In the face of economic uncertainty, companies must recalibrate their sales approach. This article discusses how to plan your sales strategy and adapt to a new environment. We debunk myths and shed light on trends that define success.
A successful sales strategy not only meets revenue goals. It allows you to thrive in the face of dynamic market changes. Embrace the challenge, seize the opportunities, and let Simon-Kucher guide you through your sales strategy planning.
Six steps for your sales strategy plan
The past several years have witnessed significant transformations worldwide. This requires improved sales strategies to maintain your company’s relevance and value. Economic uncertainty further emphasizes the need to adapt and evolve your sales strategy.
Here are the six key steps your sales strategy planning should include.
1. Conduct a basic analysis to plan and capture wins
Traditional advice often discourages alterations to your service and product portfolio during economic instability. However, we believe this is the perfect time to be proactive. Maintaining the status quo won’t get you far, and it may even restrain your ability to effectively compete against the competition.
Rather than a restraint, volatility is an opportunity for growth. Fluctuations, inflation, and other economic shifts can serve as key triggers for short-term innovation and portfolio optimization. But this requires a proactive and forward-thinking approach.
To provide your business with the agility and resources to leverage a competitive advantage from disruption we recommend:
- Solidify your market presence by penetrating new markets and cultivating loyal customer bases in regions that effectively withstand turmoil.
- Establishing consistent revenue flows by launching and monetizing products that cater to new demands of existing customers.
- Redistributing and investing resources in a manner that enables you to mitigate risk while improving sales efficiency and consistency.
The initial two strategies require either exceptional fortune or meticulous planning. At times, you might need both. However, the third strategy can be implemented by any company at any moment, even amidst tough macroeconomic conditions.
2. Pay attention to your teams and customers
Markets contract and expand. In times of inflation, some of your prepared customers will assimilate price hikes and transfer them to their customers. Meanwhile, a group of your extremely risk-averse customers will significantly cut down their purchases.
This can be a harsh lesson if you fail to recognize it. However, if you correctly segment markets and dissect them, you will observe fluctuations and be able to proficiently redistribute your resources. This requires you to continually learn about your market sub-segments and the unique factors influencing their buying choices.
When making crucial decisions regarding resource allocation, coverage, and objectives, reviewing your markets and the competition is essential. However, it's not enough to learn these things once and then set your path. There's an ever-changing timeline in play.
In the past, companies would typically evaluate their market size, growth, and share every four to five years from their buyer's perspective or when confronted with an imminent transaction. An alternative method to gain preliminary insights into emerging shifts is to reassess your total addressable market (TAM). Here the aim is to understand new influences from the perspective of the buyer.
Whether it's a refresh prompted by a recession, or laying new foundations, planning your sales strategy should start with this basic exploration. It involves pinpointing markets with potential for expansion, those requiring safeguarding from the competition, and those that consume significant time for sales team members.
Additional research offers avenues for strategic distinction, such as customer budgeting procedures, procurement advice, pipeline lead generation, success rates, and competitor discussions. Utilizing these factors, sales managers must mobilize sales assets toward markets with the most significant opportunities. These should also align with the immediate and long-term business strategy.
You won't be the only one reassessing crucial markets. Be prepared to compete with the same number of rivals for a smaller total of available sales revenue. Even high-performing companies will need to reevaluate their understanding of the competitive environment. Emphasis on the correlation between price and value from both perspectives is necessary.
This should be a collective effort. Conduct a comprehensive internal evaluation to gauge your company's competitiveness, identify your market niches, and predict potential competitor threats to your market share. Use these discussions as guiding principles when considering how to counteract competitive actions and optimize customer loyalty.
To enhance competitiveness, you should segment your TAM to provide marketing, sales, and product management insights. Our studies indicate that businesses employing more advanced, needs-driven segmentation grow more than 3x faster than those using basic segmentation. For instance, segmenting the market based on factors like size, industry, growth rate, competitiveness, and willingness to pay facilitates a more targeted sales strategy.
3. Allocate sales resources more effectively
For each segment, identify who you’re selling to and how they interact with your sales processes. This enables you to act on your observations and assists your sales team in concentrating their efforts in the right place.
During a period of volatility, customers, just like markets and industries, change. Indeed, some foundational elements may remain the same. Nonetheless, customer and consumer groups alter their actions based on broader economic conditions. Therefore, identifying your value in markets is crucial. Conduct market prioritization tasks alongside comparable profiling focused on your customers.
In sales, understanding your customer begins with defining the perfect customer and working in reverse. If your firm lacks a solid ideal customer profile (ICP), start creating one.
Sales heads should consider various factors and allocate points based on evaluations against numerous criteria. These could be factors such as transaction volume, profit margins, success rate, acquisition cost, etc.
A solid ICP establishes the foundation for your target customer. Meanwhile, it's equally important to comprehend how they interact and function with your company. How are consumer habits changing? What are the new trends? Which old habits are coming back?
Use comprehensive and segmented customer journey mapping. This not only helps you to comprehend your customers' present interactions with your sales process but it also shows you how these interactions have evolved. What behaviors will stick or slip as the economy changes?
4. Concentrate on your key product sectors
A well-managed product portfolio enables your company to create and customize exceptional experiences. These are essential for not only retaining existing customers but also attracting new ones, without drastically affecting your profitability.
