They always say people remember what they were doing when a major catastrophe strikes…think JFK, 911, etc. Strangely I remember most acutely the day after Lehman Brothers collapsed in 2008, signaling the start of the worst global financial crisis in decades. I was sitting at the table my company had sponsored for a Property Investment lunch at the Grosvenor hotel in London. The question in my mind was how to tell my CEO that not a single fund manager had yet turned up. Our green building technology start-up, a mere 8 weeks old, had just spent £10k on nothing.
The 2008 credit crunch was a major catalyst for what followed. The derivatives markets crashed. The debt markets failed under the weight of bad debt, and capital and credit dried up. This shifted fundamentally how organisations viewed risk, approached buying and, in turn, how they approached selling.
Business in the Face of Recession
My lunch event, so carefully selected, was a complete wash-out. The fund and asset managers who did turn up (late) wolfed down their food and ran back to their offices, presumably to see if they still had jobs. Our business seemed destined to go to the wall like so many others who would not survive the recession.
In the days and weeks to follow, nobody took our meetings, and those that did had no intention of spending money. Our product could save them operating expense and reduce their carbon footprint -reasonable priorities for owners of commercial A-grade property assets – but these were now second order concerns. The construction and commercial property markets in London and other major cities were in crisis.
Our little company needed a radical plan to avoid losing everything before we had even started. Our first step was to earn customer attention. To do this, we had to make ourselves relevant within the turmoil our customers were experiencing and direct that attention ultimately to a valuable solution we were well positioned to provide.
We had a hypothesis: property owners were concerned the financial turmoil would cause large corporate banking tenants to break their leases. The owner’s solution would be to provide temporary rent relief. However, the second biggest operating expense for a bank’s real estate portfolio, after rent, was energy. Rental prices are fixed by the market and so despite the rent relief offered, which was temporary, rental rates fell outside the control of the property owner. And everyone was doing the same thing, removing any competitive advantage to one owner over another. Energy inflation on the other hand was rising faster than ever, another unpleasant side-effect of the recession.
What our property owner prospects failed to realize was that their banking customers were increasingly putting more onus on energy performance and less on rent rate when making big leasing decisions.
This was our angle. Armed with this insight, we soon found ourselves in front of various fund managers presenting our energy charts and leaving mention of our product and technology at the back of the PowerPoint deck. We half expected to be thrown out of offices for daring to challenge their view of the world. Instead, within 6 months, we landed our first major contract with the UK’s biggest commercial property owner. Three months later we signed another contract with the UK’s 2nd largest. Our story worked, and we grew successfully in spite of the recession.
Four years later, I read The Challenger Sale and what made our strategy successful became clear to me. Other salespeople and organizations around the world drew the same conclusion we had drawn during the recession; a different playbook is required in difficult times. Pitching product or asking ‘what keeps you up at night?’ is of little help to customers when the market freezes and people stop buying. Instead, we must find ways to create demand through helpful insight that customers can rely on to survive. If we had not applied the approach we did in 2008 our business would not be around today.
We are again heading into uncertain times. After years of growth based on cheap money, the credit crunch has been replaced by the coronavirus shock and a new period of economic turbulence.
This downturn will be different from those before it in ways we can only imagine for now. The good news is we have time to plan and prepare, a luxury we didn’t have in 2008. Customers will again need our help. There has never been a more important time for sales leaders and commercial organisations to stand-up, build relevant and engaging commercial insight and lead the way in helping customers keep their operations alive and return to growth.