Large companies (especially in the technology sector) are conducting layoffs and cutting costs. For sales teams selling to clients in cost-cutting mode, this requires new tactics. B2B sellers must recognize that the slow economy creates different types of opportunities: that buyers’ time may be shorter, their willingness to take the risk of working with a new vendor will decrease, and their focus on core, profitable business units will increase (making it more difficult to sell experimental or peripheral businesses within the larger company). Marketers should avoid a spread-the-peanut-butter approach and focus resources on the best opportunities.
The economy is slow, and hundreds of layoff announcements are in the news, including Goldman Sachs (3,200), Pratt and Whitney (900), United Furniture Industries (2,700), and Meta (11,000). If you are a B2B seller and your customers are cutting costs, what do you do?
In many organizations, we see reductions in the sales force that coincide with layoff announcements. In others, we’ve seen sales force hiring freeze. And every sales organization is rethinking its strategy and scale.
In our view, the worst strategy is the peanut butter approach — spreading a uniform reduction in the sales force or hiring everywhere. The emerging winners will take a more nuanced approach, tailoring the response to the strength of their own products and markets, as well as how economic uncertainty affects their customers. . For example, as Alphabet (Google’s parent company) announced weaker-than-expected third-quarter earnings, CEO Sundar Pichai stated that the company “has sharpened our focus on a clear set of products and business priorities.” Through cuts, restructuring, and resource reallocation, Google aims to become “20% more efficient.”
Ironically, the current environment creates opportunities (albeit different) for sales forces in both winning and troubled businesses, as we’ll explore.
Buyers’ thinking is changing in two areas: the time horizon of their focus, and their definition of value. If things go well, as many businesses do in 2021, the “now” is certain, the “near” looks rosy, and the “far” holds promise. But as the economy falters, the “now” sees a slowdown, the “near” is uncertain, and the “far” appears bleak. Buyers pivot to doubling in the near term, while long-term attention fades. A promise that a purchase will lead to long-term revenue growth is often insufficient without evidence of short-term productivity gains. Buyers are still interested in “painkillers,” but less so in “vitamins.”
Marketers Need to Take a Proactive and Customized Approach
A sales leader told us, “Last year, the fish jumped our boat. This year, we have to fish.” Marketers need a more differentiated and proactive approach.
If the seller’s offers are strong relative to the competition, and a customer is willing to do well in a slow economy (for example, banks often benefit as interest rates rise), the answer is to duplicate and find opportunities to grow. Retailers can expand their reach and increase market share by aggressively seeking new opportunities and customers while looking to drive innovation in products and services. We expect Google to expand its customer-facing organizations in its focus areas (cloud, search, and YouTube), even as it downsizes other businesses and reduces the number of non-facing positions. to the customer. As the cloud business evolves, a decision to continue investing is clear. Search is a perfect example of a business that requires a more nuanced approach. Search advertising revenues have experienced sharp declines in areas such as insurance, loans, and mortgages. While reducing ad sales efforts in these segments, we expect Google to increase investment in high-growth sectors. Dialing back anywhere would be the exact wrong approach.
On the other hand, even if the seller’s offers are different, customers facing a weak business often have do more with less in their thoughts. Marketers must engage in active conversations with customers to pressure customers to add value to help them weather the storm. By listening and understanding the customer’s needs, marketers can re-create offers to align with the customer’s changed source of value. They may offer contracts with shorter durations, thinner versions of the solution, or favorable payment terms. And salespeople can help the customer look around and anticipate what the future holds.
If a vendor’s offerings are in a weak competitive position, regardless of whether customers are affected by a slowdown or not, the best approach is to focus on select relationships, activities, and source of value. When the buyer-seller relationship is strong, trust is a prominent source of customer value. Sellers can emphasize their ability to deliver reliably and consistently.
There Are Opportunities Out There For Everyone
Like Google, most companies have many businesses and parts, some of which are good, while others are not. For businesses that are strong, there is an opportunity to take market share from weaker competitors and to hire excellent sales talent while others are declining. For businesses that are vulnerable, difficult economic times create the opportunity to implement difficult decisions, such as selective reductions and portfolio rationalization. This is also a good time to get rid of excess fat and administrative creep. For example, Google scrapped its next-generation Pixelbook laptop, cut funding to its in-house incubator Area 120, and shut down its digital gaming service, Stadia. While the cuts are being implemented, it is necessary to retain top customers and top salespeople.
Additionally, opportunities vary with the seller’s relationship with a customer, which can range from a strong role to a non-existent relationship. When uncertainty is high, buyers tend to be risk averse. If a current supplier is meeting customer needs, buyers will see any change as risky; a new supplier can make a good thing worse. Therefore, incumbents have an advantage. Incumbents also have good customer access. Especially in service industries, by spending more time with customers, salespeople can discover new opportunities. (By the same token, if a current supplier fails, buyers will quickly switch to a new promising seller that offers lower costs.)
Retailers that thrive have one thing in common – a strong digital backbone that enables them to adapt customer engagement to every situation. Informed by data, hybrid sales strategies (a strategic mix of digital, virtual, and in-person customer connections) are critical for continued success. To find efficiencies and cost savings in certain areas, retailers can use digital channels and automate simpler sales tasks. To find effectiveness and impact in other areas, face-to-face marketing needs to be improved. In both cases, the use of analytics can encourage smarter allocation of resources.
