Adapting Your B2B Sales Approach in a Recession
The economy is slowing and hundreds of layoff announcements are in the news, including major companies like Goldman Sachs, Pratt & Whitney, United Furniture Industries, and Meta. This can be a worrying time for B2B sellers, as their customers may also be cutting costs in order to weather the economic downturn. However, it's important to remember that this environment also creates opportunities for sales forces in both winning and troubled businesses.
One of the worst strategies for B2B sellers during this time is to reduce your salesforce or a hiring freeze. Instead, the winners will be those who take a more nuanced approach, tailoring their strategy to the strength of their own products and markets, as well as how economic uncertainty affects their customers.
For example, when Alphabet (the parent company of Google) announced weaker-than-expected third-quarter earnings, CEO Sundar Pichai stated that the company is "sharpening our focus on a clear set of product and business priorities." Through cuts, restructuring, and resource reallocation, Google is seeking to become "20% more efficient." This is a prime example of how a company can take a proactive and customized approach in order to weather a downturn in the economy.
The mindset of buyers is also shifting during this time. When the economy is strong, buyers are more likely to focus on the long-term and are more open to purchasing products that may lead to long-term revenue growth. However, as the economy falters, buyers tend to pivot to doubling down on the near-term, while attention to the long-term fades. This means that buyers are now more interested in "painkillers" that can provide short-term productivity gains, rather than "vitamins" that offer long-term benefits.
Sellers will need to take a more proactive and customized approach in order to meet the changing needs of buyers. When seller offerings are strong relative to competition, and a customer is poised to do well in a slowing economy, the answer is to double down and look for opportunities to grow. Sellers can expand their reach and increase market share by aggressively going after new opportunities and customers while looking to drive innovation in products and services.
On the other hand, even if seller offerings are differentiated, customers facing a weakening business will invariably have "do more with less" on their minds. Sellers have to engage in proactive conversations with customers on squeezing more value to help them weather the storm. By listening to and understanding customer needs, sellers can redefine offerings to align with the customer's revised source of value. They might offer contracts with shorter duration, leaner versions of the solution, or favorable payment terms. And sellers can help the customer look around the corner and anticipate what the future may bring.
When a seller's offerings are in a weak competitive position, whether customers are affected by a slowdown or not, the best strategy is to focus on cost reduction and cost containment. Sellers can focus on streamlining operations, reducing costs and increasing efficiency in order to remain competitive.
In conclusion, the current economic environment may be challenging for B2B sellers, but it also creates opportunities. Sellers will need to take a more proactive and customized approach in order to meet the changing needs of buyers. By tailoring their strategy to the strength of their own products and markets, as well as how economic uncertainty affects their customers, B2B sellers can emerge as winners during this time of economic uncertainty.
