The current economic expansion is long by historical standards, and thus the risk of recession rises with each passing month. Recessions catch many companies by surprise, with predictable results. In the 2001 recession, total sales for the S&P 500 declined by 9 per cent from its pre-recession peak to its trough 18 months later — almost a year after the recession officially ended. But these periods also present opportunities for well-prepared companies to take advantage of the turmoil and gain share.
The best time to undertake major changes that will strengthen a company during recession is before it hits. Before the past recession, both eventual winners and eventual losers in a group of 3,500 companies worldwide experienced double-digit growth rates. Once the recession struck, however, performance began to diverge sharply — the winners continued to grow while losers stalled out. The performance gap widened during the recovery. What did the winners do that losers didn't? They pursued a variety of tactics before the recession that were designed to fortify the firm when the downturn hit — moves both within sales and beyond, like adding a low-cost channel to serve small accounts or simplifying the product assortment.
We'll focus here on what the sales organization should be doing now to prepare for the next recession, with an eye toward using new digital tools. The starting point, of course, must be to make sure you have the basics squared away: aligning sales capacity with the market opportunity (capacity tends to get rusted in place, leaving companies over- or under-resourced); sweating the details of daily execution (things like putting controls around discounting); and getting the back of the house in order (a nimble commercial operations group is critical).
Digital tools and analytic techniques can help make sure those basics are taken care of. Our recent benchmarking of nearly 900 B2B companies underscores the importance of these tools. On average, roughly four times as many winners — defined in this case as those companies that grew absolute revenue at a significant rate and gained market share within their industry over the previous two years — as losers have digital tools embedded into their core commercial capabilities. Digital tools can also open new go-to-market approaches.
ZERO-BASE SALES CAPACITY: Too many sales teams use outdated practices in making account and territory assignments. They rely on backward-looking sales data and broad-brush reports to calculate overall market size and gauge how many reps they need and where to assign them. Digital tools such as Vertiv's opportunity calculator can help make more accurate matches.
