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 Two details insights on evolving your account plans, including recommendations on account prioritization and seller coaching.
IMPERATIVE TWO: RETHINK ACCOUNT PLANS
Many have heard the famous story of Michael Dell in high school. He sold subscriptions for a local newspaper. Rather than knock every door and sell to every family, Dell figured that people just married or who those who had just purchased new homes would be most interested in a newspaper subscription. He checked courthouse records for newly married couples, and scanned listings for new home purchases. The strategy paid off. He made $18,000 in one year. He wrote about it for an assignment in history class. His teacher didn’t believe the figure—that would mean he made more than she did.
In the same way, the complexities and uncertainties in 2020 means that sellers will find it a significant waste of time and energy to simply go “door to door” among their accounts and hope that sustained conversations result in answers. They must focus on those accounts for whom their services are a best fit, and the earlier this is done in the sales motion, the more productive and less costly. Our research at Challenger suggests sellers should make the sales funnel of opportunities (whether with new or existing clients) appear more like a Nail than a Wedge. The trick is to scan the horizon broadly at first to determine where pockets of opportunity lie and narrow quickly to those most worth pursuing. At this point in time, and likely for the foreseeable future due to the contraction of the economy, there will be a large premium on being able to efficiently generate profitable business which requires this kind of due diligence.
Identify Viability of Existing Relationships
While it can be difficult to know exactly how different companies among your customer base are faring in this economic downturn, early data by Challenger gives a sense of three general categories you can use as an initial triage of your book of business:
CATEGORY ONE: Companies whose business is either neutral or even accelerating. In our sample, this is a relatively small proportion (8%) – but the rate could be higher for a company that sells exclusively into a vertical deemed “essential” such as consumer packaged goods. But it’s not all good news, even in these industries: Companies face difficult decisions in the supply chain and whether to invest in additional capacity. Some, such as telecommunications vendors, might reasonably expect current demand to persist and will look to acquire market share. Others, those who may see the demand spike as fleeting – makers of everything from fitness equipment to pasta – will want to be very careful about making premature investments. They may better served working on capacity utilization and running down inventories, rather than expanding manufacturing capacity. Sellers need to be laser-focused on how their solutions mitigate or alleviate the operational pain these companies are experiencing.
CATEGORY TWO: Companies whose business has ground to a halt. Roughly 30% of our sample size falls into this group. These businesses will be focusing almost exclusively on cost reduction. At this point, it’s very likely they will have furloughed staff and will be looking to preserve cash. If you do business with one of these companies, it might make sense to preemptively involve the sales force in collection and renegotiation efforts. In the short run, firms will also need to take another look at terms & conditions as it may no longer be feasible to provide service under standard terms.
CATEGORY THREE: Businesses experiencing contraction. As you might expect, most businesses (likely over 60%) are experiencing the kind of contraction you would anticipate a typical market downturn. They will put guardrails around the healthy parts of their business, and will try to limit outflows from the parts that have been left more exposed, and they’ll be asking themselves which projects are absolutely necessary or not.
When partnering with these three categories of companies, agility is key. In particular, Challenger recommends sellers stay ahead of any CEO/CFO mandates to cut costs by preemptively bringing insight that leads to business improvement and effectively demonstrates the value their solutions provide.
The goal with segmenting accounts into these categories is to help sellers prioritize. Once the category is determined, they can develop a set of relevant actions for each. Sellers should use the following set of questions to establish the priority:
- What are the small number of accounts where I most need to make further investments? Can I anticipate the operational demands these companies now face?
- What accounts do I need to exit in an orderly fashion– but maintain a cordial relationship to allow for re-entry at a later point?
- Most difficult, perhaps, ask yourself: “How do I prioritize the customers in Category Three and what can I continue to offer these customers that is relevant and directly tailored to address their economic pain?” Current earnings reports (April 2020) suggest that it will be very difficult to anticipate how exactly different parts of different businesses are performing and so the sales force will need to perform primary due diligence.
