Sales Training Blog

Crafting your "save money" recession sell

To really get the attention of a company in a recession you need to sell your product as one that will either make money or save money.  One client told me they had frozen capital budgets going into next year but that they would always make time to hear proposals that could save for make them money.

The temptation is just to lower your prices. But you need to succeed in the recession as well. A better approach is to reposition your product as a money saver. Some products are naturals for this. For them positioning for selling in a recession is done, just remind people there is a recession and present the product. 
But most products need more creativity to position them as a money saver.
Often this is done by packaging the product with other products or services so together they achieve a RESULT. It is that RESULT that effects the money.
For example, one small business partnered with two other companies to offer a total system that could eliminate two costly steps in an installation process. The RESULT of skipping those two steps saved the client money.

In another market where diagnostics were needed on an ongoing basis , a company started offering free diagnostics as part of their sales package. As RESULT of not having to pay for diagnostic tests the buyer saved money.
Take a step back ask if your product can be combined through a partnership or expanded offering to achieve one of the following RESULTS:
add efficiency
redefine work-flow
eliminate jobs
save time
consolidate buying volume for price reductions
eliminate duplication of effort
out place or out source
leverage "off the shelf" products or technology
leverage the Internet
automate routine procedures
simplify procedures
eliminate paper work
If you can attached the purchase of your product to a RESULT that saves your client money you are on your way to making a recession sale.

Should you downgrade your client profile during a recession?

When a recession hits customers are be harder to find. Sometimes it makes sense to slightly downgrade the caliber of customer you target. It can help make up the difference in business you might lose. In his report "14 Winning Methods to Sell Any Product or Service in a Down Economy, Robert W. Bly offers this this as a  suggestion. 

"You have a set of written or mental guidelines that determine which clients or customers are desirable to you ...and which are not.

During a depressed economy or personal business downturn, you may want to be more flexible in this area than you usually are.

For instance, if you normally do business with Fortune 500 companies only, you may want to consider taking on assignments from smaller local firms ...provided the pay is decent and their credit rating is good.

Or, if you normally work only on major annual reports, you might consider knocking out some small quarterly reports to generate needed revenue.

This doesn't mean you throw your standards out the window and work for anyone who calls you. Far from it. Instead, you are simply readjusting your acceptable client or customer criteria during this temporary lull to accommodate a wider range of prospects and projects.

How far should you take this? It's up to you. If, for example, you normally have a minimum project fee of $1,000, you might accept $500 assignments, but you probably should stick by your guns and not take on $50 assignments."

That was Bly's suggestion #9. Read the rest here

Recession potential: ready to "shuffle the deck"?

   A study done by consulting firm Bain & Company found that more than a fifth of companies in the bottom quartile in their industries jumped to the top quartile during the last recession. Meanwhile, more than a fifth of all "leadership companies"-those in the top quartile of financial performance in their industry-fell to the bottom quartile.

This makes the case that recessions, while hard on companies also provide a window of opportunity to move ahead of competition.

According to the study,

"Only half as many companies made such dramatic gains or losses before or after the recession. Arrow Electronics (Melville, N.Y.) offers a striking example of trading places when times are tough.

"During an industry downturn in the late 1980s, the financially troubled distributor of electronic components and computer products launched a series of audacious but smart acquisitions that allowed it to increase sales by more than 500%, turn operating losses into profits, and seize market leadership from competitor Avnet (Phoenix, Ariz.), which was once twice Arrow's size. During the recent recession, Arrow has been acquiring again and widening its industry lead."

How companies manage themselves during a recessions often sets the competitive landscape for years to come after the recession is over.  

Read the whole study from Bain & Company

 

Bear Stearns, a cautionary tale of recession cut backs

Earlier this year legendary Wall Street giant Bear Stearns collapsed and was acquired, in crisis, for a pathetic two bucks a share. But some of their problems started back with the 1990 recession when rival Merill Lynch used the recession to pull ahead of them. 

According to an Interbrand study "Leveraging Brand Value in a Downturn",  

"Merrill Lynch was seeing the return on its early ’90s branding investment in its ability to build and leverage its reputation in a broader market. It may have outspent Bear Stearns to do so, but the positive return was clear".

How clear? Look at this chart from the study comparing indexed share prices of the two competitors during and just after the 1990 recession. Merrill Lynch's "outspending" had a huge impact, redefined the competitive landscape between the rivals, and set the stage for Bear Stearns' demise.

For some companies a recession is a time to weather the storm; cut expenses, trim the staff, wait for better times...and slash the marketing budget. But other companies see a recession as strategic time to take the offensive. When competition focuses more on internal cost cutting they focus less on customers. 

The study also documents two other rivals whose competition was redefined during the last recession; Wall-Mart pulls ahead of Sears, and Gillette from Colgate Palmolive.  

The report concludes with ten points for managing during a recession including:

"9. Keep Talking. Don’t stop communicating with your customers. In a downturn, people don’t stop buying;they just buy more cleverly. Take advantage of the general decrease in marketing spending to grab a larger share of voice and define yourself in a less cluttered marketplace. In good times, the best tactic may be advertising, but now is the time to evaluate less traditional ways of communicating with your customers.

10. Define Minimum Standards of Upkeep. It is important to understand what brand investment must be sustained in order to protect your asset. The amount of dollars necessary to retain your brand’s value is money worth spending.It is important to understand what brand investment must be."

On a call

Download the study and the article on Bear Stearns' demise I link to early in this post. Keep them in your bag. If a client tells you they want to cut their marketing budget because of the recession offer the Bear Stearns story as a cautionary tale. Ask if they think their competition might use the recession to steal market share from them.

