Sell your way out of it
One of the most common approaches to accelerating a business in a slump is to simply sell more. It's the most obvious solution to a lack of revenue, but as seems to be the case for most things, it's not always the best strategy.
The problem of selling your way out of it is that if you are losing $1 per sale, the more you sell, the more you lose. In my experience, a slump in business is usually caused by one of the following:
External forces have changed the nature of the market.
Internal focus of attention has moved away from the sales.
The be clear, by my interpretation, both are the fault of the executives of the business.
Being such an executive in my businesses, I have experienced slumps of various types, and it was always my fault. One such area where I have often encountered slumps is the cybersecurity assessment practice I have been running since the late 1980s.
How can external forces be my fault?
When I invested in expanding The Radon Project on the West Coast, I put up some tens of thousands of dollars for advertising that played on the day of the Loma Preatta Earthquake. Too late to pull the ads, nobody wanted to worry about the potential of cancer some years out from an invisible odorless gas while freeways were falling on cars with people in them and buildings were collapsing on top of the residents.
That was hardly my fault. But that did not create a business slump, and we didn't have a slump in that time frame. That was a failed attempt to grow the business in a new area. And it was a limited bet with a limited impact. The loss was readily affordable, although of course I wish I had scheduled it for a week later so I could pull the ads recognizing the timing was bad.
In truth, lots of external forces are predictable, and by placing wise bets, you can avoid slumps, but only by understanding (and studying) the market you are in.
Housing slumps, market crashes, the Facebook slowdown, the bitcoin bounces, the tulip bubble, and many/most other such external effects were and are predictable. But more importantly, even if you don't predict, you should prepare.
In the early days of selling protection assessments, I sold a few a year and that generated enough money to make it worth the effort. My go to market strategy was to do all the other things I did (teach short courses, write papers, talk at conferences, etc.), and identify results in those venues related to my consulting practice. The identification of the practice and the sorts of results it produced was adequate to generate leads from folks who saw similar things in their enterprises, which turned into customers in some cases. At the time, I didn't measure explicitly in terms of a sales sieve, and because of the small numbers involved, statistics seemed to not apply. But I did notice things dropping off or building up at various times.
It's the boy scouts' motto
Be prepared. In understanding your business, you should understand what makes the markets you depend on work. I don't mean perfect knowledge or some deep theoretical construct. I am talking about understanding your sales sieve. Leads, qualification, pitching, closing, servicing, and retaining customers. This includes the cost of customer acquisition, total and reachable market size, time to close a sale, and all the rest of the sales and marketing process.
Part of understanding your market is understanding how it is changing by measuring it. To get a sense of this, if the percentage of leads being qualified starts to drop, or if the time to move from lead qualification to negotiation increases, these are signs that you are entering a sales slump. They are leading indicators, because even though current sales may continue at the same pace for at time, sales will slow unless something is done about it because the sieve leading to those sales is changing.
It doesn't matter that an external force is causing the change, it can be detected as it changes.
I was never really prepared to lose the pathfinder assessment business, but I never really had it in mind to turn it into a business. The idea in my mind was to spend most of my time doing research and do the path finding on an occasional basis. A few years ago, I decided to change this and try to make a business out of it. That's when I started to notice how poorly I was pursuing it.
But what to do about it?
Make changes! Don't wait!! Figure out what is breaking and treat the symptom regardless of the cause. Of course if you can identify the cause you might be able to do better at making changes, but in many cases, you cannot control the cause or the mechanism producing the effect. All you can do is counter the effect. Here are some examples of things that might work:
Generate more leads: Assuming the market isn't saturated (in which case you may need to find a new market), the process you use to generate leads should be increasable by spending more. The cost of leads often increases non-linearly as they are exhausted, and some paths to leads are more expensive than others. But analysis of the sales sieve should lead to determining the business effect of the change.
Generate better (more qualified leads): Sometimes it's not just a matter of how many leads. Better leads may cost more, or it might be that better lead generation results from changes that don't cost more. When we lost one of our major lead sources, we found that other sources had less volume but higher qualification rates. We hadn't explored them because we were operating at the level we wanted.
Change the pace of contacts: To decrease time to close, one of the approaches is to increase the communications rate. Instead of waiting 2 weeks to recontact a lead, reduce it to one week. Having said this, you might also find that you are communicating too often and offending people by being a pest. I developed a methodology for asking about the communication rate as part of my process to eliminate bad leads. The particulars are personality-dependent, but the point is, you can adapt the pace to improve results.
Adapt your pitch: As conditions change, so should pitches. If your pitches are taking longer or less frequently successful, either you are pitching to different types of folks or something has changed in their view of the world. It may be competition, it may be that your product or service is losing its luster, it may be that your pitch is getting less effective because of social conditions, ...
Ask: After some number of bad outcomes in excess of norms, I start to ask the customer. After a sale is more or less lost, there is little harm in politely asking why. The answer may lead to adaptation or not, but it's often helpful to find out, regardless.
There are, of course, other methods. I don't mean to be comprehensive here, but rather just to get you (and me) going.
I am in the process of changing my approach to pathfinders. First off, the name was one I came up with during conversations with a sales and marketing guy I have worked with for years. It was embraced recently to help make it more identifiable to clients. And I am starting to sell it modeled on the Angel to Exit approach to building up advisory boards. Of course this will take time, but if I do it right, I will be able to build the business to the level desired and maintain it over time, adjusting the resources in different areas to keep the levels up even when business in general is down. How will you know if it worked? Let's see what I write about it in a year or so... It takes time.
Simply selling your way out of it isn't always all that simple. Measurement leads to identification of leading indicators, and leading indicators lead to potential treatments. Selling your way out isn't always just a matter of selling more. It's often about adapting your approach to meet the changing conditions.
Copyright(c) Fred Cohen, 2018 - All Rights Reserved