The current geopolitical circumstances in Ukraine coupled with inflation stoked by soaring energy prices, supply-chain bottle necks and talent shortages, have combined to create powerful economic headwinds.
US inflation has defied expectations and remained at a 40-year high while the United Nations lowered its forecast for global economic growth in 2022 from 4% to 3.1%
While a full-blown recession isn’t upon us yet, the hallmarks of one looming over the horizon are clear. Some financial leaders have already sounded the alarm and Jamie Dimon, the CEO of JP Morgan Chase, even warned of an economic “hurricane.”
In this context, CSOs must take steps to prepare their sales functions accordingly. CSOs should employ Scenario Planning, double-down on sales culture strategies and drive efficiencies in their Go-to-Market model. Gartner analysis of past economic downturns suggests that those who prepare now will outperform those who don’t.
Use Scenario Planning to Prepare for Cost Reduction Strategies
CSOs should develop their strategy now for likely challenges by leveraging scenario planning to help their organizations avoid common pitfalls and errors in cost-reduction decisions.
Gartner defines scenario planning as the creation of hypothetical future business scenarios designed to raise decision-maker awareness of alternative futures and prepare companies for shifts in the business environment.
Our research shows that these shifts, precipitated by inflation, are imminent. While 20% of CFOs or finance leaders told us they are turning to cost-cutting in Q2, that figure will jump to 39% should inflation persist until Q4 2022.
To tackle this challenge, CSOs and their teams should aim to create a culture of smart spending using scenario planning. They can ‘signpost’ their organizational response to a scenario by highlighting not only what should happen but also what should not happen.
At our June 2022 London Executive Briefing, CSOs shared how scenario planning had proved valuable to guide their actions at the start of the COVID-19 pandemic. One CSO shared that he found it especially important for him to know the levers available that he could pull depending on the scenario and the impact each would have.
While COVID has helped many sales leaders recognize the levers available to them so they can pivot quickly, each scenario is unique and what worked for COVID may not always be the best response.
Tackle Talent Shortages by Employing Sales Culture and Talent Strategies
Commercial leaders need to ensure they build, deliver, and maintain a sales culture that engages, retains, and effectively onboards sellers. While this strategy is always apparent, in periods of talent shortages, this should become a strategic imperative.
Throughout our London Executive Briefing, talent was a challenge preoccupying most participants and the Great Resignation has made talent shortages feel more acute. Entering a talent ‘bidding war’ is not sustainable, especially in the context of the rising economic headwinds.
Instead, CSOs should work to help connect sellers to the organization’s employee value proposition. Gartner describes the EVP as how an employee perceives value by working in an organization across five attributes: opportunity, people, organization, work and rewards.
Sales leaders have a direct influence on all of these elements. Specifically, they can:
- Ensure development opportunities exist
- Fill open positions from their existing talent pool
- Improve manager quality & coaching
- Help promote work-life balance
- Build a pay-for-performance culture
You can read more about this in the blog by my colleague Dave Egloff: Attracting and Retaining Top Sales Talent
Drive Efficiencies in Go-to-Market
With talent and budget shortages looming, CSOs have to focus on managing bottom-line costs and driving efficiencies. However, there is a careful balance to be struck here. Restricting bottom-line costs shouldn’t be done in a way that limits or inhibits growth. As one CEO put it, you “can’t save your way to growth.”
Commercial leaders need to make necessary adjustments to their GTM models to optimize a variety of elements such as, territory design, salesforce size and key account programs.
For example, CSOs should be thinking about optimizing territory design to control coverage costs while still driving revenue growth. Many CSOs shared that they have blended virtual and in-person customer engagement strategies to control their cost of sale. Others are investing in digital customer engagement with reduced costs being one upside to this investment.
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