by Richard Worzel, C.F.A.
Salespeople typically are, and should be, optimistic. It’s easier to sell if you’re upbeat, it’s easier to convince people they need to buy if they feel good around you, and it helps keep your spirits up through the inevitable rejections. Optimism is good.
And there’s an old business cliché that ‘tough times don’t last, but tough people do.’ But what do tough people do when tough times do last? Because tough times are going to last in America and through most of the developed world, and capable salespeople and salesforces that intend to take more than their share of the marketplace had better be prepared for it, or they will fill neither their quotas, nor their expectations. Let’s talk about how to do that.
First, study today’s landscape
The financial panic and meltdown of 2008, and the Great Recession of 2008-09 are different from any other recession since the Great Depression of the 1930s because of the vast amounts of debt run up by consumers and governments. These debts virtually guarantee that growth in the economies of America and most developed countries will be slow for the next five years. Indeed, after a less-than-stunning bounce off the bottom of the recession, America’s GDP grew by about 2 to 2.5% in 2010, some economists believe that growth will actually dwindle to about 1.5% in 2011, and won’t get as high as 2.5% again until 2015. Why?
The economy of any developed country is driven by three engines: consumers, governments, and corporations, in that order. But with consumers trying to pay off debts, and coping with the highest unemployment rates in 70 years, they are going to remain cautious about buying things, so that growth in consumer spending will remain soft. Governments shot their wads during the teeth of the Great Recession, and almost all of them are left with such high levels of debt that they are either unwilling or unable to keep spending. Indeed, the predominant theme in many western governments is to cut spending rather than to expand it. This may be precisely the wrong thing to do right now, but it is very much the fashion.
As it happens, the corporate sector has bounced well off the bottom. Those who were going to go bankrupt are gone. Those that remain have tightened their belts, cut their workforces, and are running lean operations that are once again profitable, especially with borrowing costs at record low levels. But most managements were alarmed by the panic of 2008, and, with overall demand continuing to be weak, see no compelling reason to spend much on new plant & equipment, or in hiring workers back. As a result, the one bright spot in the economy, which is also the least important of the three sectors, is in no mood to spend aggressively.
The longer this situation persists, the more it reinforces the mindset among consumers, governments, and corporate executives of the need to spend cautiously, which prolongs the pain. The net result of all this is that as a salesperson, you should expect to work in a slow, grinding economy for years to come.
There are also some possible nasty Wild Cards (surprises) lurking out in the wider world that could make matters worse, possibly much worse, but I’m going to leave them for another blog.
So the future within which you will be selling will be one of cautious buyers, anemic consumer demand, and lean, tough competitors. That’s not what we would prefer, but we really don’t have much choice in the matter. That shifts the question to: What do you do about it?
The mindset of the cautious client
All good salespeople try to put themselves in the client’s shoes, think like they think, and anticipate what they will feel, want, and need. In the current environment, I’d suggest taking that even further, but let’s start with some things we know about clients’ needs in tough times.
Many sales organizations mistakenly believe that clients focus on price in tough times, which leads them to look first at how to shave their prices. But because it’s easier to slash prices than costs, providing a minimal-seeming 10% discount on price can, for example, slash bottom line profits by 30% or more. Cutting prices, then, is the last thing you should consider. It is truly a desperation move – and often not a very effective one. When was the last time you were moved to buy something by a 10% discount?
Instead, studies done on how buyers behave in tough times indicate that they are more concerned about safety rather than price. If they’ve decided they need or want to buy something, they can’t afford a mistake, and so will spend a little more if necessary in order to make sure that what they get is what they want. This reveals something very important about the way prospects think of value.
Value is a simple concept that relates to the mental model every prospect carries in their head when they are considering a purchase. As you know, prospects compare their image of the value of the purchase with the price it will cost them. If they think of the price as being greater than their image of the value of your offering, they won’t buy no matter what you say. If the image of value is greater than the price, the prospect will probably buy (as long as you haven’t ticked them off or made them feel stupid) because they’re trading something of lesser value (their money) for something of greater value (your offering).
