
www.kickstartall.com
Qualifying UP ↑ in a DOWN ↓ Economy
by
Janet Gregory
The challenging economy is having an impact on our sales warriors. Qualifying
customers is one way we can minimize the negative impact
on our business and increase sales effectiveness during these uneasy
times.
The economy and business have been battered over the last 8 years by
the dot-com implosion and 9/11/01, and now the continuing
War in Iraq and escalating gas and food prices. Decision
processes are extended, orders decline and hiring slows.
There is nothing that indicates that the slow business cycle
will change anytime soon. But it is not all negative news;
according to CIO Insight, most CIOs
(76%) are expecting their IT spending to remain about the
same or even increase over the next six months.
During times like this it even more important than usual to qualify
prospective customers by identifying and understanding buyer
behavior patterns. As buyers face the continued slow economy,
customers will tend to fall into one of four business categories:
losing their grip, white knuckles, holding steady, or still
cruising. If
you recognize where your customer prospects are, you can
spend your sales time wisely and mount an effective sales
campaign.
Losing Grip
- These are the 20% of companies that were struggling to
begin with. They are barely holding on, but
the grip is slipping.
- The behavior is binary -- they will either stop all purchases or
they will ignore what's going on and forge ahead.
- Identify the companies in this category early and don't waste
your time with them. Even companies that want to forge ahead
will be bad credit risks which means that they won't be
able to get financing or you will likely end up with bad
debt on your books.
White Knuckles
- These are the 30% of companies that have a reasonable
hold on their businesses, but the outlook is gloomy. These
companies may be downsizing and taking other cost reduction
initiatives just to hang on.
- The buying behavior will fall into four categories: trading down,
hunting for bargains, postponing purchases and do-it-yourself.
Stay nimble because you are likely to see a combination.
- The good news is that there are reasonable strategies to address
this customer set. Look out for the 50% of companies in
this category that will be bad credit risks and don't waste
your time with them. The other 50% however can be worth
the effort if you deal with them on their terms.
- Trading Down or Hunting for Bargains. Offer
solutions for the budget minded buyer, no frills today
with up-sell potential in later months or years. They
are receptive to solutions that are a "sure thing," so
provide proof that your solution will deliver value -– relevant
case studies and reference customers will have a significant
impact.
- Postponing Purchases. Consider offering creative financing
for capital expenditure (CapEx) offers such as leasing,
rent-to-own or 90-days-same-as-cash. Considering offering
operating expense (OpEx) alternatives such as on-demand
or SaaS (Software as a Service). OpEx offerings can be
particularly attractive because the benefits can be put
into use immediately with minimal financial impact
- Do-It-Yourself. Can your customer participate in the delivery
of your products or services? This is a lifecycle or
total cost of ownership (TCO) issue. Let these customers
view you as a trusted partner looking out for their best interests.
Holdin’ Steady
- Here you will find 30% of companies holding their own
but maybe holding their breath a little. These companies
are maintaining a good business and even growing slowly
but they are cautious.
- Typical buying behavior in this group falls into three areas: more
efficient spending, value & price, and safety.
- There are great ways to address the economic needs of this group
and some of the strategies from the "white knuckles"
can also be employed.
- More Efficient Spending. Fire up
the ROI tool. Show them efficient and cost-effective
solutions. Hard dollar savings are king!
- Value & Price. ROI is necessary but insufficient.
Show customers productivity benefits and how you help
their business strengthen their competitive edge.
- Safety. Highlight how your company and your offer
are a sure bet. Reliability, availability, up-time, back-up,
business continuity, or some combination that provides
confidence now and for the future.
Cruising
- When you are lucky enough to tap into the 20% of affluent
companies that are unaffected by the current economy you
will know it, although you may pinch yourself and not want
to believe it.
- The buyers in this group are continuing a normal buying cycle, seemingly
immune to external economic factors.
- Don't heave a sigh of relief yet. Just because their
business appears to be immune to what's affecting the other
80% of companies, they are still keenly aware of the business
climate. Be
prepared for these customers to engage in stringent competitive
comparison and stiff negotiations.
- Competitive Comparison. Be ahead
of the competitive curve with competitive reports, reference
customers that have already made a competitive comparison,
and trials if necessary.
- Negotiations. Good negotiation skills are needed in good
times and in tough times. It's no different in
today's environment.
The Power of Impending Events. Compelling impending events
drive decisions in any business climate. Heighten your qualification
activities to find the compelling impending event. Tightly
tie your offering, the value proposition and your proposal
to these compelling events and your sales cycle will move
more quickly. Figure
out what an impending event looks like:
- A company that is moving or expanding.
- A company with outdated, aged or antiquated competitive offerings.
- Business cycles: fiscal year, demand cycles, kick-off meetings,
seasonal needs, new product launches, etc.
- Financial pendulum...turn variable costs into fixed costs,
turn recurring charges into a one-time fee, flip high maintenance
into low monthly costs.
Sales is not an easy business, even in the best of times. What
makes sales such a great profession is the challenge of figuring
out how to connect your offering to changing business needs.
Good selling!
About the Author
Janet Gregory leads the sales readiness practice for KickStart Alliance.
For assistance with sales strategy, sales planning, training, compensation
or any aspect of sales operations, contact Janet at janetg@kickstartall.com.
For help in aligning sales & marketing for results contact any member
of the KickStart Alliance team at info@kickstartall.com.
June 2008