Ten sales strategies for a down market

After years of growth, distributors must now become more efficient and aggressive to survive and grow their business

by Carlos Quintero

In today’s market, everyone wants to know, are you going to make your number?

Recession, economic concerns, a slowdown in demand; clearly, we are in the midst of change. The agile organization will fare the best during today’s challenging times. After many years of growth, organizations are having to focus and become more efficient and aggressive in multiple areas in order to survive and grow their business.

To gain insight on how sales leaders are responding to today’s challenges, we tracked down sales executives from 14 national and regional companies to see what they are doing to rev up their company’s performance. These companies included manufacturers, distributors and wholesalers. Our objective was to learn and share insights that might be helpful to executives in all industries.

In nearly all cases, we spoke with the organization’s senior sales officer, veterans who manage multi-million dollar lines of businesses. They agreed to be interviewed provided we maintained confidentiality. Therefore, while we quote those interviewed, the quotes are provided anonymously.

Clearly, these executives have much at stake to keep their companies moving forward. Prior to the study, we assumed these executives might be “circling their wagons,” tightening expenses, and doing everything possible to reduce the impact of a drop in demand.

WARNING: Some of the strategies being used by these executives are refreshingly counterintuitive.

First, the big question: How have the markets and economic conditions impacted these firms? The answers are quite varied. Generally, there has been impact, sometimes significant, with volume dropping as much as 25 percent. However, some have seen their sales increase appreciably by focusing on new markets, and introducing new products and services.

From a global perspective, companies that are well positioned internationally are not experiencing the same level of decline. One company did ask all of its employees to take a cut in pay, but that is the exception.

The following represents a synthesis of the key strategies these senior executives communicated. While no one in the group is doing all of them, they do reflect where effort is being applied. We suggest you study them and reflect on them, but more importantly, act on those that are most relevant to your business.

1. Be aggressive
The most pervasive strategy shared by executives is that this is the time to be aggressive. This is the time to be well-positioned no matter what economic winds may be blowing.

Taking share and stimulating a spirit of attack is the strategy many of these sales leaders are taking during these times. The entire organization, they say, needs to be focused even more passionately on growth. “Do not accept mediocrity” is a resounding message.

Other messages:
“Earthquakes do not matter. Do not concede performance to a poor economy.”

“Our whole strategy as a company is to ensure we are well positioned no matter what the economic environment brings us.”

2. Protect your turf
The second most important strategy is protecting your position with those customers where you are entrenched. Many are providing customers with additional enhancements such as better terms, special programs and value offerings.

Some are conducting detailed business reviews to align their own strategies more closely with the customer’s growth efforts, and in turn, create an even stronger level of loyalty and interdependence.

Others are providing value by presenting their customers with a menu of available tactics to achieve the growth the customer seeks. Some are customizing menus to the channel being served – the more a program is customized to the customer, the better it is received.

“We are doing our best to provide an excellent line of opening price-point products among all categories and making sure inventories are in place to satisfy demand.”

3. Engage and leverage the sales force
Many believe these times represent an ideal occasion to re-engage the sales force. While some are using the time to re-examine the caliber of their talent, most are more provocative.

Many are giving the sales force a raise by introducing higher and more lucrative incentives for new account acquisitions; others are adding more salespeople in the effort to penetrate and gain share.
Most companies are placing pressure on poor performers. Dead weight will sink the ship in this climate.

Some are aggressively expanding the inside sales channel to mine where the direct sales organization is not able to focus.

“We are transferring customers ordering $12,000 or less to the inside sales organization. We are beefing up inside sales and have created seven different customer stratifications.”

4. Launch new products and channels
A common strategy being applied to open up opportunities in new or adjacent channels is to introduce innovative new products.

Some companies commit to stringent competitive analysis in order to prevent market share erosion.

Some are expanding or building aggressive Internet strategies to reach segments not traditionally covered by the sales force.

All are trying their best to focus on value and not on price.

“We are introducing multiple new lines each year, with each expected to generate an additional $1 million.”

5. Sustain promotional activity
Many firms are promoting more heavily and more aggressively; some are not doing anything special and, in fact, are even cutting back on promotions to protect margins. Many are changing their customer incentives so they are tied to incremental growth.

Requesting comprehensive product line reviews with customers is a proactive strategy by some to ensure the best product mix exists.

“We are paying a bounty for new customers. Commissions are 15 percent on new orders with new customers versus 5 percent on existing business.”

6. Challenge sales management
Few appear to be tapping into improving the productivity of the sales manager directly.

One organization is truly serious about improving the effectiveness of their sales teams nationally by appointing seven directors of sales force effectiveness.

Other organizations that are demonstrating leadership in sales management followed a variety of tactics to improve performance. They are:

• Helping their sales leaders coach more effectively.

• Keeping senior executives on the road, in front of the company’s top customers.

• Elevating the tracking of activity metrics and introducing score cards to focus effort and build accountability.

• Paying bonuses based on achievement of special promotions and objectives.

“We need to do a better job of sitting down with the reps on a formal basis and making sure they execute what they say they would do.”

“We have a once-a-month sanctioned office day so that managers can turn off e-mail so they can access and analyze the sales data. This provides more meaningful interaction between the managers and the salespeople.”

7. Develop accountability via better planning and execution
Companies that are serious about execution at the field level indicate this is one of their strongest strategies to drive growth. They challenge each salesperson to focus on seeking new opportunities.

Some are making the planning process more intense. The best establish accountability for developing the plan and working the plan.

“The strategy with existing and new customers is to increase sales coverage and frequency of visits, making our company a top-of-mind supplier with all customers.”

“We are now performing four blitzes a year to acquire new customers.”

8. Accelerate communications
Most leaders are staying in front of their salespeople and customers more actively than before.

Monthly call-ins and Web-based communications, frequent conference calls, and active contact with the entire customer base through product bulletins and frequency of newsletters seems to be the rule.

In all cases, the spirit is to maintain a positive disposition.

“We are providing data that supplies clarity around accomplishments of key metrics. Data enables sales and management to monitor individual and customer performance in a dynamic way.”

9. Focus on education
While many organizations that participated were not investing heavily in training now, a few see this slowdown as the best time to make education a priority investment in helping the salesperson differentiate himself/herself with customers.

Others see education now as the basis for building long-term employee loyalty and reaffirming their company’s commitment to the front line.

“We see investing in our people as one of our best strategies. It is our people’s ability to succeed, to deliver on their promises, and to solidify their presence with our top customers that will make the difference.”

10. Focus on cost management (when appropriate)
Everyone is conscious about spending and cutting costs where needed. Many are being careful, as too much adjustment will impact long-term momentum.

Substituting other means of communication – fewer meetings and travel and more online conferences – appears to be a common strategy.

“We are being careful everywhere. While we are cutting back, it is primarily in those areas where there is room for alternatives.”

We trust you have found these insights helpful. Operating in an environment of economic contraction magnifies errors and places a premium on operating efficiently and effectively. Paying attention to all details in the sales and marketing process will make a big difference in these times. Sharing and celebrating successes with your sales organization is essential.

Dust off everything you once did to become successful, because you’ll need it once again today. Those that do will reap rewards; those that don’t will be challenged to sustain their presence in the market.

This article originally appeared in the July/August 2008 issue of Progressive Distributor. Copyright 2008.

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