Selling Smarter In A Recession

White Paper: Selling Smarter in a Recession
See also Managing Smarter in a Recession

Just about every business has been adversely affected by the recession, but only those which proactively make the best of
it minimize their revenue loss…and may well increase their market share in a down economy. The difference in how your
business fares through tough times is whether you emphasize cutting back or optimizing the resources you can afford. It’s
natural to focus so much on meeting payroll and paying vendors that applying new creativity to your marketing and sales
programs may take a backseat and prevent you from maximizing your revenue. Whatever percentage drop has occurred
in your industry, you’re not necessarily doomed to the same fate. First, whatever portion of the market remains alive is
still available to you and, if you can outmaneuver your competitors, you can actually capture some of their business so
your decrease is less than that of your industry as a whole. And, second, if you work to get more of the available busi-
ness, you’ll come out ahead when good times return, and that additional revenue and profit will offset the short-term sacri-
fices you may have to make.
Marketing vs. Sales

A quick refresher on the difference between the two functions: marketing is your
strategies to identify, qualify, quantify, and target your marketplace, while sales is your
tactics to approach, prospect, propose, and close clients (and to grow existing clients).
Your company may not be large enough to have separate personnel for these functions,
but you do need to separate them just the same: they each require different mindsets
and skill sets. Your marketing function should focus on developing new revenue
opportunities while your sales function is the means by which you convert those plans
into completed transactions.

And, your role as CEO/Owner is critical to marketing success in good times and bad. While you may delegate authority
and responsibility for marketing, it should always hold true that the top man or woman remains the Chief Marketing Offi-
cer of the company. There’s a very important reason for that: marketing is the only
function which impacts every other department within a company and which is
impacted by every other department. Optimum marketing effectiveness isn’t achieved
until and unless your entire company is actually a marketing support team. As PCs
gained popularity, software manufacturers were deluged with tech support calls.
That’s how Microsoft came up with the OOBE concept, the out-of-box experience.
They, and other software publishers, quickly learned that a floppy or hard disk in a
plain sleeve in a brown cardboard box with what looked like photo-copied instructions
gave their buyers a sense that they hadn’t gotten full value for their investment. By
changing their distribution function to package their software better, buyers reported higher levels of satisfaction and tech
support call volumes dropped. Everything your company does should complement putting your best foot forward (espe-
cially in a down economy), and only the person at the top can see that this happens.

MARKETING 101

I contend that the smartest approach to marketing can be stated in just four words: clone your best customers. That may
be easier said than done, but it’s the fundamental success in getting the most bang for your buck. Your best customer may
or may not be your largest, the one who orders most often, or even the one who’s
bought from you the longest. Step back and take a critical look at your client base and
look for characteristics you can use to define categories to analyze them, including
profitability, ease of collection, special handling or requirements, chronic problems,
etc. I once had a client who provided a high-tech service and knew his bottom-line
should be better. In a meeting with his ops people, we learned there were two
situations that created issues which complicated the delivery of his services. His
accounting software facilitated addition of two sort fields for those two conditions and,
when the last year’s financials were re-run excluding accounts with both conditions,
the results jumped off the page: if he had turned down those customers with those two conditions and referred them else-
where, he’d have missed 15% of his gross revenue for the year…but would have ended the year with 10% more cash in
© 2009 Bob Hougland RGH MARKETING! Box 92166 Pasadena, CA 91109-2166
626-583-9000 (tel) 626-583-9111 (fax) RGHmktg@pacbell.net


the bank! My client bettered my idea by, instead of referring those prospects away, forming a subsidiary company with
much lower overhead to specialize in those situations and ended up with a second profit center. So, don’t let the “blind-
ers” of the dollar value of an account be the primary factor by which you evaluate it. You may well discover that a dozen
smaller accounts of certain characteristics actually contribute more to your bottom-line than one big client, or that you can
actually better-prioritize your market segments for a better return.

B2B Commodity Marketing: If your product or service is bought by a purchasing agent or category buyer, try to create
value-added incentives that cost you little or nothing. It’s a myth that buyers always go for the lowest price: the good
ones go for the best value, so figure out how to add value. Think of incentives that will enhance the value of your product
or save your customer time or effort. The auto industry learned years ago that the best incentives are accessories or ser-
vices directly related to the vehicle and which improve the usefulness or enjoyment of the purchase. Try to add a product
or service that costs you wholesale, but has perceived “retail” value to your buyer. Find out from your customers’ trade
association what kinds of problems their members are facing and see if you can provide any solutions beyond just the
product or service you provide. Explore combinations of items you can “package” since any form of vendor consolidation
is financially beneficial to both customer and vendor. And, down times are the best times to critically evaluate the range
of what you offer in light of either expansion or contraction: now may be the time to drop seldom-sold products or ser-
vices or those which cannot readily be packaged together with other things, but it just as well may be the time to expand
your array to include something which complements what you already do.

