How to Lead a Sales Team in an Economic Downturn

When the economy is healthy, salespeople work with a customer base willing to spend money and carry on long-term sales relationships.

So what happens when there’s an unexpected recession, and suddenly your customers — as well as your sales team — face an uncertain future?

I’m Steve Benson, CEO of Badger Maps, a route planner for outside sales. I recently spoke with Kyla O’Connell on the Asher Sales Sense podcast about the sales landscape in times of economic hardship, and what sales managers can do to not only ensure their team weathers the storm but also finds success.

Some of the topics we discussed are:

• Strategies for handling new and unique challenges presented by the bad economy
• How to react to margin compression
• Building pipelines in times of economic hardship
• Recruiting in a down economy
• How to demo products when face-to-face meetings aren’t possible

These proven management strategies will help your team rise to the occasion when the economy sags.

Kyla O’Connell: You’re the CEO of Badger Maps. What does your company do and how does it help field salespeople?

Steve Benson: Badger Maps is basically a way for field sales teams to view the information about their customers that usually live in their CRM system. What we do is connect to the CRM system and bring all that information out onto their mobile device on top of the map.

That allows them to perform a bunch of useful activities, such as planning their day, planning their route, figuring out which accounts to focus on given where they’re going to be, and generally being more thoughtful and organized about their time in the field so that they are able to spend less time behind the wheel, focus on the right people, and end up selling more.

KO: I enjoyed the demos on your website, and I can see how critical having that information on their phones is while they’re visiting customers. It’s got to be so handy.

What are the new challenges a sales manager needs to overcome in a bad economy that they may not have been thinking about before?

SB: There are a couple of things. First, new challenges that they’re going to face from desperate competitors doing desperate things. A lot of companies are really, really hurting right now across the board, and they’re willing to do things that they probably would not have done before — like liquidating their inventory to make ends meet at discounted prices, basically, so deep discounting. Giving away free consulting or other types of free or subsidized/low-cost value to try and steal your customers away from you. Those competitors out there just behaving differently is the first major challenge.

I think another major challenge that sales managers need to think about is, new challenges that they’re going to receive from their prospects, from their existing customers. They’re going to get resistance around not wanting to engage, not wanting to meet in person, not wanting to take the time to really appreciate what you’re doing and how it could help them.

If anyone didn’t want to meet with you before, now they have a fantastic excuse not to. Resistance to spending money. So, a lot of companies just have spending freezes coming from the top down, not to mention aggressive procurement officers who have been tasked with getting discounts out of your sales reps, generally jamming down your margins at your company so that they can keep some more money in their pockets.

KO: Other than negotiation training, how can a sales manager react in a bad economy to their margins compressing?

SB: Well, specifically from the sales manager’s perspective, one thing that you can do is tweak the sales plan, the comp plan, right? If you have a product with very tight margins, or in general if you need your margins to be defended in these times, comping your reps based on the revenue they bring in right now, you could consider switching, comping them based on profit margin.

The reason that you do this is if your profit margins are 30% and your rep gives away a 15% discount, you actually need two deals like that to be worth as much as one deal was that you were getting in February before we were able to get full price. If your reps comp plan is in line with revenue with that 15% discount, that only costs them 15% of their commission, right?

But if the comp plan is aligned with profit, that 15% discount just cost them half their commission and that incentivizes them to defend the margin a lot better if you align their comp plans with that profit line, instead of with a revenue line.

And in general, you want to design comp plans to be aligned with your business’s needs right now. And this doesn’t mean you’re going to pay your reps any less or change their target earnings around it just means that you are going to change the plan in a way that rewards the reps that are generating the most profit maintaining margins in these times.

KO: What do sales leaders need to change in their behavior in a time of crisis to keep revenue flowing?

SB: I think an economic crisis is the toughest time to be a sales leader. The whole company depends on the revenue you and your team are generating. Sales leaders really need to step up in a time of crisis in a lot of ways. They need to be more responsive to their reps, give them the support they need, know they’re scared, they’re worried about their jobs.

A guaranteed base salary from the PPP for a few months, it doesn’t keep their commission check from evaporating and they probably weren’t paying their mortgage with their base, right? So, they really need support right now, more guidance, more coaching, and managers need to spend a lot of time supporting and bringing new knowledge to the reps because times are changing very rapidly.

Processes are changing and you need to spend a lot of time working with each rep. So now more than ever coaching is important, figuring out where they’re finding success, where they’re finding challenges or getting stuck, and looking to unstick it. And you have to get down to the ground level in a time like this.

KO: What do you think are the areas where reps commonly need coaching in a down economy? I know you mentioned a couple before, but how have your conversations changed?

