Whether you believe we are headed into a recession in the next twelve months or not, we can all agree that the state of our economy runs in cycles and therefore you should never be caught surprised by the ups and downs of the market. What happens to your business when your market slows? How does this impact your bottom line, and what plans do you have to neutralize (or better leverage) this downturn?
No matter the economic climate, looking at the right data will help your sales staff narrow their focus to increase revenue. Here are three specific strategies to you should put into place in your sales department that will help you forecast and avoid surprises.
Understand Your Serviceable Obtainable Market
Your Serviceable Obtainable Market (SOM) is the current segment of your Total Addressable Market (TAM) for whom you can provide solutions, and it represents businesses who are willing to buy from you. This is the smallest segment of your TAM. In between is your Serviceable Addressable Market (SAM). Understanding these three segments in total enables you to understand what you may be missing in your solutions offering in order to increase your SOM, therefore increasing the number of sales opportunities you can have. Why are customers outside of your SOM unwilling to buy from you? Is it geographic? Cost? Gaps in current product offering? If a market is contracting, then maintaining your SOM implies a greater market share of a smaller market. Consider ways in which you can increase your overall SOM and invest in order to have an opportunity to capture even greater market share.
Identify Your Win Rate
Your win rate, also referred to as your conversion rate, measures the percentage of sales opportunities you win. Knowing your win rate allows you to forecast the impact of a reduction in your sales pipeline, or, more importantly, enables you to understand how much bigger your pipeline needs to be if you forecast (for example) a 10% reduction in your win rate. Or maybe you will have an overall reduction in your average deal value. Either way, this important KPI (Key Performance Indicator) can help you plan ahead. What can you do to increase your win rate? What can you do to increase your pipeline? Hire more salespeople? Increase your SOM?
Know Your Customer
Just like you, they are in business to serve their customers. How are they thinking about the impact of an economic downturn? How does this impact their customers? Let’s say they intimate buying 20% less next year. In that case, knowing this potentially a year in advance means you would need to address this 20% reduction most likely by selling new accounts. You may need to develop a creative approach to campaigning new accounts in anticipation of a slower economy, so have this conversation with your sales team well ahead of a potential downturn and make it a part of your Sales Playbook.
These suggestions are areas to focus on in general, but also have a very specific impact on your sales in a market downturn. Work closely with your sales team and other senior leaders in your business to discuss and evolve your addressable market, use the data you have about your current sales performance, and work with your sales and account management teams to stay plugged into your existing clients so that you can better anticipate their needs and how they are planning on their end. Thinking and acting strategically in these three areas will help you get in front of a market contraction, and frankly are good sales business practices in general.
Jay Pila
Jay Pila have provided sales and business strategy consulting in over 30 counrtries for start-ups and multi-billion-dollar organizations. Jay serves greater New York and uses his extensive sales leadership to understand his client's needs and build the right processes for growth. Take Jay’s 10-Question Sales Agility Assessment
