Oct 31, 2022 • Podcast

What are the benefits of a recession? Part Two

Paul continues his three-part series on the benefits of a recession with three more reasons why recessions can be good for you, your company, and your customers.

Show Notes

Recessions will increase the number of decision makers. Why is that a good thing?

When your competitors get scared during tough times and cut marketing budgets and sales staff, that is a great opportunity for you.

While your competitor slows their selling activity during a recession, increase your selling activity level by 25% and double your coverage.

Your attitude during tough times will either encourage you to move forward, or it’s going to hold you back. Which will it be?

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What are the benefits of a recession? Part Two

Well, today we are going to continue this three-part series on how recessions can be a good thing for you, for your company, and even for your customers in some cases. So, last time we got together, we talked about the cost-cutting opportunities, we talked about easing some competitive pressure; we also talked about gaining access to high-level decision makers. In today’s episode, I’m going to give you three more reasons why recessions can actually be good.

Now, before we get into that, pick up your copy of Selling Through Tough Times. This is the original go-to guide on how to build mental resilience and how to compete more profitably during any downturn. Guys, we’re heading into some tough times. Although we can feel the pinch right now, chances are, things could get a little bit worse. Believe me, three to six months from now, you don’t want to look back on this time and say, “Man, I wish I would’ve read that book.” Pick up your copy of Selling Through Tough Times. It’s available wherever you get your books.

Okay. Let’s get into it. So, let’s talk about some of the benefits of a recession. One thing I wanted to highlight is that recessions are going to increase the number of decision makers. That’s right. You may be thinking, “Paul, why is that a good thing? Why is it good to have more people involved?” Well, here’s the deal. We know that John F. Kennedy famously said that success has many parents, and failure is an orphan, so, during these tough times, you’re likely to have more decision makers getting involved in the decision-making process.

Here’s why that’s a good thing. Number one, each new relationship you develop within your customer or your prospect is an opportunity to grow your business. In fact, that’s one thing we encourage salespeople is not just to focus on a number of product lines that you’re selling into companies, focus on the number of relationships you’re building. Remember, each new person that you meet has a unique need. They may have some information. They may be able to help you get into other departments, or share information about a problem that they’re experiencing. And every time you meet someone new, it creates an opportunity to grow your business. So let’s approach this opportunity with that attitude.

Now, another reason that it’s a good thing that more decision makers are getting involved is that you are now able to gain access to other decision makers that you normally do not have access to. Let me give you an example of this. I remember, back in the Great Recession, so back in ‘08, ‘09, when I was selling in the construction industry, I remember that many of my decision makers, their spending threshold was lowered. So, whereas they used to be able to spend $10,000 without gaining approval, that number would now get down to $5,000. So here’s what would happen. Anytime we put together a project that was more than that $5,000 threshold, I now had the opportunity to meet with a higher-level decision maker. Remember, the relationships you build during tough times will last longer than the tough time itself. So I actually came out of there better positioned in the long run because I now was able to build those relationships with high-level decision makers.

Another thing to remember, when you have more decision makers involved in the process, they are also likely to get there earlier on in the process. That’s important to note. Think about it. So, let’s say pre-tough time, you would have three or four people involved in the process. And as you get close to the finish line, then maybe an engineer or a technical influencer may get involved, or procurement may get involved a little bit later. They’re getting involved later and they’re giving you objections later in the process. Well, now that you have more decision makers getting involved, it means you can field those objections earlier in the customer’s buying path. And by addressing those concerns and objectives earlier in the process, it’s going to help you get across that finish line quicker. So keep that in mind. That’s also a good thing.

Now, since more people are going to be involved in the process, I’m going to leave you with one tip on managing multiple decision makers. Your goal as a salesperson is to generate consensus around what your decision makers really need. The sooner you can generate that consensus among the group, the quicker you can move the process forward. So again, hey, tough times are good.

Now, the second reason that recessions can be a good thing, that we’re going to highlight today, is that recessions will create market-share opportunities. This is so important to realize. Remember, during tough times, your competition is going to do crazy things, sometimes stupid things, one of which is cutting their salespeople.

I remember, during the pandemic, I was working with one of my clients and I asked them, I said, “What are some of the interesting things your competition is doing during these tough times?” And here’s what my client said. They said, “You’re not going to believe this. One of our competitors is actually cutting half of their sales force.” Think about [that]. One of their toughest competitors was cutting out the revenue generators within the organization, the rainmakers, the people that are keeping the company going, they cut half of them. Think about the opportunity that created for this competitor—for my client. So, your competition is going to do crazy things. Some of them may cut salespeople, which is going to create a fertile ground for you to go in there and take over projects, to build new relationships.

Now, another thing to remember during tough times, one of the first things that your competitors will cut is their marketing budget. They reduce the amount of money they’re spending on advertisements, trade shows, anything that falls into that marketing realm, they tend to cut that budget. And it’s because some of these decision makers, these high-level thinkers, they have trouble seeing the value. Well, their ignorance is your opportunity, because here’s what will happen. During tough times, not only can you keep your advertising dollars there and focused on what’s important to your customers, but you can also increase the amount of advertising. And what you’re doing here, think about it, you are now investing your dollars and you’re getting a greater return because it’s costing less money per impression. So when you’re competition gets scared again, that’s an opportunity for you.

Now, one thing I did notice—and this is from anecdotally just with salespeople and also there was a purchasing manager’s index study that found—another reason why recessions create market-share opportunities is because salespeople will reduce their selling activity during a recession. We found research that shows that salespeople will reduce their selling activity to 62% of what they normally do during good times. So if they, I don’t know, make a hundred sales calls per week, during tough times, they’re going to make 62 calls per week. So they go from 100 to 62. Here’s what that means. If you not only maintain your current activity level, but let’s say you increase it by 25%, you can effectively double your coverage vis-a-vis the competition.

Think about it. Let’s stick with that 100-call benchmark. That’s the industry norm. Your competitors are calling it 62. Sixty-two calls per week. You bump yours up to 125, you have basically double your coverage. So increase your selling activity by 25%. That is critical. Again, tough times are good. You have this opportunity to increase your activity, to get better, to work harder, and what you do during tough times is going to carry you even further when good times get here again.

One final thought here on why recessions are good. Recessions will stabilize shortages. For the past year and a half/two years, I have heard salespeople and leaders complain about, “Wow, we’ve got so much demand. We’re not able to take care of our customers. Our customer-service levels are dropping. Our customers are ticked off at us. We can’t find product.” Well guess what? During a recession, that will stabilize. As demand slows down, supply chains will stabilize or normalize. And again, that will give you an opportunity to increase your service levels, to go back and deliver the kind of experience that your customers have come to expect.

You know, during the past six months, I had a client of mine—. We were on a coaching call, and the salesperson said, “I spent two years trying to win this opportunity.” Two years. Now, you know what that’s like. You put that time, that energy, that effort. You make the calls, you do the work, and after two years, he finally won the business. But the problem was, their company did not have the capacity to actually support that customer. So he had to refuse that order. He had to tell the prospect, “Look I would love to work with you, but we just don’t have the capacity.” Do you know how frustrating that is? Some of you do, listening to this podcast. It’s frustrating. I get it. Well, during recessions, things will begin to normalize. Your operations team will get a little bit of relief. And, believe me, when you’re able to support your customers better, it’s going to make you better in the long run.

So, everyone, just a reminder, your attitude during tough times is either going to encourage you to move forward or it’s going to hold you back. If you can change the way you view a recession, you can change everything. The key is, how do you want to view this recession? How you view it will determine how far you go.

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