If this recession has taught businesspeople anything, it's that they must equip themselves for long-term survival. Ultimately, a businessperson needs to consider the question: "What can I do to ensure I'm still in business when the recession ends?"
More specifically, businesses need to ask themselves the following:
- Are my marketing teams in tune with what sales needs? Is sales held accountable for delivering on its goals?
- How will my sales organization cope with the downturn?
- What will I do if new customer acquisition (NCA) closing rates decrease, throwing off all of my sales projections?
- How full is my sales-opportunity and sales-ready pipeline right now?
In a downturn, most businesses expect sales from existing accounts to decrease. However, if companies fail to develop new sources of revenue during tough times, the situation can only worsen. This is why NCA is the only practical way of compensating for or overcoming a sales shortfall. Even if the costs are greater than before, focusing on NCA is worthwhile because it will not only help businesses shore up immediate sales but also create long-term value as they retain a larger customer base. Lifetime value is an asset that is worth the additional expense. Look at it as battening down the hatches before a storm -- it makes good business sense to have defenses against a downturn.
If current marketing plans do not include NCA as a specific objective, businesses should consider taking the following steps that can help acquire and retain new customers:
Have an organized lead generation program in place. Companies that aren't already budgeting for lead generation need to push that start button immediately. Only then can they begin to fund the necessary measures to jump start an effective lead generation program.
Outsource to specialized vendors. In addition to -- or in lieu of -- the first step, companies can outsource lead generation to a specialized company that can make prospect and business development calls to target markets. This task can certainly be handled in-house, but will require a highly trained staff and the implementation of specific systems. Oftentimes, outsourcing is a more cost-effective option.
Recognize that sales may only produce half of your typical return on investment. If this result is satisfactory to keeping the business afloat, companies can be confident that this will likely be the worst-case scenario. Nevertheless, if in previous years, for example, sales averaged a 20 percent closing rate on qualified leads in the sales pipeline, project close rates to fall to 10 percent, and budget accordingly. In short, hope for the best, but plan for the worst.
Consider letting the weaker (the 80 percent who deliver only 20 percent of your sales) salespeople go. The hard truth is that weaker salespeople (i.e., "order takers") usually fail in difficult times. Only genuine salespeople -- natural professionals who enjoy the challenge of selling and winning -- will succeed.
Make sure your marketing department isn't wasting precious dollars on ineffective, non-sales-producing activities. This is not the time for utilizing your resources to disseminate pretty pictures or cute brand advertising. To stay in the game, companies should be looking to develop an effective strategy that demands accountability and generates sales demand. Now is the time to use promotional dollars more effectively, to hold marketing responsible for their spending, and to mine the CRM database to better focus on prospects who are most likely to make a purchase.
Look to lead nurturing and lead revitalization. Too many companies neglect these activities even in good times. While neglecting lead nurturing and revitalization is a mistake when the economy is healthy, continuing to do so during tough times can be fatal.
Develop an enhanced customer retention program. Customer retention is critical, especially in an economy where consumers are more careful with each dollar. Retention programs will limit churn and revenue loss from existing accounts.
Establish a systematic process to cultivate and grow high-potential accounts:
- Create a schedule to "touch" key accounts regularly.
- Build variable schedules based upon account potential (as opposed to the current value of the relationship).
- Develop relationship-building content that is applicable to the customer, which may include webinars, third-party whitepapers, or conferences.
Develop a strategy to manage marginal accounts (those that cannot be cost-effectively managed by the sales force or even an internal sales operation). Outsourcing is one option, but keep in mind the other fundamentals when dealing with these accounts:
- Continue to raise awareness of new products and services.
- Look for cross-sell and upsell opportunities.
- Overwhelm them with loving care. Don't overdo it -- but make sure they know you're there for them.
Resist the urge to be pennywise and pound foolish. Go with the best: the best salespeople, the best target markets, and the best lead-producing business development strategy. It always makes sense to go for the best, but now, more than ever, it's essential to the health of your business.
About the Author
Michael Falkson (email@example.com) is the founder and chief executive officer of eti Sales Support, a B2B lead generation and lead qualification service. He founded and chaired the South African Telemarketing Association until 1987, when he immigrated to the U.S. and established eti Sales Support to provide solutions to corporations wishing to maximize sales productivity. He works extensively with developing state of the art database systems applications (CRM/PRM), offering strategic tools and processes that help sales forces attain their maximum potential.
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