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:
- Targeting
- 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.
Frank, No, you are not alone in thinking that, in some aspects, a recession is not all negative. What your article tells me, and I hope I’m not going to win an Olympic medal jumping to conclusions, is that you were either prepared for a recession or you saw it coming so that you could advise your client(s) on what to do when their customers find the recession to have a very negative affect on their businesses.
Where I agree with you is that while business is going good, more good, even better good, the tendency is to not change what is working. However, it is working not because the firm is doing, it is because everyone else is doing good and are not looking to change.
Change is, as the saying goes, is like death and taxes. It’s always with there. Death has its finality, taxes are inevitable, but change has many aspects that have a domino affect no matter if one is the generator of the change, the recipient of the change, or having to take a change and get others to accept the change. Change is, as you seem to feel, an opportunity to help others with the change(s) they are affected by but cannot control.
Friday I had a meeting with a client who is going through tough times and that between the snow in December and now the recession, it’s 50/50 if she can make it. That before things “tanked” as she terms it, she never looked at things that were not selling, she just started to go off in another direction, forgetting that what was not selling was not selling. To show her that by going in the direction she was going, she was blaming the weather and the economic situation as an excuse for not taking care of things that should have been taken care of.
She is not alone in using the recession to place the blame. It’s a common fact being repeated in the newspapers, on radio and tv, and in cocktail conversations every day,
I remember a corporate VIP say during a downturn in the economy many years ago, “When thing go bad, the good get going.” Maybe, I thought that had they been doing the “the good get going” part before things when bad, things would not be as bad as they were.
On of my mentors, my Uncle Daniel Zell, early in my business life, told me you have to be 70% ready with lots of ideas. You do not have to do anything with them until you see a need for one of them. Then polishing up the other 30% does not take so much time and effortt. My experience after practicing his lessons was that if I/we kept adding to each idea’s file, when we went to use one, it was not 70% ready but 80% or 85% ready. In the battle of reatailing, I’ve lots of war stories about this.
When I went into my consulting business, Attitudes for Selling, taking his philosophy and putting into a format my clients can understand was one of the first things I worked on. They are in the articles on my web site – two articles on change and 4 under the category of Doing More Business.” I have tried ,when times were better, to guide my clients to read these articles and adapt them into their business thinking and start working toward being 70% ready. Interesting, some of the hesitancy comes from “the cost of changing the computer system.”
One of the other problems is, I believe, is that firms look at dollar figures of sales, inventory, other categories. I, like you, have a product background. One of my other mentors had developed a hand-bookkeeping form(ats) – before the computer age – that showed me as the buyer and my sales staff the rate of sale for each item i.e. what I call a horizontal picture of the actual inventory, the rate of sale, replacement time etc. This way, if we were low, I could determine by the history if or how much should be ordered and the sale staff could see what we had and if we did not have enough, the approximate delivery time it would take to get replacements. Of course, this was a time when stores like ours had depth in some items in our an inventory as per the rate of sale dictated/suggested. Other than the cyclical ups and downs of usage, we could tell if the rate had slowed due to others reasons and then, maybe figure out why it had changed.
We had lots of variations of the forms we used going all the way for 3 x 5 cards to inventory cards that we also used for reordering by being able to make a photo copy and then do the multiplication to reflect the number of items.
Like Newton’s law, while for some the recession is good, for just as many or even more, it is not. The survival of the fittest is true for less than you and I would like.
Thanks for approaching the economic situation in a way that says that the hill is not as steep as some say it is.
Alan
Alan J. Zell, Ambassador of Selling, Attitudes for Selling
Recipient of the Murray Award for Marketing Excellence
Attitudes for Selling offers consulting, workshops and speaking on all business topics that affect sales.
I can be reached at [email protected] or through his web site http://www.sellingselling.com
You are more than right. The recession at least in part is because of our ignorance and lack of listening to customers. I just wrote a new post here at Customer Think that actually takes it beyond the old processes but asks sales people to rewrite their “scripts”.
@AxelS
You have drawn attention to a very pertinent point in your article that during normal period lot of negative or nonsystem methods flourish. Noone questions the sales staff because results are there. The roller of results hides all wrong processes by crushing all effects of the same.
In recession all such process deficiencies, personal empires get highlighted and affect sales. Those who adapt may survive and others may not, if they remain in ivory towers and believe that their “proven” personal methods are the best. Small details, small irritants and such details which are overlooked in normal times become differentiators during recession.
By using these differentiators to advantage, we may become stronger against recession and chances of survival will improve.
Jagdish