SB: I think it depends on the team and the industry. I’m in software, which is a different type of business than a tighter commodity product, but I guarantee no matter what the industry is, there are new areas that a team needs coaching.

I think one specific area that everyone will need to be coached on is building pipelines in these times. We often have to relearn to prospect and rethink who we’re selling to in a bad economy, because maybe you’re the best buyer. Your product or service has shifted a little bit to the left or even completely changed, right? Maybe new opportunities opened up, maybe old opportunities shut completely.

Getting good at hunting again is important and getting out and prospecting and seeing who your messaging is resonating with, and who’s able to engage their product in these times is important. I think managers need to be probably spending 50% of their time coaching their sales teams — could be pre-call strategizing, debriefing after sales calls, could be joining them on sales calls to give them coaching, could be any of those things.

As a sales manager, you should ask yourself, “Have I been spending 50% of my time coaching my sales team lately?” Because this is a time of change they probably need to be walked through it.

KO: When you think about some of the behavior changes we’re seeing in our customers, competitors, prospects, how can a sales leader leverage prospects?

The fact that their prospects are actually picking up the phone and now maybe are being open to new ideas because of the down economy, forces them to change. How can leaders teach their reps to leverage that?

SB: That’s important. I think people are picking up their phones now more than ever. It’s a good time to think about the structure of your sales team.

We see this a lot in software, but a lot less in many other industries. The sales teams being broken up into your hunters and your account executives, and then your farmers, your customer success representatives, and people that deal with your existing customers and making them successful. And then also your lead generation reps or your SDRs. We tend to break that up in the software industry.

If you had 10 sales reps and they were all sales reps generating leads, closing deals, and managing accounts. If you pulled out the ones that were good at managing accounts and had them manage all the accounts, but not selling anything new, not generating leads, pull out the ones that are good at generating leads and have them generate leads for everybody.

You may get a bump in efficiency. It’s hard for people to focus on generating leads if they’re also dealing with existing customers, also dealing with closing deals. So it’s a great time to kind of rethink that and maybe consider shifting some things around, to be more efficient that way.

KO: Somebody who has higher, natural empathy is probably going to thrive in an account manager role. And then somebody who has an extremely high intensity driven personality is probably going to excel in that lead generation and hunter role, right? It’s not just more efficient, but it’s also putting them in the right seat of the bus based on their natural aptitudes. So yeah, it’s definitely a great thing to do.

SB: If I had everyone kind of doing the same thing, the first thing I would do is break off someone to manage my existing customers because it’s so easy to over-optimize a company’s revenue generators on existing customers, and you end up sacrificing a lot of new revenue by doing that. You’ll serve your existing customers that extra little bit better but at the cost of not bringing in nearly as many new customers as you could’ve.

KO: When you’re building a pipeline and in this type of environment, how is it different in a tough economy versus a good one?

SB: The first thing to approach here is to change your messaging. In a bad economy, your prospects are going to respond to different messages than in a good economy. And the biggest thing that comes to mind for me is when you’re in a bad economy, you need to change your messaging from, “We’ll help you do better”, to “We’ll help you do more with less”.

It’s subtly different, in terms of what’s going to resonate, and you need to show them how much in terms of dollars you can help them do more with less. It could be less money. It could be less manpower. It could be fewer resources. I guess I can give myself as an example because I just did training on this with my team a couple of weeks ago.

So when times are good, my message is, “We’ll help you sell 20% more with your field sales team”. Now, the message has to be “With Badger Maps your outside sales team can generate the same revenue even though that team may be 20% smaller.”

It’s a slight difference, but it really can resonate with your prospect in a different way, because they’re not looking to make things better. They’re looking to keep the wheels on and they’re under pressure to get more done with less.

And this can go at the top of your page, on your website. You might want to change the wording that you have because it’s been working for the last five years, but maybe it’s the wrong message for these times.

KO: Well, I’ve heard the term tone-deaf. I had a coaching session with a VP of sales recently and she kept reverting back to 2019. I was like, we need to forget about 2019 right now because everything is different now — you need to refocus and go forward.

Businesses are under pressure to reduce costs. And in fact, many boards and CEOs may look at the high expense of sales and marketing as a way to reduce costs. So if you’re a VP of sales and you’re being told to reduce costs right now, how do you recommend pursuing it?

SB: Tough question. But one that is often needing to be answered in these times where the CEO walks up and says, “Hey, you got to cut the team a bit down. There’s too much money going out the door here.” So I guess, first of all, I come from a perspective that salespeople are the engine of revenue in an organization. Given that revenue is really important to the company, sales is one of the last places to make cuts.