Confirming the Account’s Needs
Even if your customers experience runaway demand – as logistics companies, for example, currently report (April 2020) – they will be keenly aware of the risk that comes with that growth. An even greater sense of risk will be true for companies whose business is shrinking. All customers will want to minimize risk and will be cautious about cash outflows until they have a better sense for the length and depth of this downturn. When positioning a commercial opportunity in an existing account, sellers need to rapidly confirm the following:
1. Who is the buyer in this account?
In this environment, purchasing will require authorization from the very highest levels. The most common scenario is that finance will be more involved in making any purchase decisions. This means the functional buyer needs to be prepared to make a solid business case. More than ever, sellers need to ask their contacts about the purchase process early on and identify everyone who must sign-off on the purchase.
2. Does the solution help the account solve current economic pain?
Getting customers to feel pain in their status quo was a challenging proposition until March 2020. That has now changed, with most businesses feeling acute economic pain in multiple areas. We can expect it to last, at the least, for the rest of the year. Challenger advises sellers to help their accounts clearly understand how their solution addresses this pain and leads to a measurable proof of customer improvement. A time-tested way to help customers explore these possibilities is to teach them about similar before-after cases observed in other companies. Buyers, who play the role of Mobilizers, are hungry for this information. It’s the tool they can use to pique executive interest.
3. Is this account in a position to take action?
More than ever, sellers should focus on an Ideal Customer Profile. This is not just an industry or demographic match, but also a circumstance match. Does the pain your solution solves align closely to this customer’s most important “jobs to be done”. And does this customer have the resources, attention, and capacity to properly address it? Getting too far along on a fool’s errand hurts everyone and can unnecessarily strain a relationship. Reps should spend more time with accounts for whom the solution is an indispensable necessity rather than looking to find customers for whom the solution is a less obvious fit.
Provide Tactical Support
As businesses reset and rebuild across Q2 2020, and sellers start having conversations with new contacts in their key accounts, they will need more support than ever before. At Challenger, we suggest evaluating the support provided by the following three roles:
1. Senior Executives
As purchasing power escalates up the corporate ladder in key accounts, it is tempting to ask senior executives to join calls more frequently for “top-to-tops”. This makes sense in streamlining decisions and showing customer care. The risk, however, is a long-term disempowerment of the true account manager. Although there are exceptions, it’s far better to position senior executives as simply wanting to provide “guest” perspective. This keeps them at arm’s length from true account management. Sellers remain responsible for the account and the any planning, negotiation and service that needs to happen.
2. Sales Managers
Coaching is hard in good times, but especially hard when little time is available to do it. When account activity and forecasted bookings slip, sales managers are burdened with exceptional reporting requirements. Senior leaders look more closely and more frequently at forecasts and measure activity levels across each sales step.
At the same time, sellers need more coaching to help them react to and innovate in an uncertain environment. If time constrained, Challenger recommends coaches focus their support on the seller’s very topmost or trickiest accounts. Coaches will be needed to focus sellers whose perceptions are likely to be more optimistic than warranted. The coaching insights will likely translate to other accounts, and sellers will feel supported in their most complex or highest stakes opportunities.
3. Sales Support/Enablement
Customers are already examining contracts with a view toward resetting relationships. Sellers will find themselves needing to spend even more time on contracting and figuring out the mechanics of delivery, scope and payment. Challenger finds that companies quickly shrink administrative support to the sales force in economic downturns, arguing that sellers now have more time to do this activity themselves. Sales leaders should closely track where sellers are spending this time. Alarm bells should ring if sellers do not spend at least 30% of their work time selling to or managing accounts – providing supportive insights and solutions that improve the customer’s business. If not, the relationship turns more adversarial and the seller risks losing their status as expert advisor. Equally worrying is spending too much time battling internal bureaucracy, which can damage the seller’s morale and engagement.
In summary, selling to existing accounts can be far easier and less expensive than selling to new accounts in a downturn, but sellers must be smart about where and how they’re spending their time with these accounts. The current downturn has naturally segmented accounts into three general categories. Sellers should identify where their accounts fall and prioritize the best action. The broader organization needs to re-think the support it provides to these sellers so key account customers receive capable care and good business is retained and built upon.
If you’d like to have further conversation with Challenger about these ideas, please fill out the form below.