Download the Interbrand study, "Leveraging Brand Value in a Downturn" 

Recession fighter promo letter

During the 2002 ad recession I was selling advertising when I wrote and sent out the following letter. It showed how advertisers who maintain exposure during the slow times move ahead of competitors who don't. It is based on the true story of how Kellogg's moved ahead of Post cereals. Here is the letter copy:

Should You Advertise During a Recession?

Consider this ad from 1935 and how it affects buying today.

Advertising dollars spent during slow times are the best investment a company can make.

In 1929, rival cereal makers Kellogg’s and Post were in a close race to win the breakfast cereal market. When the Great Depression started, Kellogg’s maintained their advertising spending while rival Post cut back.

At the end of the Depression, Kellogg’s had achieved a category dominance that they maintain to this day.

On your next call:

Download and print out the memo. Show them the old Kellogg's ad that ran at the height of the American Depression and remind them that it was during The Depression, when Post cereals cut their ad budget and Kellogg's did not, that Kellogg's became the category leader.

Now ask, "How many more boxes of Kellogg's product have been sold long after The Depression ended because someone had the vision to see a time of economic slowdown as the time to pull ahead of competition?"

Whether you sell advertising or not the story demonstrates a great business lesson. Companies can use a recession to move ahead of their competition by being aaggressive during slow time. You might be able to use this story to motivate a client contemplating cutting back on purchases to stay active.

Download cornflakes_promo.doc

Lesson from selling in the 2001 recession; more decisionmakers

A terrific study was released earlier this year from DowJones advising that the key to success in selling in a recession comes not from looking at what is different for salespeople but rather at what is different at the companies they sell to. Researchers Jim Dickie & Barry Trailer studied corporate organization during the 2001 recession and concluded that the biggest change impacting sales was a shift in how client organizations bought things.

"Then the economy tanked, sales started to decrease for these firms,
and the CFOs stepped in. They mandated that since revenues in were
declining, expenses out would be decreasing as well.
Enter the era of Buying by Committee: Decision-making power
was removed from the hands of the individual and relegated instead to
group consensus. A colleague of ours the Senior Vice President of a
Fortune 500 firm saw his personal buying authority reduced from $2
million to $50,000."

When you sell in recessionary times you need to anticipate more decision makers will be involved in decision makers,especially economic decision makers.

On a call

One of the best things you can do on a call is to ask about others who will have to sign of on the buying process. Simply ask, "Who else will be involved in the decision making process?"     

Download "Successful Selling in Turbulent Times -  Dealing with an Economic Slowdown" for free on the SellingPower website

 

Recession Fighting Chart

Over the past half-century, there have been nine recessions, with an average length of 11 months each. If we head into a recession...eventually it will end as well.

On your next call.

If you are engaged with an advertiser who is thinking about cutting back buying because there is or might be a recession, show then th the chart below. The chart will make tangible the idea that all recessions end. Then ask ask them a simple question:

Who will your customers think when the recession is over if a competitor was more active? 

How to hang on to clients in a recession

When selling in a recession the first priority is to keep existing clients. But often the top reason customers leave salespeople is misunderstood. Marketing Sherpa recently conducted a poll asking both customers and vendors why customers leave vendors. The top answer of these two groups did not agree.

Overwhelmingly, vendors (on the selling side) thought that price was the main reason clients left them but customers ranked price a distant second to service.

Too often salespeople do not get the full story. Once a client decides to end a relationship with a salesperson the fastest way out is to play the "low price card." From the buyer's point of view, think about the time wasting activity that often results when they announce they are leaving; the salesperson's boss might try to meet with the buyer's boss, a bold new proposal is made that requires time consuming review, a ton of extra attention gets paid that requires reaction time to deflect. For the buyer, it might not be worth spending the time on a relationship that is ending. The quick way out is to play the price card. 

While selling in a recession notch your customers service up. It will be worth the investment.  

Read more on the Marketing Sherpa survey
http://www.marketingsherpa.com/article.php?ident=30719&?=9750#

Three principles for selling in a recession...

Ted Higgins, Vice President, The Forum Corporation has posted a terrific white paper on the web on selling in a "tough economy." I'd like to share his advice now that we are selling in a recession.�

Here are the three principles he advises to be true to for success:

1. Be a true business consultant for your customer. Talk
business strategy with your customers. Show how your
offering advances their strategy. Create solutions that solve your customers problems. Customers expect solutions that support and drive their central business strategies. Talk results with customers. Show how your offering can positively affect customers key performance metrics. Identify the appropriate metrics and create a compelling case for your solution. Be innovative. Increase credibility as a trusted adviser by bringing to the table innovative, highly differentiated solutions that respond to customers unique business challenges. Customers value new ideas and insights from your experience with issues like theirs.

2. Do your homework. Know more, be more connected than your customerand turn that knowledge into value. More than ever before, customers want insight. Salespeople must invest time and energy in researching their customers own customers, markets, competitors, employees, and challenges. Go beyond asking good questions about the customers situation. In a recession, when competition is at its fiercest, salespeople need to know much more before the call, so they can prepare insights to share with the customer during the callinsights that turn into meaningful actions after the call. Before getting in front of the customer, salespeople must know the answers to questions (or at least have formed opinions) about the customer's vision, own customers, competitors, strengths, and weaknesses.
So much information is available in the public domain that asking the customer to explain it to you is a waste of his or her time.

3. Focus on results and relationship. In these tough
economic times your customer is focused on results. You
and your organization are focused on results. It is important to enhance both the customer relationship and results. Beating your customer in the short term may provide short-term results, but it is destructive in the client retention and growth game. Losing to your customer is one of the quickest ways to get sales managements attention. Those that balance beating and losing do so by persisting in seeking a solution that involves their customer in a search for innovative answers to tough questions, converting opposition to mutual understanding, andin extremely tough situationsasserting their own needs and encouraging the customer to do the same.

Download the entire white paper

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