B2B Product/Service Marketing: If what you sell requires an executive approval,
always target high and, if necessary, accept delegation downward. It’s always easier to
navigate through a company with downward momentum than to try to fight your way
up the food chain like spawning salmon. By targeting too low, you run the risk of
someone without the juice to sign the contract derailing your efforts, so do your
homework and go for someone who can make the decision. When referred down, ask
for permission to keep in touch with the referrer. Then, you can tell the person you
were referred to that the boss graciously asked that you keep him informed on what
happens. To varying degrees, the old adage “What the boss likes, I love” still applies
in most companies.

Whether times are good or bad, you’ll not likely grow your market share by very much without identifying and approach-
ing new prospects. You optimize your potential success with new prospects with the manner in which you make your
initial approach. Equip your sales force with a library of approach letters. Yes, snail-mail letters sent by U.S. Mail.
Why? Because this is the most effective way to capture initial attention of a busy
executive or manager. Surveys have shown that most execs prefer to not be contacted
via e-mail by vendors they don’t already know (yet they prefer e-mail for those with
whom they have an ongoing relationship), and more and more busy managers are
rejecting cold telephone calls because such a high proportion involve buying decisions
which can be made at a lower level. While all of us check our e-mail whenever we
think of it, almost all execs and professionals have a daily routine for handling
incoming mail. They set aside a period of time which they go through it (whether pre-
screened or not) which means their minds are focused on its content and open to intake
of new information. A concise, punchy letter that grabs their attention, says in one sentence why it’s in the recipients best
interests to learn more about what you have, and a closing follow-up commitment (which you must always meet) will do
the best job of getting you to decision-makers, even some you might have thought unapproachable. Nothing is perfect,
but even delegation from such a letter is better than having started at the bottom and trying to work your way up.

B2C Marketing: Selling to consumers is actually a combination of the two B2B situations, above, because some are im-
pulse or routine purchases (such as groceries) while others are joint decisions (such as major appliances). As you plan
your promotions, sales, ads, and window signage, percent savings/reductions are more effective than dollar amounts,
while benefits should be described in largest terms (per year) with your cost in smallest terms (per day). Don’t be bashful



about approaching your suppliers for promotional help and/or extra allowances in their cooperative advertising program.
In a down economy, manufacturers and distributors are more likely to negotiate on issues that will help move product.

Your Website

Certainly, not all business require a website, but do you have a strategic plan for yours if you do have one? You may sell
directly from your site or use it primarily for customer service/support. But, if it has value as a marketing tool to support
your non-internet marketing and sales programs, optimize it to accomplish the most for you. The great majority of busi-
ness websites fall short of their potential (even those of large, successful corporations) by conveying the messages you
want to tell or just presenting an online catalog. Your website should be built from your site visitors’ standpoint, not
yours, and most web designers have either a graphics or programming background. Consider the five major stages of me-
dia development:
1. Books gave reach: words could be spread worldwide in their original form
without distortion
2. Periodicals added timeliness: now news could be distributed promptly and the
local fishmonger could let the town know when he had a fresh shipment
3. Radio provided the human voice: tone and emotion could now be added to
words, along with actual sounds
4. Television combined sight, sound, and motion: it’s still the most effective way
to make a deep and lasting impression
5. Internet added to all of these interactivity: now there is a way to involve site
visitors with you and what you offer
Ask yourself if your website tells your story or does it give visitors custom navigation choices to go to the content of
greatest interest to them and to satisfy the reason they came to your site. I’ve had more than one client report signifi-
cantly-increased interactivity when they changed their website to meet the inquiry needs of defined categories of pros-
pects and customers rather than to broadcast the company’s whole story to everyone. The unique internet characteristic of
interactivity lets your prospect/client become involved with you immediately, and if the site is set up right, they’ll stay
longer, come back more often, and leave feeling helped and better-informed. Also be mindful that it is very inexpensive
to host webinars about your product or service and/or make online sales presentations in lieu of costly travel in many
cases.

