As the world confronts the human and economic cost of COVID-19, sales leaders must focus on a strategy to survive and position their businesses for success in 2021. Our Five Imperatives series, based on the five steps we feel sales leaders must take now to stay ahead of the curve, details our recommendations and perspectives on how to thrive, even in uncertainty. Part One is about strategies and ideas to consider when it comes to talent management during crisis.
IMPERATIVE ONE: ENGAGE YOUR HIGHEST PERFORMERS NOW
Howard Macmillan was elected Prime Minister of the UK in 1957. The man knew a bit about adversity. He was wounded at the Somme in WWI and served in Churchill’s government during WWII. Someone supposedly asked him at the outset of his tenure what risks his government faced. His response: “Events, dear boy, events…”.
And so goes the way of business today. Leave it to events, a particularly big event, to change things mighty fast, even for those who think they’ve seen everything. Coronavirus is exacting tremendous human and economic cost. Challenger’s April 1 pulse survey of 139 B2B commercial leaders showed respondents expect Q2 revenue to be approximately half of what they originally forecasted. Companies are scrambling to reinforce parts of the business that still generate profit, while trying to mitigate a host of adverse effects. CFOs are implementing cost containment measures, and sales leaders must put in place a new revenue plan; a plan that – let’s hope – drives some good business in 2020, but likely is more forward looking to 2021.
Any hope for success in 2020 and a strong comeback in 2021 depends on the organization’s continued engagement of high performing sellers – those responsible for a good percentage of revenue. All sellers have difficult conversations ahead. They must sell to buyers whose CFOs ruthlessly prioritize spend and defer paying bills. Keeping sellers motivated, feeling safe, engaged, and performing is a critical priority.
Companies should focus on 3 key strategies, centered around the sales leader, to engage high performers and provide them a sense of control:
1. Communicate Expectations
“Good communication is just as stimulating as black coffee, and just as hard to sleep after.” Anne Morrow Lindbergh
Advocate to the C-Suite
Every sales leader in a difficult environment must advocate for their best talent. CFOs are now, or soon will be, looking to cut costs. This can easily include talent. For example, PwC’s March 30 pulse survey of CFOs found that 67% have already put cost containment measures in place. Heads of sales cannot predict exactly how business will turn out, but they can, and should, look at exposure by industry, by segment, and by geography (as shown below) and educate/promote/sell other executives on the talent needed to seize opportunity:
Illustrative heatmap of business (color-coding is speculative based on current observations)
A first step should be mapping opportunity in existing accounts – highlighting pockets where selling is possible and mapping high-performer talent to capture that demand. Communicating nuance here is critical. For example, you could communicate a need to use talent to chase opportunity in an existing travel-related account and get rebuffed. But if you highlight, counter to all other commercial travel, that demand for private jet services reports no spare capacity and you plan to sell specifically to that space, you can make your point.
You may also want to consider doing this work vis-à-vis competitors. You’ll find that now is a perfect time to take market share when customers are open to new ideas (and, relatedly, a new source for those ideas). This gives you an opportunity to convince senior executives of the value of key talent for capturing these opportunities.
Having this detailed conversation early with your CFO may not prevent all cuts, but it can show strategic thinking, proactive planning, and can make a case for retaining the people you need the most. It may also allow you, as a sales leader, to have a much-needed role in critical C-Suite discussions.
Communicate with Sellers
More than ever, sales employees are looking for clear direction. You won’t need to know everything to communicate an initial vision, but you can begin based on what you currently know and can reasonably expect. The following model provides a useful perspective on how to structure this initial communication to the team:
It might be tempting to skip the Why, but we recommend spending time on the background and purpose of what you’re trying to accomplish – even if outcomes are uncertain. Reinforcing the meaning of the work can have a dramatic effect on individual engagement and make the difference between success and failure. Remember Nietzsche: “He who has a why to live can bear almost any how.”
And speaking of How, salespeople are hungry for details. This is where you describe – as much as allowed – the obstacles in the business and broader economic environment, and how you expect to address each one. The plan won’t be perfect, but at least it exists.
For action to be the next step, this communication must also involve the What. This is where you set action steps with measurable KPIs. These KPIs will depend on the nature of each business but should always involve a mixture of activity and outcome metrics (sampled in the chart below):
|Sample Activity Metrics||Sample Outcome Metrics|
|Contact every existing customer to validate current expectations||80% of existing customers requirements met|
|Identify whether current buyer still has purchase authority||100% buyer verification|
|Contact 10 competitor accounts per rep to identify if requirements have changed||75% check-in success rate|
Working virtually, with today’s distractions, makes it harder than usual to capture and keep a seller’s attention. A communication that typically takes 3 iterations to sink in might take repeating a few more times.
Finally, the tone of communication is as important as the content. Given the severity of the moment, sales leaders are likely to be more directive than usual. While this can be appropriate by degree, leaders will do well to remember that many of their employees have communication styles different than their own. Some will respond to facts and figures, some need clear direction, others will be looking for a sense of human connection and for you to share what the plans mean to you personally, to the broader business, and to the community.
