The dreaded ‘R’ word that won’t go away in 2023
One thing that most economists can agree on is the distinct likelihood of a global recession in 2023 as the world continues to grapple with rising inflation and interest rates.
Many businesses are already feeling the pinch with surging increases in the cost of energy, leases, mortgages, wages and almost everything else, making a market correction inevitable.
The reality is that despite markets shocks across the past 30 years, many businesses will not be prepared for what’s coming, in a nation such as a Australia where recession is a distant memory, the collective wisdom to draw from to cope in tough economic times simply isn’t there.
The infamous Keating “recession we had to have” in the early 1990’s bore witness to the collapse of building societies, 17% interest rates, unemployment rates of 10% and 4 quarters of zero or negative economic growth – many lost everything.
The impact of a similar recession after the Covid disruption of the last 3 years could prove to be the proverbial straw that breaks the camel’s back for many affected businesses.
Add to that the emotional and mental pressures people faced adjusting to business managing remote workers, finding staff and supporting the fall out of COVID-19 and the impact will extend beyond economic and financial.
Around the globe we are already seeing impact as tech giants lay off staff by the tens of thousands, in what seems a precautionary move in our unstable economic times.
If some of the largest and most profitable businesses the world has ever seen are making such changes, what does that mean for medium sized and small businesses?
With recession comes risk and with risk also comes opportunity. It’s natural to think the only option during a recession is to “bunker down” for the duration with survival being the sole goal.
While that’s not necessarily incorrect, it is only part of the range of possible approaches businesses can take – especially when they’re armed with enough time to adequately prepare.
According to the Harvard Business Review, “recession doesn’t need to mean retreat”, citing that in the 2008 GFC resilient companies performed better than their “retreating” counterparts by having oversight on every dollar spent rather than on simply reducing costs.
15 years later those companies are still outperforming better than their retreating counterparts.
While my view is always through a sales lens, when it comes to selling in a recession, the onus is on the whole organisation to think and operate very differently in order to ensure sales succeeds.
Without revenue, there is no business, and my recommendations are not only directed at Sales Directors, but for leaders across the organisation
- Come back to purpose
It’s easy to get distracted, panicked and reduce decision making to quarters when faced with a recession. It takes disciplined leadership to remember what the company is about and make decisions from that perspective so the culture, the essence of who the company is in the eyes of all those who matter: its people, its customers, its suppliers, its community remains genuine and intact.
Even when difficult decisions must be made like making roles redundant, letting suppliers go and reducing overheads, they must be made in ways that don’t do irreparable damage to future growth opportunities, trash momentum previously built or diminish existing capacity to dig deeper.
Vision and courage required by leaders matters more in recession than at any other time.
- Realign your sales function to the way your customers buy now
B2B sales teams need to reorient their sales activities towards more remote/hybrid than face to face. When lockdown 1.0 hit in March 2020, both phone and field sales teams were using remote engagement methods which further blurred the lines between each team’s focus, and gave rise to an opportunity for companies to approach customer engagement differently.
If you have not already done it, then you should be taking steps to remove large sales teams from the road. Customers who sit at the lowest end of annual spend could be serviced more appropriately using platforms augmented by AI to replicate the in-person experience as much as possible.
Phone teams through Zoom and like products can have an expanded remit of customer portfolios leaving A and AA accounts to be allocated to fewer top sales people who generate greater returns on their capital.
Phone account managers have no additional costs like travel and vehicles and generally come at lower salary points. Through technology they can work remotely, providing potential savings and flexibility about where they’re based.
- Orientate the entire business towards nurturing your customers
It’s always important to make every customer know they matter to you – especially if you have a role that is customer facing or speaking. That said, most organisations think that “loving” their customers is the sole domain of sales and customer service. This is a luxury no organisation can afford in the future, recession or not.
Recession or not, the whole organisation must be educated in the value of a customer to the organisation’s continuity and to their employment.
Whether they’re in accounts, finance, in the warehouse, in IT, delivering a product or somewhere else, if they have anything to do with a customer or support someone who does, they have a responsibility to do all they can to ensure every customer feels valued by the experience everyone gives them.
Creating a culture during a recession that supports that approach will set any organization up to thrive despite the recession even grow their customer and once the recession is over, they’ll race ahead of those who don’t.
- Solidify suppliers and supply chain
Being able to deliver products and services to your customers is paramount. Without supply, it’s pretty difficult to sell!
This applies to services as well as products. When you deliver a service, this doesn’t mean you don’t need to worry about supply chain, but if the “deliverer” of your service is a person, you need continuity plans in place.
How are you ensuring your team stays positive?
What can you do to create contingency plans should people leave or need time off?
What will you do when your already reduced workforce can’t work for whatever reason?
Thinking through these challenges well in advance is the secret. Having a plan ready doesn’t mean you’ll need it. Adjusting a plan is different to not having one at all.
Ultimately planning helps to ensure you’re not reactive which may cause permanent problems from your short-term solution.
- Look for ways to differentiate by the way you add value to customers
Recessions create innovation as organisations look for low-cost ways to keep their customers connected to their people and brand. The initiatives you create to deliver more than simply the product or service you provide, is one if the keys to your success.
Consider the problems customer groups are likely to face during a recession and partner with other providers to help be part of the solution with education, information, connections, networks and expertise.
Make sure you’re promoting your customers and celebrating their wins to your network. Capture stories of how your service or product has enriched what they’ve been able to do as a result. Celebrate it internally and externally.
Giving is the key to reciprocity. Giving with no expectation is remembered and is good for all.
If what economists are saying is true and a recession is due by the end of the year, we all have time to adequately prepare. How well we use that time will matter. The test of this will be when we’re in it.
For business leaders now is the time to get into action.
Written by Ingrid Maynard.
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