Marketing Ideas

 Create new demand for your products/services: During WWII, eggs were among the few natural foods which
were in excess. Facing either lower prices or destruction of eggs to maintain prices, a marketing idea was imple-
mented. Egg distributor sales reps who called on soda fountains and hamburger joints began touting a source of
incremental income to their retailers: when taking an order for a milkshake, ask the customer, “One egg or two?”
Some customers perceived “two” as better than “one” and made that choice. Others simply took the default
“one.” Both decisions boosted egg sales and added several cents’ profit to each milkshake transaction when eggs
were not usually added to milkshakes previously.
 Improve your packaging/presentation/displays: Candy has not always been an important part of Valentine’s Day
gift sales. While the Necco candy hearts go back to the late 1800s, flowers dominated gift-giving with jewelry a
distant second. When the confection industry introduced durable, decorated heart-shaped candy boxes prior to
WWII, that turned the tide: expenditures for candy have surpassed those for flowers ever since. Surely you know
at least one woman who has kept one of those boxes, either on her dresser or in her closet, for years, using it to
hold some kind of memorabilia.
 Don’t be too hasty in trimming your product line: When William Clay Ford took over as Ford CEO, he
promptly began announcing reversals of some of his predecessor’s decisions. As an economy measure, the com-
pany had dropped out of the rental car market because it was the lowest-profit sales channel. Reviewing the im-
pact of that decision, Ford determined that a small profit would have been better than none, and that the increased
production would have spread overhead and other costs over a larger vehicle production base.


 Don’t be too brash in slashing your advertising: Cut the frequency by as much as one-half, if necessary, because
studies have shown that this does not decrease your impact by 50%. Go in every other issue or run broadcast ads
alternate weeks only. Cut full-page print ads to half-page; there’s only a small loss of notice. Remember that the
ad media are among the hardest hit in a recession, so they’re usually willing to work with you.
 Innovate with little or no added expense: For all the bad mistakes GM has made, one successful move was put-
ting new cars on E-Bay and negotiating a contract for local dealers to list cars free-of-charge. Examine every as-
pect of everything you do for new and better ways to do it.
 Maintain aggressive marketing and sales programs: The recession won’t last forever, and if you maintain a
stronger position in the marketplace than your competition, you’ll be better off in good times later on.

Good Times Market Share Bad Times Market Share Back to Good Times Market Share
Hypothetical 20% of 100% Market Hypothetical 25% of 75% Market Hypothetical 25% of 100% Market

YO U YOU

YOU

Your
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Increase Incease

SALES 101

There are two fundamental factors to keep top-of-mind in your sales function in order to complete the greatest number of
completed sales. The first involves your prospect; the other, you. Let’s start with your
prospect. Sales trainers for years have preached that purchase decision-making is
primarily emotional, then converted to logic, and that’s now been proven by studies of
brain activity. That means it’s easier to sell to a “want” than a “need.” Help your
prospect want to buy what you have and not just focus on his/her need, and you’ll
improve your chances of closing the deal. When you summarize your benefits, your
offer, your proposal, your price, whatever…ask them how they feel about it, not what
they think of it. If you can elicit a positive emotional response, you’ve rounded third
and are heading for home plate.
The second factor involves how you decide what to do or not do, what to say or not say: selling boils down to nothing
more than making it easier for your prospect to make a decision in your favor than to make any other choice, whether that
be buying elsewhere or not buying at all. Some tips on how to accomplish this: Do tell
your prospect what he/she needs to know to make an informed decision, but don’t
waste their time with extraneous information that won’t directly impact a buying deci-
sion. Do anticipate your prospect’s questions and concerns and “head them off at the
pass,” but don’t raise subjects that can generate questions which can derail your sales
process. Do ask questions; the more you know what your prospect has on his/her
mind, the better you’ll know what to say or not say. Don’t presume anything about
your prospect’s interests or priorities; if you’re wrong, you may say or do the wrong
thing.
But, most important of all, never answer a prospect’s question you don’t fully understand. You may not answer the ques-
tion he’s actually asking or you may be “opening a can of worms” with your response. Years ago, I remembered learning
that from J. Douglas Edwards, arguably the greatest sales trainer of the 20th Century, as I sat opposite the VP of Marketing
of one of the big 3 auto makers in Detroit. The contract I handed him with my proposal (for a very large amount on be-
half of a client) had a fixed project price along with a standard contingency clause for up to a 10% overrun for unforeseen
costs. His only question was, “Is this a fixed or variable-price contract?” The project price was fixed; the contingency
clause was variable, but I knew to not answer that questions, so I asked in return, “May I ask why that difference is impor-
tant to you?” Without batting an eye, he responded, “If it’s a fixed price, I can sign the contract right now. If there are


