The question isn’t if a recession is coming. It’s when.
Nearly half of American CFOs indicated they believed a recession would hit by mid-year 2020 in a Duke University/CFO Global Business Outlook survey released in June 2019. European business leaders feel similarly, as half of European companies stated that a recession is imminent in the next five years and 18% believing their country is already experiencing one.
Recent research by Bain and McKinsey, both published in the Harvard Business Review, analyzed companies that came out strongest in this century’s prior recessions. Both studies found a common thread in those companies that didn’t just survive during the economic downturns but thrived: they prepared for it.
Because it takes six to 12 months for organizations to achieve meaningful sales transformation, now is the time for chief revenue officers and chief sales officers to improve sales performance to bring their companies to a position of strength before the downturn hits. Let’s explore three actions that your CRO can take now to recession-proof your business.
1. Focus on Leading, not Lagging, Indicators
It’s easy to assume your sales organization is recession-proof if you’re making your numbers, but when you dig deeper, you see that a good economy may be masking a plethora of issues. Last year, the average sales organization saw revenue attainment of 101%, according to CSO Insights, the research division of Miller Heiman Group. While that seems like good news, it’s a lagging indicator—and looking backward, rather than forward, won’t help sales leadership see their future.
The 2018 Sales Talent Study found that two-thirds of sales organizations rely solely on lagging indicators. It’s critical ahead of market fluctuations to instead focus on what your leading indicators tell you. When you monitor your leading indicators, you’ll catch warning signs sooner. Here are a few for you to start:
- Have your C-sat scores dipped? The 2019 World-Class Sales Practices Report from CSO Insights, the research division of Miller Heiman Group, found that for most sales organizations, leading indicators like customer retention, have dropped by 3%.
- What does retention look like on your sales team? On average, seller retention is down 5% in 2019. If you see sellers leaving your organization at a higher rate, it’s a sign that your organization may have some talent gaps.
- What’s the win rate for forecasted deals at your company? On average, win rates of forecasted deals is less than 50% at most sales organizations—which means you won’t win half the deals that you think you’re going to close this year.
2. Review Your Customer Experience Strategy
CSO Insights found that less that 25% of buyers say they consider salespeople to be a resource to solve business problems. Therefore, it’s more critical than ever for sales organizations to make sure that customers perceive every interaction with an organization as relevant and valuable. By doing so, an organization meets and exceeds buyer expectations, setting themselves up as a more trusted partner to solve business problems than their competition. As the economy fluctuates, organizations that invest in customer experience strategies are more likely to build loyalty and weather the storm than those that don’t.
As you evaluate how customers perceive your organization, and what you can do to shore up their loyalty, consider these questions:
- Have your customer retention rates fallen in the past six months? Would you describe your customer relationships as deep? Leading indicators such as these can identify lapses in proving your value to buyers.
- Do customers have consistently positive interactions across every channel they use to engage with your company? Map out your customer’s path and make sure that the experience is seamless, whether they’re interacting with customer success over the phone or filling out a form to download a product sheet.
- How closely do customer service and sales work together to support an account over the course of a relationship? Customer service touches an account 10 times more than any other department—they’re going to have the most insight into how a customer feels. Sales leaders that collaborate closely with service leaders will find more opportunities for cross-selling and upselling.
3. Conduct a Sales Talent Assessment to Find Your Gaps
Only 16% of sales leaders feel they have the talent to meet their business goals. For the past few years, sales leaders have been able to hire their way out of this problem by adding additional headcount or by over-relying on their top performers, but that’s not a sales management strategy that will pay off, particularly during economic trouble. Consider conducting a talent strategy assessment and a sales skills assessment of your existing force. Start by asking yourself the following before a hiring freeze or a lack of training budget exposes costly gaps in your sales force:
- Does your sales organization regularly assess its top performers to understand why they’re successful and how to replicate their success? The top 20% of salespeople account for more than 50% of the average organization’s revenues. Understanding what makes them successful can identify gaps among the remaining 80% pinpointing opportunities for sales coaching and sales training.
- How strong is your onboarding program and how much reinforcement does your organization offer? Sales attrition now sits at about 18% a year, and organizations grow their sales force an average of 9% per year. That means a lot of new sellers coming in your doors. By understanding how well your new sellers understand your sales process and methodology at 30, 60 and 90 days, you’ll be able to understand how successful you are in your current approach to sales training and sales coaching. You’ll also be able to identify where you need to invest in additional dollars to make your sales force successful.
- Do you assess sellers on achievement metrics and behavioral assessments? While tracking seller performance like quota attainment and win rates helps you see points in a sales cycle where a seller might struggle, it’s just as important to understand what makes up their sales DNA by evaluating their behavior. This helps sales leaders narrow in on gaps like product knowledge or negotiation skills, create tailored learning paths and ensure that coaching opportunities are focused on a seller’s true weaknesses.
Predicting the arrival of economic uncertainty is, well, uncertain. That means you can’t wait to invest in making your sales team as strong as it possibly can be; if you only begin to invest in sales transformation after a downturn, you’ll find yourself struggling to thrive within it.
Chief revenue officers and sales organizations that invest in future-proofing themselves against a recession by understanding the story told by their leading indicators, how their customers perceive them and where they need to assess and improve their existing talent will be the ones best positioned to rise when the recession ends and may even find themselves succeeding within one.
Of that fact, we’re certain.
With more than 40 years of experience, Miller Heiman Group’s ability to develop sellers who meet the changing expectations of today’s buyers is unparalleled. Enterprise sales organizations can get the process and tools their sellers need to meet the changing expectations of the modern buyer through Strategic Selling® with Perspective, the world’s leading sales training program.