the highest value to you, and which also match a customer’s high-priority pain — these are new “white space” opportunities that you should pursue.

• Analyze the value that you have delivered in your past accounts, get credit for the value you delivered, and use this to start new latent opportunities at an executive level. See our previous post that explores the rationale for this approach in some detail.

• Focus more energy on making it safer to buy your solution. In tougher times, customers like cash. They want to cling to their cash reserves for protection against uncertainty. Solution sellers recognize this need for security, and focus more of their time and effort to mitigate the customer’s perception of risk. Use clearly defined transition plans, implementation plans, value justifications and success criteria to help the customer establish a vision of what it will take to realize the benefits of your solution. If you can be flexible in your terms, so that the customer can hold on to their cash longer, consider making this part of your recommended solution. If you see your opportunities begin to slip beyond their originally projected closing dates into future weeks, months or quarters, or if you see an increase in losses to “no decision”, then your customers aren’t seeing how they can implement your solution safely and with a high probability of success and economic return.

If you apply these Solution Selling® ideas, you are very likely to find new opportunities, even in challenging times. Further, you should have a high probability of winning these opportunities, since most of them will be latent, born out of your customers’ most critical needs. Finally, when the economy once again begins to expand more rapidly, as it eventually will, you will be in a much better position to capitalize on the upswing in growth, providing more prosperity for both yourself and your customers.