Three Sales Approaches for the New Year

(one not recommended)

By Tibor Shanto

For most sales people 2008 is all but over. There will be valiant attempts to close deals to hit quota, some less than valiant discounting, but most everything that you start now will likely close in 2009. For many sales professionals the process of planning for the new year should be all done but the fine tuning; and if you are a manager, director or higher, your plans are prepared for execution, and you are currently thinking about the latter half of 2009.

The difference this year is the levels of uncertainty in the economy, and if you are in Canada there is even more uncertainty due to politicking in Ottawa. The impact of the current climate is evident in the way many are looking at 2009 and their specific reaction and actions. Their plans reflect a special mix of hope, trepidation, and desired results all while boldly marching forward and leading in the face of the unknown.

Let’s look at three companies and how they and their sales leadership are preparing for 2009 given the current economy. The companies are as follows, one is an information/media/consultancy organization; the second is a transport company serving points across Canada, offering warehousing and logistics services; the third is a provider of broad based office supplies to companies of all sizes.

I recently had candid discussions with each as to their plans in 2009, their goals, challenges, and if they were planning to do things differently as a result of the current climate. As a business owner and chief sales officer of my company, I found it interesting to see how others were preparing for what will surely be a year of fun and frolic for sales professionals. What I found is that each was taking a different approach, driven by varying degrees of objective thinking and raw reactionary emotion.

At one extreme was the transport company, they are planning to grow aggressively in 2009. They see their competitors shrinking and trying to deal with three years of fluctuating fuel prices, declining markets, and a rising Canadian dollar. But they also see a market looking for cost reduction, and the ability to off load non-core activity as a means of increasing revenues and margins. My client, we’ll call him Tom, spent the summer stepping back from the business and looking at it from two extreme views. First, as a traditional transport executive, looking to see how he can improve the process of efficiently moving something from point A to B. He kept emphasizing that he wants to move things efficiently, not cheaply, as seems to be the focus of many of his competitors.

The second view he took was to see how companies view their transportation needs. In addition to having deep discussions with his customers, he began to talk to his suppliers. He found he could get them to talk about things in a much more open way than some customers, he was able to talk to more levels of those organizations, and as such gain a greater understanding of the terrain and opportunity. He took the information to his leadership team, and they began to examine how a more broad definition of transport and logistics connects to the businesses and processes of their market.

In the fall they began to market a number of “new” offerings that were sold on the basis of “cost take out” rather than transport. They are specifically focusing on services and the benefits of outsourcing rather than competing along the lines of the traditional transport sales. While the direction is not new, and others in the industry have set out to accomplish this, many of their competitors haven’t changed their sales process to suit the new realities in the market, they have not changed the targets for the new conversation, and they certainly haven’t changed their key talking points.

As a result of the new approach and conversations with both new and existing customer, Tom’s revenues have been growing at a slightly higher rate over the last five months (July to end of November), than they were in the first six months. They expect to continue this pace through 2009 and see capacity as more of an issue that getting business. This is not to say they are complacent and taking sales for granted, they have been strategically hiring from outside the industry, focusing on sales reps with a “solution selling” background, and those more accustomed to working for commission rather than base salary. They are also continuing to upgrade the skills of their sales team, while also reinventing all parts of the organization to meet the demands and image of their new success. Since their original budget was submitted in October, Tom has increased his forecast for 2009, based on the success of the new model, and is busily planning growth for 2010. He sees 2009 as a year of building a solid base that will accelerate growth in two ways. First the revenue growth from new client acquisition in 2009; second the positive impact as the over all economy turns around as we approach 2010.

The second company is a provider of a wide range of office supplies defined in a very broad way, including traditional office supplies, furniture, facility supplies, and computer and imaging supplies. A highly competitive market, they find themselves often fighting the pressure of commoditization. Facing serious challenges, they have set out a plan for modest growth in 2009, based on a two pronged approach, first they want to solidify relationships with existing clients, increasing revenues and margins, and considerably improving client retention in the process, Second they plan to selectively acquire competitive accounts; rather than going after everything in their competitors’ base, they are looking at high volume high value accounts that they feel they can grow in both revenues and margins, executing a similar process as they would with existing accounts. They feel that by selectively picking off these accounts, they will keep their competitors busy with low margin high demand, no return clients. We are engaged in discussions to help them with both ends of their initiative.

They have spent Q4 planning realignment based on assessment of the teams, ensuring that the right resources are focused on the right accounts and opportunities. The biggest change is teaming up people with off setting skills. Before the change they had individual reps in the territories, supported by inside CSR’s. They have increased the size of territories across the 48 states, but have teamed up hunters and gatherers to drive their plan. This also has allowed them to reduce the number of territories and not have to backfill open headcount. The inside teams continue to be part of the support, but the tag team approach in the field improves retention without sacrificing growth.