The Bolton model remains a good rule of thumb for guiding a communication strategy. In team meetings, consider the style of the team and speak to that, flexing a bit here and there to other modes. In meetings with individuals, diagnose the style of the individual in advance and speak directly to it throughout the interaction.
2. Rethink Incentives
“An incentive is a bullet, a key: an often tiny object with astonishing power to change a situation.” Steven Levitt – Freakonomics
As CFOs ruthlessly prioritize bills and decide which vendors to pay and which not to pay, it will be significantly harder to compensate high performers as you have previously. When this is the case, communicating quickly and clearly a reasonable plan for compensation is crucial to provide your best sellers a sense of clarity around where they stand.
There is no perfect incentive plan in this situation. The right move may depend on your company’s location (government employment laws) and industry (common rates of fixed and variable pay). But ultimately, Challenger recommends a few principles we think are important to follow:
Move to Reset Targets: Companies should reset previous 2020 targets and compensation plans and issue a new plan based on accounting for a period of deep uncertainty (Q2 2020 and perhaps longer) and a different look forward to 2021. Reserve the right to learn as we climb out and expect only some things will go back to “normal”.
Keep Sellers (Somewhat) Whole: This is done either by lowering quotas temporarily with flexibility to move them as we monitor performance or providing something like a recoverable draw (essentially an advance on future commission).
Be Careful With SPIFS: Despite their widespread use, as seen in our chart below, we recommend that sales leaders be careful about using add-ons/SPIFs that are tied to specific activities up funnel from closed business. Unless you are confident that yield rates and cycle times are holding steady in your sales motion, these incentives could end up costing more than they contribute and result in cash flow pain for the broader organization.
Recent Challenger research of sales leaders (shown below) tells an interesting story. Although these leaders demonstrate serious concern over revenue and budget in 2020 and expect a significant drop in Q2 revenue, few have taken bold action to adjust expectations with their sales forces. We should all consider the message this sends to high performers. If these valuable contributors don’t see a path to success in your organization, there are other organizations open to hiring them to weather the storm. Where you don’t want to be when the market begins to recover is spending your time recruiting talent. You want that talent already in place and ready to perform.
3. Forge Meaningful Digital Connections
“The Business of business is relationships; the business of life is human connection.” Robin Sharma
Most B2B sales forces are intensely social: if they aren’t in-front of customers, they’re with their managers or colleagues, going over current pursuits and refining their game. For the moment, this sociability has taken a very different form, and companies are looking for new ways to generate the same kind of energy that comes from bringing people together.
First-line managers likely remain the greatest influence on a salesperson’s intent to stay, their engagement, and their discretionary effort. Some managers are accustomed to managing distributed teams, others are not. Those managing remotely for the first time will need practical guidance fast on how to make the situation work.
Based on our observation of clients, and having reviewed the vast amount of material recently published, Challenger recommends the following principles for managers to engage virtually:
Use Video: People may forget they have a camera aimed at their forehead (creating some awkward moments) – and most quarantine haircuts are of a homemade variety. But video is the best tool for maintaining focus and giving broader clues into the general feelings of the team. Having to use video on team meetings will confirm whether employees have the internet bandwidth needed to use video with customers or otherwise do their job. You can address tech issues before they become big sources of frustration.
Expect Participation: We at Challenger have found good results from making a list of participants in advance of a call, and then keeping a running tally of participation to make sure nobody is left out. Obviously, this will be harder with large groups, but even small group meetings can be controlled by a few dominant players. Managers should assign agenda items to participants and expect those with agenda items to share their screens. Call on individuals by name for thoughts and comment. Participants will learn quickly about the dangers of multi-tasking when hit flat-footed with a question.
Do a Daily Check-In: The daily “stand-up” is a time-tested method from the world of software development, where teams come together for a short period and everybody is asked to answer the following questions:
- What did I work on yesterday?
- What will you work on today?
- Is there anything that’s getting in my way?
The routine may feel awkward at first, but this helps push the team from expressing generalities and gives everybody the opportunity to say their piece, get some help if needed, and promote the positive contributions they are making.
Connecting digitally requires managers to bring more energy than they might otherwise. A stage director will tell the actors on the stage to “act for the back row”. The further away the audience, the more larger-than-life the performance needs to be to feel normal to those watching it. For a sales manager conducting a virtual meeting, this might mean changing your voice and being more animated. We recommend preparing more questions than you may have before. All the common platforms have extra features such as the ability to chat with participants, conduct polls, use whiteboards, and more. Make the best use of all of these resources to keep people as physically involved as possible. Any additional energy helps to compensate for a new, more distant experience.
If you want to weather this storm with your best performers still in the boat, now is a time for communication that goes both up and down in the organization; for setting reasonable expectations to make people feel as whole as possible; and for virtual connection. If you can’t make things perfect for your high performers, or even reasonably good, at least be transparent, and show empathy and effort. These are tough days and we have tough days ahead; salespeople will give leaders a lot of points for trying if it’s clear that their hearts are in the right place. If you’d like to have further conversation with Challenger about these ideas, please fill out the form below.