As interest rates rise by 75 basis points for the first time in almost 30 years, experienced sales reps and newcomers alike are facing the prospect of selling during a recession.
Sales is tough enough as it is, and prolonged economic uncertainties make the job even harder. Budgets are reduced or eliminated. Companies evaluate prospective new technologies with greater scrutiny or postpone such investments entirely. Your warm leads leave for “safer” industries or join the ranks of the recently laid-off.
With the odds increasingly stacked against them, how can salespeople navigate a precarious economy and hit their number during a downturn?
I spoke with Lou Wolf, VP of sales at ZoomInfo, to learn how he survived the recession that followed the dot-com crash of 2001 and the financial crisis of 2008. He shared some concrete tips for how sales professionals can prepare for what may be in store over the coming months.
Strap Yourself In — It’s Going to Be a Bumpy Ride
Wolf is certainly no stranger to selling in economic downturns.
After graduating from college in 2001, he began his sales career at BrassRing, an applicant-tracking software company. Despite the strength of its product, the sudden crash of the nascent Internet industry in 2001 was a body blow to the company.
Entering the sales profession at a time when major tech companies were losing their proverbial shirts was an experience that was as instructive as it was challenging.
“BrassRing was in a hot market during the late ‘90s tech bubble,” Wolf says. “Everybody had hiring initiatives and lots of companies were having a hard time finding talent. You couldn’t have a better product to sell. And then when everything froze, they were in big trouble because they had this recruitment product they were trying to sell, and people weren’t worried about recruiting. So I learned to cold call in a tight, tight recession.”
This would not be the last time Wolf found himself selling to reluctant buyers in a difficult market. He was working at executive search firm Howard Fischer Associates when the collapse of the subprime mortgage industry in the U.S. triggered the world financial crisis of 2008. Once again, he had to sell services aimed primarily at talent acquisition professionals at a time when nobody was hiring.
The lessons Wolf learned during these two historic economic downturns continue to serve him today. However, today’s conditions feel markedly different to those two previous recessions.
“The job market’s strong right now, which is different,” Wolf says. “The downturn is being driven by inflation and some things that are obviously going to affect everybody in a broader sense. But it hasn’t put the kind of total pause on the market in the same way as the two previous recessions — at least, not yet.
“But the key characteristic of any downturn is that it creates a little more pause in your buyer. People want to be more sure. You have to have a better offering, and you have to do a better job selling.”
So how do you do that? By managing expectations, identifying real opportunities to demonstrate value to your prospects, and paying close attention to the competitive landscape.
Recession Sales Tip #1: Be Prepared to Prove Your Worth
Tightening economic conditions almost invariably result in tightened spending across all aspects of an organization. But all savings are not created equal.
Many companies will reduce spend in areas such as nonessential travel long before they’ll reduce their investment in technology — especially technologies that you can prove will save the organization precious time or money.
“In this recession, tech spending is going to be incredibly important,” Wolf says. “People are looking for automation and efficiency from tech, and they’re not going to pull back as much there as they might pull back on other expenses.
“We learned from the pandemic that we can sell without traveling. We don’t all need to be in office, so companies might pull back on real estate expenses. Organizations are going to pull back in various areas, but significantly reducing tech spending is not a primary focus.”
Be well prepared to demonstrate the value your solution can offer, especially during earlier conversations. Identifying tangible ways that will help prospects save money can really move a deal along.
“If you have a product that sells through a trial, you’ll probably need to go in harder with that,” Wolf says. “If I’m a prospect trying to reduce expenses and keep things going, the more confident I am that something’s going to actually work the easier it’s going to be for me to pull the trigger. That’s always the case, but that’s going to be even more important when budgets are tight.”
Recession Sales Tip #2: Anticipate Longer Sales Cycles with More Stakeholders
An inevitable consequence of tighter budgets is more oversight of spending decisions. This means more stakeholders scrutinizing potential “costs,” even if those costs will ultimately save them time or money.
Rather than fighting against this, Wolf recommends leaning into it, accepting that deals will likely take longer to close, and adopting a consultative, team-based approach to your sales calls.
“You’ve got to hit more people, and you’ve got to ask for more people to be on the calls,” Wolf says. “Selling is a team sport now more than ever, and unfortunately, that means more possible objections.”
Overcoming hesitancy and objections is a fundamental part of sales.
According to Wolf, the messaging you use during initial conversations can make or break a deal. You should be prepared to tailor your messaging depending on the priorities of individual stakeholders.
“Everybody wants to drive revenue, but when buyers are in a recession and when they don’t know what they don’t know yet, I may need to make a stronger appeal in terms of how I save them time or money,” Wolf says. “You’ve got to think about the core personas we can sell to and where we might break into an organization, and you’ve got to make sure that you’re tweaking your SDR messaging even further for those personas.”
Recession Sales Tip #3: Pay Attention to What’s Actually Happening
With tumbling stock prices, talk of layoffs, and nervous chatter at the Federal Reserve becoming increasingly common across media outlets, it’s easy to give into fatalism and assume the worst.
However, while many economists agree that the coming months will be difficult, the asymmetry of the many factors behind this downturn means that, for now at least, not every company is facing the same challenges.
“It’s interesting, because we’re apparently in a recession, but there are some companies growing rapidly,” Wolf says. “The recent Department of Labor report said 360,000 jobs were created in June, so which of the companies in my target pipeline are the ones that are still adding that headcount? And how does my message relate to that?”
Since not every company is facing the same market conditions, it’s vital to go deeper during your preliminary prospecting research. Companies seeing strong revenue growth may not find appeals to cost savings as enticing as potential productivity gains, for example, so conducting rigorous research is more important than ever.
Another effective technique for selling in a recession is to openly acknowledge how you can mitigate negative market forces. Pitching a software-based solution to problems caused by reduced headcount might not feel great, but if that’s how you can demonstrate value to a prospect, doing so can open doors that might otherwise remain closed.
“If I’m selling something to a head of sales who’s going to have less people on their team, what does that mean for them?” Wolf says. “How are they going to get the same number of opportunities that they used to get when they have less people on their team?”
Get Ready for the Hard Sell
When the last major recession hit, Apple’s iPhone had been on the market for about six months, Twitter was less than a year old, and Airbnb hadn’t even been founded yet.
Today, tech companies and their products have become inextricably linked with virtually every aspect of everyday life, which makes it that much harder to predict how markets might react in the coming weeks and months.
Although the potential length and severity of the current economic downturn remains to be seen, many economists agree that volatility in the markets and broader business environment is likely to continue for some time. This means that sales veterans and new SDRs alike are going to have to learn how to sell during a time of great uncertainty.