Call me weird, sick, strange and demented, but I am perhaps the sole person on the planet that finds good in a recession. No, regardless of what you’re thinking, I’m not some Hannibal Lector-type psychopath scribbling this from the comfort and security of my parent’s basement. And, make no mistake, I really do hate the human pain and suffering that comes along with the whole process.
But still, I like a good recession. Before you toss this page aside and chalk up another one for the loony farm, let me tell you exactly why I like this little phenomenon.
I am a consultant to wholesale distributors. These are the very guys who supply everything from industrial automation to horticulture products. When you hear the American axiom, “Eliminate the middle man and save,” these are the very guys—the middle men. And their demise has been predicted since Eisenhower sped down the first interstate.
During the internet boom days of the 1990’s, the word disintermediation was proclaimed from every mountain top. Yet these guys survive. They change, morph, transmute and they remain relevant to customers and suppliers. But change isn’t linear. It comes in spurts. It’s necessary, good and refreshing.
Recessions Can Drive Worthwhile Change
It’s not survival of the fittest or even of the most powerful. Rather, survival belongs to those most able to adapt. Adapt as your environment shifts and you will survive.
Here lies the problem. It takes a manager with extraordinary vision and skill to drive change during excellent economic times. During great business conditions, most leaders are too busy congratulating themselves on their great business year—to consider making changes. “If it ain’t broke don’t fix it.” becomes “It’s working great, we must be geniuses.”
Survival belongs to those most able to adapt.
For those who want to drive change, one of the biggest draw backs comes from their own people and suppliers. Sales people in particular can be a major stumbling block. And, it comes not from the newbie’s but from some of the top guys. They have been out in the trenches for 10, 15 or maybe 25 years and they resist change. Generally they are the guys—this is generic non-sex specific Midwestern term—who bring in the orders. At the same time these are the ones most resistant to changing the way they do business.
Here is a quick list of symptoms of their lack of conformance in any new sales process:
- Contact information is not regularly loaded into the corporate CRM system
- Call and activity reporting is haphazard at best
- Resistant to involving others in their accounts
- Refusal to quickly introduce new product offerings
- Protective of their existing accounts
- Unwilling to try new sales initiatives
Many managers resort to creating excuses for these people. Terms like “company culture,” “entrepreneurial sales approach” and “not micro managed” spew forth to disguise the real issue. During good economic times, the results seem to justify the “spewage.” Deep down we all know this probably isn’t a good thing. But hey, this group is bringing in the orders—and orders are what it’s all about right? The results of this un-bridled bunch are mostly minimized during good times.
Lord forbid one of the establish guys leaves the team—death, illness or a better offer from someone else. Because when they leave, you often find that they were the only one who knew their accounts, especially the secondary buying influencers that really make the difference.
New salespeople come on board the team and they follow the process, often generating substantial profit dollars faster and with greater efficiency then these old hats. So, in your heart you know your process works.
The question becomes: How do I teach old dogs new tricks?
A recession provides a good solid excuse to insist that all sales people follow the process. It’s called disruptive change—conditions are bad enough that changes are justified. And, with the right kind of mentoring, the changes will become the true new standard.
Here is a short list of processes that need to be explored:
- Handling of leads
- Actionable Analysis
- Customer Profit Contribution
Recessions Can Help You Gain Market Share
Track successful companies and you will find they gain market share during every down turn. At first this seems counter intuitive. The same number of competitors are slugging away for a share of a smaller pie. What changes?
Risk aversion and the customer’s perception of value change. As a young computer school cowboy—fresh out of college—I heard the term, “Nobody gets fired for buying IBM.” The point: reduce risk by buying from the long time industry leader. During poor economic times, customers look for partners who will “be there for the duration.”
Unfortunately many organizations don’t pick up on the “be there” factor. Expense cuts drive some of the behavior. Too many of us tie spending money with being there. But “being there” needn’t be expensive. Let me illustrate the point.
During poor economic times, customers look for partners who will “be there for the duration.”
The last big downturn hit one of my clients hard. Cash was scarce, entertainment was out. But, they wanted to send the right message to their target customers, so they decided to invite target customers into their facility to meet their team. The salesperson hosted a meeting with the as many contacts from the customer as possible. The President, VP of Sales, Warehouse Manager, Customer Service and anyone else who affected the customer came to the meeting. The meeting was homespun, informal, chatty and simple. The President thanked them for their business, said they were important to the company and asked how they could be of better service. The rest of the team took notes or commented on the spot. These meetings worked because everyone else was too busy battening down hatches to care about the customer.
In ongoing business relationships, most sales organizations scale back the attention they give to customers whose purchasing levels drop. Salespeople stop by less often and interaction with customer service drops off. The key to growing market share is to let customers know you “are there.” If you are the dominant supplier, you keep your business. If a competitor is dominant, you can grow your market share.
Recessions Offer Opportunities in Related Businesses
Around every core business there are related businesses. You need only ask, what “other stuff” are my customers buying? If you can locate products closely related to your own, you can grow your business. Here’s a quick example. If you sell electrical products, it makes sense that your customers are also buying:
- The tools required to make electrical connections
- Personal protective equipment for use by electricians
- Signage pertinent to electrical products
- Training (some electrical stuff is complicated)
- Certification (safety, calibration and other)
- Remanufacturing services
In most of the instances, these products are probably purchased from a niche-based provider who has fewer resources to spend on customer service than your organization. All of these present opportunities for growth in a down economy.
If you happen to be working in an industrially oriented business, you can leverage your presence in the administrative world. Purchasing departments tell us maintaining a relationship with a short line supplier is very, very costly. Your value to the customer increases along with your order size.
Bonus: Recessions Drive Your Leadership Growth
I said there were three things I liked about recessions—but there is one more point. This one isn’t a natural. It depends on you and it depends on your situation.
Leadership skills are born during recessions. Oh, I know it’s born all the time, but I believe the birth rate spikes during bad economic times.
It is never easy to be a successful sales manager. There are hundreds of little details—recruiting, developing, tweaking, managing and promoting your team come to mind. Plus there are at least a zillion customer-oriented details churning around in those overworked frontal lobes. In good economic times you have easy resources. Salesguy A needs product training—shoot him out to Cleveland for a week. Salesguy B retires—easy just call Prudence the recruiter in Chicago. No sweat. Need to tweak a salary to solve a problem, there’s money.
But when the economy tightens, sales managers are like Robinson Crusoe: no resources, no lifeline; just raw nerves and inner strength. During good times a nice guy who doesn’t quite “get it” gets 100 second chances. And the sales manager lives to tell about it. Recessions force one tough decision after another. Recessions make sales managers dig deep inside for answers. Often times this digging exposes something shiny—a new leader is born.
A Parting Thought
Recessions have beginnings and ends. Our recession started about 9 months ago. If we forget this little gem, we will make decisions we learn to hate. Of all the parts of a recession, I like the end best. But that’s a different article.