With that in mind, let’s circle back to the question of safety. Safety means saving money by not having to go back and repair an earlier mistake. And this has two components: First, they want independent proof of the quality of what you offer before they will commit. And second, they want to know that they can rely on you.
In today’s world, there are no secrets, and consumers and corporate customers will go online to check out your reputation, and read reviews about your product or service from sites like tripadvisor, Amazon, or others. Therefore, your best bet is to offer truly objective reviews of what you are offering before your prospect can check for themselves, including any bad reviews or comments. This is counterintuitive; no salesperson wants to knock their own product, but think about it. First of all, you know they’re going to find out anyway, and second, it allows you to both present the bad news in the best possible light, and also to treat it as a conventional objection to overcome. And providing people with the bad news underlines your trustworthiness. You’re giving them the whole truth, not just the convenient parts.
But beyond this, making a sale should be just the opening move in developing an on-going relationship. One of the oldest, and most reliable sales clichés is that the best source of new business is existing customers. Once you’ve closed a first sale with a new customer, that’s when you should work the hardest to make sure they become a regular, repeat customer through follow-up and after-sales service. You should appoint yourself their unofficial, in-house purchasing agent for all products and services in your category, whether such offerings come from you or a competitor, and you should provide them with honest, reliable information, whether it helps you or a competitor, because this gives you a first-right-of-refusal on all future purchases. You should regularly update them on what’s happening in your field, and make sure they have all the latest and greatest information so they can make the best decisions. If you have a better offering, you can make sure the client knows it. If your offering is equally good, there’s an excellent chance you’ll get the business because of your honesty and relationship. And if you can’t match what your competitors are offering, then you reinforce the value of your advice.
Rubbermaid, which is the category leader in their line of products, trains their field salesforce to help stores produce the most attractive possible displays, even if it means showcasing a competitor’s products. By so doing, they reinforce the view that Rubbermaid is interested in their clients’ success first, and their own sales second. They become trusted advisors rather than just another salesperson – and with the quality of Rubbermaid products, the relationship blossoms, and company and salespeople both prosper.
Generational differences count, too
It’s not just their appreciation of safety versus price that clients are changing. Their minds are changing, too, in part because of who today’s clients are. There are two different, but important, ways that clients are changing.
The first way that they are changing is that the younger people moving into the workplace have different values, different ideas, and hence behave differently than the boomers. Although I don’t tend to use these terms myself, many people refer to GenXer’s and Millennials as the two younger generations that are now very much in evidence among professionals – and who will be increasingly populate the clients you deal with. Going into the details of the differences of these groups, especially when compared with the Boomers, is beyond the scope of this blog, but there are a few ways in particular in which they are different that matter to salespeople.
First, they are more skeptical than the Boomers. Both GenXer’s and Millennials have been in the crosshairs of marketers since before they were born. They have been bombarded with the most intensive, most ingenious sales and marketing approaches devised over the last two- to three decades, and have developed an enormous resistance to any claim. They almost start by assuming that a product claim is misleading, that sales and marketing presentations are guilty until proven innocent. This compounds their natural tendency to check everything online, looking for criticisms and lies. In today’s constantly connected world, you can lie once and maybe get away with it, but I wouldn’t count on even that.
As, they value relationships more. If they’re leery of corporations, they value individuals – although, again, they are cautious. But they’ve grown up working in teams in high schools, colleges, and universities, and are receptive to the idea of teamwork.
All of these – cynicism about sales claims, technologically connectedness, and more relationship oriented – support my earlier comments about how to present and persuade.
The rise of women
And the other major way in which clients are changing is that increasingly they are women. A young woman growing up today is much more likely to move into positions of significance and authority than any generation before them. This is the result of several different forces coming together. First, today’s young woman has successful role models before her in almost every realm of life in the developed world, up to, but not quite including president of the United States. (The status of women in developing countries is a completely different issue, and again, is beyond the scope of today’s blog.) Next, more businesses are being started by women than men. The last statistics I saw on this indicated that for every three businesses started by men, there are four being started by women. And businesses started by women are much more likely to survive.
