Challenger’s August Pulse survey finds sales leader optimism somewhat down from our findings in July, but we do find some evidence of an economic recovery as pipelines appear to be improving compared to what we found in April -at the global onset of COVID-19.

Download the infographic with the full survey results here. 

Overall sentiment

The decline in sentiment is pretty consistent across individuals, their organizations, and the business environment generally (5% to 8%). Sales leaders continue to be a little more optimistic about their own fortunes and only slightly less optimistic about their organizations’, but only a minority are confident in the future business environment. It’s said, “a recession is when your neighbor loses their job, a depression is when you lose yours”. These numbers show we’re in recession, not depression, territory.

Sentiment with regards to sales management practices

We continue to see a decline in confidence that sales organizations will be able to retain their best people. 72% were confident of retaining their best in June, but this has now steadily fallen to 56%: a potential long-term problem that will likely make a return to growth more difficult in 2021

On the plus side, organizations have clearly made headway in their ability to support their salespeople. It appears investments in the various support resources we studied in July are starting to prove beneficial. You can find these details here, in July’s pulse survey.

Expectations for Q4 2020

On average, respondents told us that they expect to deliver almost 1% less revenue in Q4 2020 than they did in the same quarter last year. Though a small overall reduction, the average hides considerable variation across firms. In our sample, we find that 36% expect to post good-to-great increases in revenue compared to 2019 (these are the lucky segments selling “essential” products). For a smaller percentage, 11%, life is steadier with no big difference in 2020 forecasted. The remainder of sales leaders (53%), however, expect to post sharply reduced revenues.

While our sample isn’t large enough to identify more definite trends, we did find respondents from the Health Care, Financial Services, High Tech, and Consumer Packaged Goods are forecasting solid growth. Respondents working for Transportation, Energy, Hospitality, Telecommunications , Business Services and Manufacturing firms, on the other hand, expect the largest declines in revenue. Overall, larger companies report doing better than smaller companies.

Business Priorities

Lukewarm sentiment with regards to the economic future combined with a wide variation in revenue performance starts to explain sales leaders’ business priorities for 2021. At the top of the list (and the percentage goes up to 57% for more senior respondents) is a focus rebuilding the pipeline, followed by increasing customer value. Sales leaders indicate wanting to do that through a combination of improving sales rep effectiveness and better sales operations/enablement.

This continued focus on rebuilding the pipeline tells us sales organizations are still testing value propositions they started to build in April (66% told us that they were working on new value propositions at that time).

Shifts in the Pipeline

Four months ago, we observed many sales pipelines nearly grind to a halt. Customers were making only necessary purchases and re-evaluating all existing agreements. Now, a few months later, we are seeing evidence of an uncertain, but emergent recovery:

  1. Customers are more willing to have conversations (although 44% of respondents still report a decline)
  2. A larger number of opportunities have started to enter the pipeline although a majority still report a decline
  3. Deal sizes seem to be stabilizing, with fewer sales leaders reporting declines
  4. A real positive trend comes with conversion rates. Given significant market uncertainty in April, many sales leaders (63%) expected conversion rates to fall, but for many the opposite has happened. The overall reduction in opportunities has sifted out non-serious buyers and many companies have unexpectedly seen an increase in conversion rates. Those expecting a decrease has fallen more than half.
  5. Another positive trend comes from cycle times. In April, the greatest number of sales leaders (41%) expected them to go up. But many experienced the opposite. Those customers still in the market have urgent needs and are willing to act decisively. Those expecting cycle times to increase has fallen by half.
  6. Sales leaders are clearly worried about future deal complexity, with a majority (51%) now expecting the role of finance to increase in the decision-making process. Greater involvement of Finance in purchasing seems here to stay.
  7. Similarly, we see no evidence that buying groups have shrunk in size: Instead we have good reason to believe the companies are now inviting more stakeholders to participate in due diligence than before. Due diligence processes tend to be sticky and so we believe that selling has only become more complicated.
AprilAugustAprilAugustAprilAugust
A decline (-5% or less)A decline (-5% or less)More or less the sameMore or less the sameAn increase (+5% or more)An increase (+5% or more)
Customer willingness to have conversations50%44%28%32%11%24%
Number of active opportunities entering the pipeline77%57%19%17%5%25%
Deal Size43%39%51%37%6%23%
Conversion Rate63%30%30%35%8%35%
Length of Sales Cycle37%43%22%37%41%20%
Involvement of Finance in buying decisions9%8%55%41%36%51%
Number of buyers involved9%7%68%45%22%48%

Summary

Overall, sales leaders are still wary about the future state of the economy. And they have good reason: While some respondents project solid growth in Q4, a larger number expect substantial contraction. Similarly, while the sales pipeline has now somewhat normalized, a majority still report a significant decline in the number of opportunities entering the pipeline. This, for most, is the primary problem to solve. As a consequence, business leaders are actively looking for sources of new business, they are working to do a better job of capturing value from existing customers and they are helping their sales people be as effective as possible selling into a far more complex environment.

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Spencer Wixom & Timur Hicyilmaz

Spencer is Senior Vice President of Marketing at Challenger, and has helped transform sales and marketing teams in some of the biggest and best companies in the world.

Timur has been conducting research for most of his career. He was part of the team that researched many of the original concepts behind Challenger. Mostly focused on trying to better understand how commercial organizations succeed, Timur has spent time working on everything from trying to understand consumer attitudes toward energy consumption to identifying best practices for hospital operations leaders. His passion is for trying to identify strategies that are more likely to deliver a desired outcome than any others.