It's time to assess which products genuinely contribute to your income and profit margins and which don't. What part do they play in your portfolio? Have your loyal customers been requesting new products or innovations? Now is the moment to examine your existing assortment and identify ways to enhance your mix.
Our recent collaboration with a leading food service equipment producer underscores the significance of this concept. We recently facilitated their growth into related product sectors by identifying and prioritizing their main markets and accounts and we then refined their market entry strategy.
Our insights and advice enabled the producer to gain market share in new sectors and safeguard their primary business. This will result in a substantial financial effect within 1-2 years, providing more time to implement strategic changes.
Differentiate products contributing to your revenue from those lagging behind and which may be unprofitable. This can primarily be a data-oriented task, utilizing either existing or new KPIs to structure past performance in pursuit of predictive indicators. Recent customer feedback and inputs from the sales team are also excellent starting points as you evaluate your portfolio.
Enhance your feedback with a comprehensive SKU analysis and investigate the factors influencing the performance. This will allow you to make deliberate choices on how to adjust your product assortment based on your company's strategy.
These decisions often encounter opposition from sales teams who believe customers won't transition. However, don't let these concerns hinder you from making decisions contributint to long-term growth. Our studies indicate the contrary if you implement a systematic and steady process.
5. Review and monetize your services
When businesses aim to expand into higher profit sectors, they typically evolve from transactional and product-focused to offering comprehensive service packages. This concept of "servitization" is a primary method that businesses use to hold onto crucial customers during downturns. One advantage is it increases their multiples through steady income.
This is an ingenious approach to monetizing services that distinguishes your offerings from the competition. It's also a way to attract customers across various segments for their willingness to pay. These services, on their own, might have a smaller profit margin than certain aspects of the product range. Nonetheless, the total value these services provide enables you to distinguish your products, boost involvement, and generate improved results for both your company and customers.
When scaling up services, be cautious of how your sales or customer service team spend their time. They risk devoting more time to customer servicing without generating proportional revenue increases. Although many companies use customer acquisition cost as a crucial metric for customer segmentation, the cost to serve is equally significant. This is particularly true for low-margin service offerings.
Leading companies address this problem by establishing service tiers that cater to varying service requirements across segments and ensure market profitability through differentiated pricing. Other companies recruit a team of customer success managers and consider the job done. However, they can get expensive if not focused and productive.
Define the importance of services with a strategy to capitalize on all valuable aspects. Start by understanding your segments and their needs. Enhance your service propositions by assessing what you promise as a fundamental guarantee to every customer versus what additional services are embraced by customer groups over time. Align these propositions to their profitability to justify the business rationale for servitization.
As you strategize for the upcoming year, reevaluate your product and service blueprint. Update the supporting research, seek diverse viewpoints, and ask these key questions:
- Who are our key customer segments and how are their requirements changing?
- What's fueling our income and profit margins? Specifically, which SKUs?
- What resources do we need to expand without overstretching ourselves in periods of uncertainty?
- What role do services play in customer retention, upselling, etc.? What sets us apart from our rivals?
6. Utilize innovative methods and platforms to stimulate demand
For numerous businesses, adopting omnichannel strategies is not a novel concept. Organizations must utilize all available channels to broaden their customer reach and enhance interaction, market penetration speed, and coverage costs.
Inside sales representatives are one of the fastest growing types of sales roles. Companies are increasingly using digital marketing channels to expedite the customer's purchasing journey more efficiently, extensively, and economically than ever.
Studies indicate that the majority of a customer's buying process is finished before they even contact a sales representative. This validates the age-old adage: "If we weren't aware of the RFP until it landed in our inbox, we've already lost."
Considering the turmoil of recent years, companies possess an unseen chance to reshape their competitive advantage. They can accomplish this by transforming their channel relationships into genuine collaborative partnerships.
Certain companies exhibit a sense of entitlement when interacting with their value chain. For example, they raise prices without increasing the value they deliver. Conversely, top-performing firms rely on robust relationships with channel partners. They engage in strategic discussions, generate shared benefits, and discover innovative methods to jointly penetrate the market.
Have faith in your channel partners and maintain openness with them. Review your channel portfolio during customer feedback research just as you would scrutinize your product portfolio. Prioritize and allocate resources to channel options based on past performance and potential prospects.
Conclusion: Change reveals opportunity, but only if you embrace short-term investment
Our experience with business and operational groups indicates that a well-defined, pertinent strategy should be the basis for prioritizing markets and implementing structural modifications. Reevaluating your strategic stance in terms of markets, customers, products, and channels is instrumental in determining your success. This holds true in prosperous periods and particularly in challenging ones.
Navigating the intersecting trends of inflation, digitalization, and economic downturn can be challenging, but Simon-Kucher is ready to assist you in discovering new perspectives to secure a competitive edge.
We know how to boost your revenue with the right sales strategy
Whether developing alternative sales channels, optimizing sales territories, increasing customer-facing hours, developing motivating quotas and sales goals, or even highly emotive topics like redesigning sales compensation schemes, it has never been more important to unlock the hidden growth potential of your current sales organization.
Reach out to Simon-Kucher today!
