The far-reaching impacts of COVID-19 have us facing many unprecedented circumstances, but one thing we have successfully endured in years past is the bear market. It’s important that we take some time to understand what our current economic downturn means for businesses—and what you, as a seller, can do to mitigate risks and maintain momentum.
What is the Situation?
Thanks to concerns over the novel coronavirus and a sharp drop in crude oil prices, we have just entered a bear market for the first time in 11 years. That means we are now facing “a period in which the major stock indexes drop by 20% or more from a recent high point and remain that low for at least a few months.” I think “a few months is a little optimistic, as we have had 12 bear markets since 1945, and on average, they have lasted between five months and 14 months. As such, we should pragmatically assume this economic downturn will last most of 2020.”
People often suspect that a massive market decline is panic-driven, but in reality, it’s far more complex. Investor confidence relies on a company’s ability to demonstrate accurate forecasting and a clear, fast path to profitability. Without that proven path, a business is more likely to be hit hard by this downturn. Just look at the stocks of software companies that IPO’d successfully in 2019 on the promise of rapid growth; many have already lost significant value. Next in line will be companies whose inefficient operations make it demonstrably difficult to fulfill orders or production quotas. As a seller, therefore, you need to be asking: “Are the top opportunities in my sales funnel still on track to close in four quarters?”
What are the Implications?
First and foremost, companies with a high cost of sales will need to adjust to a new reality of doing more with less. Growth expectations will still be high, but you’ll be expected to achieve those expectations with lower headcount. Obviously, hiring more headcount to achieve the same goals is not an option.
Remember, too, that products that do not massively accelerate revenue generation or massively reduce costs in the business are not relevant in a downcycle. Work with your product development teams to clarify the business impact your products/services bring to your customers. Focus on those that have a clear line of sight to impact in 2020.
Finally, keep in mind that even your most established customers will be forced to readjust their priorities. This, in turn, will undoubtedly affect the highest priority committed deals in your sales funnel and your revenue commitments.
What Can I Do About It?
There are two ways to approach this situation, depending on your role in the organization:
As an individual seller, knowledge is key. Work to understand how your customers make money and what might change in their supply chain given current economic circumstances. You must also stay in tune with potential adjustments your customers are considering. Have their management teams started communicating externally about slowing down investments or changing direction?
As an example, Bureau Veritas is already signaling to investors that they see COVID-10 as a downward impact, but only in Q1.
As a VP of Sales or CRO, focus on communication and confirmation. Look across all the top accounts where you have commits this quarter. Then, working with your Account Executives and Client Directors, connect with economic buyers to reconfirm project priority, decision criteria, and the steps required to jointly execute the plan. Finally, reconfirm the expected close date.
In addition, work on making the most of the excellent opportunities afforded by this slowdown. This is the perfect time for pipeline inspection and to focus on financial payback this year (as opposed to longer-term deals). Clarify any expected changes to your timing for investments this or next quarter. For each opportunity, ensure that your account team has a clear line of sight between your products/services and the priorities of your customers’ boards. Work to ensure the pipeline is primed and ready to return significant payback within the next 12 months.
For example, Fiat Chrysler announced these changes on March 11, and the impact on lower production will no doubt have a direct impact on their spend. Knowing this information as it unfolds is critical to preparing your pipeline for the financial impact.
Many industries face similar challenges right now—such as airlines and other travel- or hospitality-related businesses. Be watchful for now they plan to adjust their operations, and be sure your account teams are ready to recalibrate plans as needed.
Without a doubt, this is an unnerving time for many of us, both professionally and personally. Uncertainty can breed fear—but the best way to combat that reaction is to arm yourself with current, factual data. By staying alert and aware of how businesses are responding to ongoing changes in the economy, sellers can position themselves to weather the storm successfully and emerge stronger in the end.