Their internal analysis sees a depressed market through most of 2009, with modest growth for their sector in 2010. Their plan is to grow by taking a proactive leadership stance. Having looked at their data from the last down turn early in the decade we are discussing a program that will help leverage a cut back in spending. My own experience has been that sellers who educate their clients can benefit from reduced budgets by focusing the discussion on vendor consolidation, advantages offered by a more efficient order and fulfilment flow, and a move to managed inventories and other value add for fee services. In the past, a 20% cut in spending by a client often meant every vendor being scaled back 20%; a more proactive approach based on the elements mentioned above can often lead to both savings by the client and the ability for a smart provider to stay whole or even grow at the expense of other vendors. While we may all have to live with”a shared wallet”, no one said it has to be an equal share.

we are looking forward to seeing if in fact this company will achieve the modest growth they are planning in an industry braced for declines.

The last example is a company that has adopted an approach I think of the ostrich, head in the sand not willing to adjust with the market. This media/info firm has done well in good markets, usually better than expected, and has managed in down markets, the most recent being the slow down after 9/11/2001. But while they did well in that period, well is defined as having avoided complete disaster, not growth. As the market came back they were able to quickly recover, and settle back in to their usual routine, of acquiring clients by offering initial discounts, and then selling more products at a discount to generate growth rather than selling more and bringing pricing into line. When they could no longer add product, they would offer services to support the product, again usually below scale. This worked well in an up economy, but has serious issues in a down market like the one we are in now. Again, while there was a hick up in 2002, it was short lived and did not bring enough light to expose the risk in their market and sales reality. This was because the budgets for this type of offering usually fall into the “lagging indicator” category, and a quick recovery usually leaves this under the radar.

The reality is a simple one that has been manageable over the last 15 or so years based on the short lived downturns. The budgets most companies allocate to purchases on which the company survived were usual discretionary, or at time for some elements a sliver higher, but never mission critical. This was something that the long standing VP of Sales has failed to address in good times and bad markets. When orders were coming in, there was little examination as to sustainability, when things slow down, they would introduce new variations on the product, sell a bit more, give away some services and things hummed along. Very short tem transaction oriented, despite talking the long term solutions story.

The organization as a whole has developed a comfort for primarily dealing with users of their service, people who process rather than rely on the output. Traditionally these people have had little or no say in budgets, at best which vendors they would allocate portions of their predetermined (by others) budgets. Determining the size of budget and which spend was discretionary or mission critical is in the hands of people higher up the sales continuum. In other words, the people they dealt with had power to spend discretionary money, but no power to create funds, or any alternatives when discretionary funds were withheld. The team had repeatedly failed to use good times, when their products and service had positive visibility as an opportunity to establish relationship further up in the continuum. Funding decisions were made with little awareness of their products’ and services’ contribution, awareness was limited to those who were tasked with spending what funds were made available by others.

With consumer spending down, the financial service sector in retreat, budget freezes and cut backs in most sectors, discretionary budgets are a thing of the past, and mission critical is being taken to a high standard of scrutiny; an environment that is toxic for companies like the one in the picture here. Some specialized providers were taking advantage of better times, worked to change their profiles and relationships, are now managing to survive, but they too are facing hard times and making concessions. Those that remained in the discretionary class are being decimated and left out in the cold.

Even as we spoke last month, the focus was on closing the year strong, and facing next year when it come. Planning was limited to reassigning accounts based on personality and seniority rather than analysis of the market. No time to do a lot of planning now, we’ll sot that out late December and first part of January.

As mentioned earlier, in the past when downturns were short lived and not as severe, this company was able to take the blow and look to the future. This downturn has been steeper and looks like it will last well into next year impacting spending not only for 2009 but also 2010 and ten, as mentioned above, this product is usually a lagging indicator. The real impact coming at renewal time, this is usually November and December when over 50% of accounts are renewed or in the case of this year not renewed. If the pessimism lasts in to Q3 of next year, budgets again will not be allocated for 2010, and there will be no new renewals for 2010. Recovery for this type of company is likely to happen 3 – 9 months after a real upturn in the economy, corporate leaders will need to have enough confidence to turn the discretionary tap back on.

All hope is not lost, a proactive campaign targeting the right people in the right accounts could help offset some of the funds that have been lost forever. But a “this too will pass, we’ll just hold the line on spending, cut back travel and entertainment etc.” approach is not the way to go. That is why we refer to this strategy as the ostrich.

Each of these companies has staked out a strategy, and is about to implement them. The strategies are realistically portable, that is, anyone of the three can adopt the other’s approach and likely have similar results. The key difference is the outlook and foresight of the sales leadership, their ability to set out a strategy and execute. But most importantly, the willingness to incorporate reality and a willingness to adapt to new opportunities, a willingness to lead in the face of challenges rather than guard the status quo and hope that tomorrow will be a better version of yesterday.

Have a very successful and prosperous 2009.

What's in Your Pipeline?

Download our Above the Pipe: Part One “Three Must Haves for Prospecting Success”

This e-mail address is being protected from spam bots, you need JavaScript enabled to view it is a Principal with Renbor Sales Solutions Inc., and find out how he has helped dozens of organization to fill their pipeline with real prospects - - driving real revenue.

You can also read the blog edition of The Pipeline at www.sellbetter.ca/blog. For more information on helping your team sell better, write to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , or call 416 671-3555.