We published this article early last year (2008) but it seemed worth revisiting given current events.
What Good is a Recession?
Whether a recession is generally spread across all industries, or localized to just your industry, it is a great time to be selling. A recession is defined as two consecutive quarters (3 month periods) when economic activity, i.e. total sales, is lower than the two preceding quarters. In severe recessions ales have been as much as 15 percent lower than the two preceding quarters. That means that (only) 85 percent of your market is still buying. However, most of your competitors will have substantially cut back on their sales efforts. They often cut back by 50 percent or more.
A Time to Sell More, Not Less
In the 1980s, at the start of the personal computer era, there were 151 computer manufacturers in the USA. Due to over-production, the industry went into a tailspin. Fifty-two of those computer manufacturers went bankrupt in the first year of that industry recession. At that time, I was the Executive VP of a company that provided manufacturing equipment and tools to the computer industry.
Most of our competitors, the suppliers to the computer industry, feared the recession. So, they cut back on their sales and marketing efforts. However, our company hired and trained more salespeople, and we increased our marketing efforts. And, that was a period of maximum growth for our company.
Think about it! During that recession, 99 of the original 151 computer manufacturers were still building and selling computers. And, their average sales went up because their failed competitors could no longer supply computers to the market. There were 33 percent fewer computer suppliers in a market that was buying 15 percent fewer computers. Therefore, the computer companies that survived did an average of 18 percent more business. However, our company’s sales to the computer industry increased by almost 100 percent because most of our competitors made themselves weaker due to their fear of the recession. While we were expanding, many of our competitors failed.
A Good Time to Gain Market Share
Even companies that have a very large market share should continue their levels of sales and marketing during a recession. That has been proven in the auto industry where American manufacturers are managed for profitability per quarter and Japanese manufacturers are managed for long-term growth. While the American car companies have cut back on marketing and sales during recessions, Japanese car companies have continued at pre-recession levels. Thus, the Japanese gained market share during the recessions and they held onto their market share gains when the recessions ended.
Adjust Your Sales Process
Whether you are running a company or your own book of business, you should be able to considerably increase your success during a recession. However, it is not “business as usual.” Having a highly effective sales process is more important than ever. You must be able to efficiently find and identify the high probability prospects. You must be able to work with them on the basis of mutual trust, mutual respect and mutual commitments.
This recession can be a good time for you.