That being said, if there are weak links in your team and you have to cut costs, that’s the first place you look — at underperformers. But you can look at newer reps that haven’t scaled all the way up or maybe reps that aren’t scaling the way you’d like.

But I think you want to cut really carefully, more carefully than you normally would with a sales team. If you’re going to do a cut, do one big one and don’t make them look over their shoulder. “Am I next? Am I next?” Because it eats up productivity.

KO: I agree. If you’re going to invest or put money into anything, we try to put it into marketing and sales to keep things going.

In a down economy, most people aren’t thinking about recruiting. If they’re cutting people, they’re not probably thinking of recruiting, but there are a lot of great salespeople in the market right now looking for something new, their next position. What are your thoughts on recruiting in a down economy?

SB: The world’s changed and it’s not a candidate’s market anymore. It’s a buyer’s market. Meaning we are coming out of an economy with very low unemployment and now we’re in an economy with a ton of unemployment. So, it wasn’t possible to hire great sales talent essentially. And now there’s a ton of great reps out there that would love to work here.

It’s a great time to hire. If you either make some upgrades in your team or have the ability to make an investment and try to grab market share from your competitors, by bringing in great salespeople, it’s a great time to do that.

You want to be more specific now than ever because you can be a little choosier with who you’re hiring. Do be very specific about the criteria you’re going to bring in, or you’re going to use to bring in candidates. You want to ask yourself, what is going to make someone successful in this very specific sales role? You’re going to write it all down.

You want to quantify the people that you’re interviewing, understand their individual characteristics, so you know who has the right characteristics to be a good fit. The job posting should be super specific so you can attract the right kind of people and not attract the wrong kind of people.

I often see people putting things in job posts that don’t need to be there. A great example is if you have done an MBA for a role, then don’t ask for one. You end up scaring off great candidates that would have been very successful in the role with these types of false requirements.

Another thing is I’d rather get a ton of applicants and give them all a five-minute sniff test on the phone than only have a few applicants that are the right fit. Keep the net broad, but have some kind of inexpensive quick way to sniff out who’s going to make the cut and who’s not.

KO: So, your product really helps field salespeople and you run a software company for salespeople. They’re under a ton of pressure right now since they can’t go out into the field, and that’s probably changed for good in some way, shape, or form.

How do we bridge the gap of having no face-to-face visits, especially when our sales pitch is based around a customer experiencing the product in person and the product can’t be demoed via video or other methods?

SB: There are a lot of products that are best sold in person. So what are we going to do now? You need to stay productive, and you need to keep generating new sales cycles and moving existing cycles downfield even if you can’t demo the product in person.

We’re able to see stats on this. We’re seeing these types of meetings are down 20% now from where they were in like February and there’s 20% fewer sales meetings, economic activity. And it was obviously in mid-April or May far lower than now. A lot of meetings that were occurring are down by about 20%.

It’s important to focus on filling the top of the funnel instead of putting all your focus in the middle or the end of the funnel. I think it’s a great time to invest in social selling skills because this is a big enough topic for a book.

I’ve had several experts on my podcast over the years about social selling and there’s so much nuance to it. There are some clever tactics out there to generate new leads, build existing customer relationships and social media, especially LinkedIn for the B2B world.

But I think right now the goal has to be to advance the relationship, move the sales cycle forward, knowing you might not be able to close it just yet, but then you’ll have everything teed up to be closed once you can get back in front of your customers and close the deals in person — once your customers’ businesses open up or once you’re able to get involved.

KO: Communication is so important in a crisis. What are some thoughts you have, or you can leave us with around how a sales leader needs to change their communication in these times?

SB: Communication is always important for leaders, but right now I think transparency and over-communicating should be the thought top of mind. Don’t worry about over-communicating. If people hear things more than once, it’s fine, people want safety, they want security.

And as a business leader, you’re responsible for that base layer of people’s pyramid of needs, money that they use to pay for their food and their home and their healthcare, and ultimately, their long-term financial security.

But right now one of your key responsibilities is to communicate really clearly and honestly and transparently about where things are at so that people can plan accordingly.

And from a productivity perspective, if you don’t over-communicate with them, and you’re not clear, they’re going to spend all their time worrying about the worst.

KO: Or looking for a new job maybe.

SB: Well, that’s planning for the worst. You’ve got to get an immediate term plan, a midterm plan, a long-term plan, and show how those shift based on the different external factors if it’s a smaller recession. If this ends up being a huge recession, how does it change? You need to make them comfortable because they know what to expect and feel like they can count on someone who is keeping their best interest in mind.

Conclusion

Selling in a down economy can be a scary and overwhelming thing.

By adapting your attitude, strategies, and mindset to match the needs of the time, it is possible to not only lead your team through challenging times but empower them to perform better than ever before.