Winning in an Economic Downturn: Part 1

Spencer Dent

Winning in an Economic Downturn
Part 1 of 2

6 Tips for B2B Solution Providers

It’s time to adapt. Right now.

As the world grapples with the effects and uncertainty of COVID-19, businesses are feeling the pressure. There’s no doubt about it, we’ve slid into an economic downturn. 

Some industries have already taken a direct hit (i.e. restaurants, travel, etc.) and laid off significant numbers of employees. Most B2B solution providers (i.e. software, professional services, etc.) are slowing down their activity and decision-making as they try to gauge the situation at hand.

We’re not sure how long the downturn will last, but some things are clear. The world is different now than it was just a month ago. Markets are changing, buyer behavior is evolving, and your business needs to adapt right now. These themes are starting to emerge as trends across the hundreds of win-loss interviews that Clozd consultants conduct for B2B clients each month. In spite of the challenges, solid businesses should sense an opportunity.

Economic downturns present an opportunity.

Macroeconomic downturns filter the weak and unstable competitors out of each market. They divide the strong from the weak. There are many studies, from reputable management consulting firms, that analyze what happens. The Boston Consulting Group conducted a study that showed how 30% of companies that were among the top-10 in their respective sectors dropped off that list during a recession. Fewer than 10% of those that dropped off ever made it back. Their conclusion is that a downturn magnifies the relative strengths and weaknesses of each company. A study by McKinsey concluded that when companies manage to double-down on their investments in research/development and sales/marketing during a downturn, they emerge with higher valuations and surging momentum in the upswing.

Every company is under pressure right now due to COVID-19. There is no way to avoid the risk - so don’t bother trying. Adjust your expectations and start taking action that will ensure you gain ground relative to your competitors during the downturn. Position your company to thrive, coming out of this crisis, by implementing the following tips.

Six tips for B2B solution providers.

  1. Stay Lean. If you are not accustomed to operating lean financially, then it may be too late. Companies that weren’t in sound financial shape on March 1 are already cutting costs, laying off staff, and figuratively crossing their fingers. If you were already financially disciplined, stay that way.
  2. Double-down on your go-to-market effort. Notice that I said “effort” not dollar investment. Be creative and focused in lead generation activities. Figuratively get “all hands on deck” to help with driving business. Reset your culture to treat every deal in your sales pipeline as though it’s make or break - because that’s true in a downturn.
  3. Don’t be stagnant. Advance your offering. Build on your strengths and find creative ways, given your resource constraints, to advance and differentiate your offering. Incremental improvement during a downturn is magnified by the fact that most of your competitors will stagnate.
  4. Adapt your pricing model/terms and packaging. You need to make your solution easier to buy right now. Be aggressive in removing roadblocks or tension points in the evaluation and negotiation processes. This may necessitate changes to your product offering and packaging. Think “starter package” at a discounted price. Gaining market share during a downturn magnifies your gains in the upswing.
  5. Stay focused on your customers. It’s more important than ever to deliver real value to your existing customers. They are the lifeblood that will sustain you during the downturn. Get creative and go the extra mile to reward them for sticking with you.
  6. Be diligent (and patient). Some of your efforts will feel like they are in vain but they will generate pent up demand that will be rewarded when the economy turns back around. Your investment now will position you as a leader coming out of the downturn.

Spencer Dent is one of the founding partners of Clozd, a leading consultancy for B2B win-loss analysis, and a former Case Team Leader at Bain & Company.

Check out Part 2 of his article by clicking here.

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