But the clinching argument about the rising importance of women is that almost 60% of all post-secondary students are women. This is true in colleges and universities, but is even pronounced in graduate programs.
All of this means that an increasing number of your clients will be founded, headed, or run by women – a fact you should embrace and run with. And you should start by considering how women, as a group, are likely to view the world and business differently. Naturally, this involves generalizations, as did my comments about GenXer’s and Millennials, so you should treat these comments with care. But women, as a group, tend, again, to be more focused on teamwork and relationships, less macho and interested in ego-promoting arguments, and more interested in work/life balance. Clearly there’s more to this, but the important part is to be aware of the changes in your prospects as well as the changes in the environment.
Now look at tomorrow’s world – from the clients’ point of view
Beyond building relationships, organizations should take account of the environment in which their clients are working, and look for ways of helping them overcome obstacles that might prevent them from buying. For instance, the banking industry is awash in cash, but has overreacted to their earlier excesses by being extremely cautious in their lending. This means that many small and medium-sized companies may have difficulty in securing financing for purchases. If your firm can offer sales financing on reasonable terms, either directly or through your own financial connections, it will help you secure additional business.
But all of this relates to today’s environment. You should also project yourself into your client’s future so you can think through what they are going to need. That way you can make sure you’re there, waiting with offerings tailored to help them. This works best with a structured approach to thinking about the future.
When I work with clients to help them think about the future, one of the first things I tell them is that if you ask vague, general questions about the future, you’ll get vague, useless answers. Instead, you should ask focused, purposeful questions, because they will lead to insights that you can act on. One way to do this is to break the future possible alternatives, called ‘scenarios’.
Most business people have heard about contingency plans, which are alternative plans in case the future doesn’t unfold the way you expect it to. But the step before developing contingency plans is to consider what contingencies you’ll need, which comes from thinking through what things might happen that you’re not expecting to happen. Indeed, the first mistake most people make when they think about the future is just that: they think about ‘The Future’, as if there is only one possible future, when there are billions of possible futures that could occur. If you limit yourself by thinking about just one possibility, then you may find yourself blindsided by something happening that you didn’t anticipate.
Now, the future is inherently unpredictable, and no matter how good you are at preparing, there will be at least some aspects of the future that catch you by surprise. The key in business is not whether you are caught by surprise, but how quickly you recover, and how constructively you respond to surprising events. And one way of doing that is to think about a range of potential futures, most notably those that are expected, those that are probable, and those that are possible. This process is called scenario planning, and it has been used by the military and major corporations for over 50 years.
But from a sales point of view, scenario planning is useful because it allows you to consider what kinds of future your clients may experience, and then how you can serve them in those futures. In effect, you can project yourself into their future, decide what they will need most, and then prepare to serve those needs so that you are standing there, waiting for them when they arrive. You can not only respond to their needs, but anticipate them, possibly even before they anticipate them themselves.
And if you want to take this a step further, you can sponsor a scenario planning session for them so that they can consider where they’re going, and how they’re going to get there. This would entail hosting a scenario planning session for your client, and possibly hiring a facilitator to guide them through the process. That may sound expensive – and it is – but the benefits are enormously valuable because you get to participate in the process. That would mean you would have a much greater insight into their thinking than any of your competitors. And that benefit would be over and above any gratitude they might feel to you for sponsoring the process in the first place.
So scenario planning is a way of: (1) anticipating your clients’ needs and preparing to meet them; (2) anticipating what kind of world you will be competing in, allowing you to prepare in advance for it; (3) allowing your clients to look forward into their own future so that they can prepare, through your sponsorship; and (4) a way for you to invite yourself into their strategic planning as a valuable member of their team.
It’s an off-beat idea – but these are strange and difficult times, and business-as-usual won’t cut it any more.
If you would like to know more about scenario planning, please get in touch with me.
© Copyright, IF Research, November 2010.
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