Life and business doesn’t always go to plan. Both throw curve balls at most people on a regular basis. Now we are all living and attempting to work through one of the most disruptive events in recent history, certainly in living memory. Nothing could have prepared the world for Coronavirus (Covid-19), a devastating and deadly global pandemic.
Covid-19 is a particularly dangerous virus. It’s highly infectious, and transmits when humans — social creatures, for the most part — interact. If someone has it, whether in a crowded office, shop, train, cafe, restaurant, or anywhere else people are likely to meet, there is the chance of passing it onto numerous others. It kills, and even if people survive, the long-term effects are devastating.
Naturally, to protect ourselves from Covid-19, working from home (WFH) is actively encouraged. WFH is likely to be normal for quite some time.
Living in a world of reduced expectations
Alongside the devastating loss of life, the world economy has been thrown into recession more quickly than in decades, even centuries. All major world economies contracted. Growth ground to a halt, then got thrown into reverse.
However, we are in many ways on the road to recovery, with governments and central banks throwing money at this unprecedented challenge. Government efforts are helping to keep businesses going that might have otherwise gone under. But that’s only a short to mid-term solution.
What governments need is for customers to start spending. Businesses need that too. B2B sales need to pick up too; that will support the global economic recovery. Unfortunately, during this time of massive economic uncertainty, most companies don’t have quite as much to spend as they did before Covid-19 hit.
As a consequence, a lot of deals will have vanished. In some cases, sales pipelines have gone up in smoke overnight as sales teams, or buyers, have been furloughed. A lot of deals may be coming back, or companies have scrambled to get new revenue into the pipeline. And at the same time, many more deals are being downsized.
Budgets cut. Scopes reduced. Expectations scaled back. As a salesperson or sales leader, how can you adapt to a world of lower expectations?
You may have already had to adjust targets. One of the reasons why is clients are slashing budgets, although most aren’t doing so quite as drastically as when this started.
What is Strategic Down-selling?
Down-selling is the opposite of up-selling. When up-selling, you encourage a client to spend more.
Down-selling, on the other hand, is strategically securing a sale only when a prospect is convinced to spend less rather than not spend anything. Traditionally, this happens when a prospect or client wasn’t going to spend anything; therefore this is a way of getting them to spend something.
But now, in these new economic circumstances, a strategic down-selling approach is the most effective way to salvage a deal that could disappear. It’s something that should be in every salespersons toolkit.
How to Strategically Down-sell to Rescue a Deal?
#1: Recommend alternative (cheaper) products and services
Depending on your clients, and sectors you serve, higher-priced service offerings may not do very well. Companies need to adapt what they offer and in some cases, how much they charge. Now that doesn’t always mean slashing margins, which is a short-term fix that often causes long-term problems.
Instead of cutting margins, look at ways to offer more cost effective packages. Align your products/services around adjusted pain points and smaller budgets. Buyers will understand you can’t deliver the same as you could if they can’t afford a bigger budget, but at the same time there’s an increased exception as far as value and effectiveness is concerned.
Look at ways to serve customers more effectively, offering more value for a lower rate, without compromising too much on margins.
#2: Suggest a new payment structure
Cashflow has never been more important.
Businesses can’t end in a situation where clients are taking longer to pay, and paying less than before. Make sure the flow of cash is healthy from current customers, and then look at ways to bring in more from prospects in the pipeline.
For example, when it comes to agreeing terms, aim to make it as fair as possible. If you have to offer reduced prices, aim to get more money up-front to support cash flow (e.g. a percentage of the monthly invoice). Always seek to gain when offering something to make it easier to on-board new customers.
#3: Look for aligned opportunities
Are there other ways you can work together?
Are there cross-promotional opportunities that could be explored?
Or are you missing up and cross-sell opportunities that need looking into?
In this new normal we are operating in, companies need to think creatively. Businesses need to find ways to generate more revenue, open up new revenue streams, and even adapt the traditional client - supplier model. If there are ways you can help clients (such as introductions to companies they could work with) then seek to ensure a reciprocal arrangement to generate new revenue.
During these challenging times, businesses that survive will be more adaptable, more versatile, offer more value (without cutting margins too much), and operate more creatively with clients, suppliers and other partners.