any variables in it, I’m forced by company policy to put it through the purchase order process which will take at least
three weeks and which you’ll have to absorb because we can’t slip the deadline.” [Did I just hear a strong buying sign?] I
asked for the contract back, lined out the contingency clause (which my client had authorized me to do if necessary), ini-
tialed the margin, and asked him if he’d accept that as a fixed-price contract. He called his secretary in, told her he was
going to take me to lunch in the executive dining room, and that he wanted someone in legal to look over the contract so
he could sign it when we got back. I later learned that a head-on competitor had tendered a proposal which, even with the
10% overrun, was still a lower total amount than mine, but he didn’t bother to find out what about the pricing was impor-
tant to that exec. If you don’t thoroughly understand what your prospect is asking, don’t answer the question…clarify it
first. Note also that I closed the deal on what he wanted rather than what he needed which my competitor could have also
provided.
Overall, selling involves preventing the creation of hurdles or obstacles in your sales path while getting over or around
those that may occur. Foresight and prevention are more valuable tools than correction and compensation.

Mistakes to Avoid

In the March, 2008 issue of Selling Power, John W. Asher, head of Asher Training, summarized the eight most common
mistakes companies make which can be especially detrimental in a down economy:
A. Common mistakes Sales Managers make:
1. Hiring the wrong people, and then leaving them in place
2. Failing to train sales reps in the skills they need (don’t assume they know)
3. Believing that managers can motivate sales reps (motivation is internal)
4. Promoting the best sales rep to sales manager (different mind and skill sets)
5. Failure to establish an appropriate division of labor (don’t expect sales reps to be marketers)
6. Failure to develop a repeatable sales process (learn from your customers and best reps)
B. Common mistakes Sales Reps make:
7. Talking and presenting rather than listening and solving
8. Giving up too soon on qualified prospects

Do you respond to RFPs or RFQs?

What follows applies in many sales situations, but Sales Director Donna Kirtz wrote in the May, 2008 Selling Power edi-
tion the ten most important questions to ask before wasting time on a non-productive RFP or RFQ:
1. When did you last change vendors?
2. Are you looking for both short and long term growth?
3. What is your response timeline?
4. What would prevent a change on that date?
5. What is your purchase process? Are RFPs required?
6. When you have all the responses, what happens next?
7. Who reviews the RFPs? Who makes the final decision?
8. What made you consider my company?
9. Why are those things important to you?
10. What role does price play in your decision?
If your prospect is put off by these questions, that may be a telling sign in itself. In the body of the same article, Program
Manager Jennifer Runyon says its important to formalize a “go/no-go” checklist for RFPs to make educated decisions on
their viability. She also points out the top four RFP red flags:
1. The RFP is very vague
2. The RFP is too detailed or slanted towards a competitor
3. The prospect won’t answer questions about the RFP
4. The prospect claims the RFP was issued to satisfy company policy


B2C Selling:

Store Owners: Don’t make the biggest retail sales mistake made millions of times daily!

When you greet someone who walks in by saying “Good morning! May I help you?” you know how many times you’ve
heard “No, thanks, just looking.” You’ve effectively painted yourself into a verbal corner because you’ve lost control of
the sales situation. Instead, try a simple “Good morning!” and then shut up! You’ve now put the verbal ball in your cus-
tomer’s court and he/she will feel the need to say something, and most likely, that “something” will be the reason they
came in. Now, you’ve got something to work with as you guide him/her to that part of your display and begin asking
questions to better qualify them. If they see you as a helpful resource, they’re less likely to shun you as someone who’s
going to try to “sell” them something.

Overall

It’s been said that you can’t control some things that happen to you, but you can always control how you react to them.
This applies to an involuntary recession. Focus on creative ways to maintain and grow your sales rather than allowing
yourself to be backed into the corner of reactionary management. There are ways to drive new business. You know your
marketplace. You know your customers. Keep your attention on what new and different things you can do that your
competitors can’t or won’t and you’ll come out ahead.

07/09 626-583-9000 (tel) 626-583-9111 (fax) RGHmktg@pacbell.net

Selling Smarter In A Recession

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