The financial headlines certainly aren’t great as we head into 2023. KPMG reports that 61% of consumers plan to cut discretionary spending in 2023, while just 4% plan to increase it. That’s a painful outlook for businesses across a wide range of sectors, given that many shoppers already tightened their belts during 2022.
Meanwhile, the services industry in Britain has contracted for three consecutive months, with the final purchasing managers’ index (PMI) from S&P Global and the Chartered Institute of Procurement and Supply hitting 49.9 in December 2022. Anything below 50 indicates a contraction. Gabriella Dickens, senior UK economist at consultancy Pantheon Macroeconomics, sums it up succinctly:
“December’s PMI data are consistent with the UK economy sliding into recession.”
Some businesses have been quick to respond to the situation by laying off staff. Doing so can quickly reduce a company’s outgoings. It can also be a major mistake.
Why? Well, there’s no harm in a company trimming and reshaping roles if doing so means that it can operate more efficiently while still achieving the same outcomes in terms of productivity, customer service and so on. However, laying off staff as a knee-jerk response to a reduction in income smacks of poor long-term planning.
Sales teams are often particularly vulnerable to this. After all, if consumers aren’t spending, there’s no point in having sales staff, right? Surely the best plan is to lay off the sales team and then recruit them again in a few months’ time, once things are back to normal.
No, no, no. Sales staff who are unable to hit their targets due to a recession need to be nurtured and retained, not let go and later replaced. According to Centric HR, it can cost between six and nine months’ salary on average to replace a salaried employee when you factor in recruitment and training, as well as salary and on-costs. And that’s not accounting for the cost in missed opportunities as the new employee gets up to speed.
Instead, it can be far better to focus on retaining an existing team. Their knowledge of the business, including its products and clients, will have been built up over time. A company that keeps this team in-house will be able to tap into that knowledge and experience the moment the economy starts to pick up again. A competitor who has let their sales team go, on the other hand, will have to start all over again – they certainly won’t be poised to begin thriving the moment the UK starts heading out of recession.
It will be sales skills that lie at the heart of that ability to seize the moment and support a business to thrive. That’s why it is so important for businesses not only to retain their sales teams but also to support them by getting rid of pre-recession targets that are now much more difficult to achieve. Sticking to targets that applied a year or even six months ago will do little for a team’s morale during the current situation.
Rather, businesses can show their support for sales teams by investing in training, development and team-building activities. They can nurture the growth of stronger teams and revisit core skills to ensure that every individual feels confident in their position.
None of this is to say that targets need to slip entirely into obscurity – but focusing on increasing market share might be a better approach than sticking with rigid sales targets. After all, any gains in market share over the coming months of recession will pay impressive dividends once the economic situation turns around.
Strong sales skills will be key to success when that day comes. Teams that have focused on these during the recession will be chomping at the bit to return their company to full strength once it is over.
Throughout all of this, it is important to remember that most companies live or die by the performance of their sales teams. Product quality and customer care of course also play a big role in success, but it is often the sales staff who are the main source of a company’s lifeblood – its income. Any company that forgets this and lays off its sales team as part of a “strategy” to weather the economic storm may find that it quickly becomes unstuck. Short-term gains in terms of income reduction indicate a worrying, short-term approach. It will be those companies with their eyes on the horizon – on the potential that exists when a country comes out of recession – that will be the ones to thrive in the longer-term.
Author bio: Paul Owen founded his firm – Sales Talent – in London back in 2011. In the decade since, he has helped well over 10,000 people improve their sales skills through his consultancy, training services and podcast. He has delivered seminars at 40+ universities and became an Amazon Bestseller and shortlisted for Business Book of the Year 2018 when he published his book, Secret Skill, Hidden Career.
