As we prepare to close out 2022 and look toward 2023, analysts expect volatility:
- Deloitte: “Recovery from the pandemic doesn’t appear to be over just yet. Inflation, however, is likely to remain a concern. While lower energy prices push down headline inflation, core inflation has remained high.”
- Bloomberg: “ Goldman Sachs Group Inc. cut its US economic growth estimates for 2023 after recently boosting its predictions for Federal Reserve interest rate hikes.”
- Forbes: “We don’t know for sure when, or even if, a recession will hit. At the moment economists from the Federal National Mortgage Association, more commonly known as Fannie Mae, are predicting that a recession will start in early 2023.”
- BlackRock: “Production constraints – stemming from a massive shift in spending and labor shortages – are hampering the economy and driving inflation.”
- International Monetary Fund: “War slows recovery… economic damage from the conflict [the war in Ukraine] will contribute to a significant slowdown in global growth in 2022 and add to inflation. Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.”
Although it’s not an optimal selling environment, a recession doesn’t have to be all doom and gloom. A recession is an opportunity to streamline sales operations, improve efficiency, and even outperform competitors that aren’t prepared. Incentive programs can be designed to focus your sales team’s efforts on the best sales pursuits in challenging economic conditions.
How do you prepare your sales team for economic turbulence and a likely recession? In this article we’ll present 6 strategies for using sales performance management to navigate an economic downturn.
Make data-based decisions
A sales performance management system collects performance data about your team, products and customers. There’s no need for guesswork; you can mine the data you have to make informed decisions about which team members are performing well, which products are most profitable, and which customer/product combinations will show desired results.
Revise and simplify your strategy
In a downturn, you will likely need to do more with less. When resources need to be conserved, it’s crucial that the go-to-market and corporate strategies are aligned. Expectations to be more efficient will extend across the organization, including sales teams and individual sellers.
Territories and quotas will need to be revised to align with new corporate goals that consider the state of the economy. A sales performance management solution can help you model the projected effects of territory and quota changes, and can even help identify underserved markets where resources could be allocated to create new opportunities. An automated quota management system with the capability for modeling can be invaluable in determining which quota scenario to use.
Increase planning frequency
When heading into a probable recession, planning benefits from being more dynamic than it typically would be in a more stable year-to-year scenario. Quarterly or half-year targets will allow plans to change as the economic cycle evolves. Shorter planning cycles protect against dramatic over- and under-performance driven by external economic conditions. The perfect plan won’t exist; however, it is possible to create a plan with a high chance of success.
Right-size the team
In a healthy economy, some sellers may post numbers that inflate their actual capabilities. To determine who the most effective sellers are, it’s essential to consider the selling environment. With accurate data available from your sales performance management system, you can use multiple lenses to evaluate team members. You can look for trends and commonalities such as the performance of the individual, the manager, the product or offering, and the customer base or territory.
A sales performance management solution can provide valuable insights into managers, individuals, teams, and regions which form a solid foundation for planning and strategic decision-making about personnel.
Focus the team
When resources are tight, efforts must be focused. At the highest level, sales teams will benefit from performance goals that align tightly with the overall strategic plan. Clear, simple, realistic goals and sales performance incentives will keep the team engaged and aligned with evolving corporate goals.
With a sales performance management solution, incentive plans can be rolled out quickly, with a high degree of transparency so all team members know what they need to do, and where to focus, to hit their quotas.
Cut expenses that don’t help the business
Although it may be tempting to save funds by reducing sales performance incentives, a more effective strategy is to eliminate overpayments and ensure that incentives are only paid for performance that helps the business. Use incentives to encourage the sales team to execute the plan you’ve created to keep the business thriving through a downturn. When the sales team executes successfully on the plan, both they and the business will be rewarded.
In tough economic times, companies face the challenge of maintaining customer engagement and profitability. This is where incentive programs come in handy – they can be designed to focus on retention strategies while driving sales behaviors needed for success. To learn more about using a sales performance management solution, schedule a meeting here.