Market downturns are troubling times for any business — but the concerns can suddenly hit home if you find out that your company needs to cut your sales department’s budget. One moment your team is flying high in a bull market, with productivity and conversion rates at a peak. Then you’re suddenly attempting to pick up the pieces during an unavoidable market slump.
A budget cut doesn't need to completely disrupt your sales department, however. It will take careful planning and adjustments, but by prioritizing the right sales essentials, you can bring stability back to your sales department, find new customers, and thrive once more.
It will, however, take all your skill and experience as a sales manager. Navigating a sales department budget cut is as much a personal test as it is a professional one. Learn more about how to leverage a handful of tactics to survive budget cuts and keep your team intact.
Shift Your Focus to Expansion Revenue
Budget cuts require your sales department to do more with less, and that includes fewer sales leads than usual. Owing to there being fewer leads, a higher number of deal risk vectors, and less money to spend on finding new business, coach your sales department to secure more value per successful deal. That’s why you should tailor your sales process to emphasize customer retention and expansion revenue.
Any amount of new business acquisition is meaningless if your churn rate is too high to keep your sales funnel and overall cash flow healthy. As a result, customer retention is essential for any sales department to prioritize following a budget cut. Your existing customer base is your surest source of stable revenue. They know the product, they like the product, and you have an existing relationship to build on.
Re-orient your sales reps’ focus on getting more expansion revenue from your existing customers through upsells. In doing so, you’ll be able to maintain a good LTV:CAC (lifetime value vs. customer acquisition cost) ratio for your company, given existing customers require no additional “costs” to approach. There are a couple of ways to go about this:
- Upsell on existing plans. The most straightforward path to expansion revenue is to simply target those customers on lower-down plans, assess their buy-readiness (how much were they interacting with your marketing content pre-COVID? are they still interacting with it now?) and offer them a next-level subscription package, or a new product they might not be aware that you offer. You’ll probably have a template roster of upgrade plans, but you may want to branch out and offer customized plans in order to make upgrading more appealing to cash-strapped customers.
- Expand the services you’re offering. Your company’s ability to develop entirely new software-based solutions may be somewhat impaired by cash flow reductions, etc. However, you can still monetize your company’s market expertise and experience by offering consulting and auditing services or larger support plans.
Prioritizing expansion revenue not only combats churn and raises total LTV, but showing devotion to your existing customers also helps your brand perception. In times of market turbulence, the circumstances negatively affecting your company will likely affect your clients in the same way. By supporting existing customers and prioritizing customer success in a difficult period, you’ll secure relationships and monthly recurring revenue (MRR) as well as advancing a supportive and trustworthy image of your brand.
Tailor Your Approach to New Business
Whatever the state of your sales department’s budget, and however much expansion revenue you can pull from your customer base, new business will still be important for your lean-times sales strategy. Modify your sales process for approaching new business, focusing on prospects with the highest-potential LTV. In an economic downturn, the key to sales success is restricting your targeting to prospects with the highest likelihood of conversion.
For example, you’re likely to find that larger companies are more eager to spend on your company’s product in this market. They will likely have more cash runway, and, depending on their industry, they may find that there’s less competition to worry about as a result of the market turbulence. These companies will be looking to scale up their tech stack and achieve wider market penetration in the short-term. This gives these customers high potential LTV, and they’re more likely to convert than smaller, more cash-strapped companies.
You’re likely to find that larger companies are more eager to spend on your company’s product in this market.
In addition to targeting more enterprise organizations, review your approach to new business, and gather new information about your buyer personas and target market segments. Vet your buyer personas for their product use motivation and how easy it is to incorporate your product into their workflow. Then focus your sales strategy on targeting the kind of enterprise ($100k) or high-medium-grade ($51k+ value) prospects who’re most likely to be buy-ready.
This will help your sales department bring in more customers through a smaller number of deals and reduce the likelihood of wasting time pursuing prospects who aren’t in a position to buy in this market.
Reshape Your Sales Department’s Tool Stack
Aside from an inefficient sales strategy, one of the primary sources of needless expense for a sales department is an overloaded tech stack. A budget cut is an excellent opportunity for management to prune their sales department’s tools.
First, ascertain your sales department’s main priorities. Regardless of the scale of your company or your field, these priorities should run roughly as follows:
- Qualifying leads
- Converting leads into customers
- Pursuing and fulfilling customer success goals
- Serving existing customers
From here, focus on retaining or adding only those tech stack items that help with these fundamental aspects of sales funnel health. After removing unneeded tools, focus on new tools that are high-value, low-lift, and work well for remote teams.
Here are a few tool types you might want to consider adding to your stack:
- Low-lift tools that assist in closing deals and identifying deal risk, such as Chorus.ai’s Conversation Intelligence. Maintaining pace in the sales pipeline is tougher during market downturns and for sales departments with slashed budgets, so the more you can do to keep that pace high, the better.
- Tools like Deal Hub make phase handover (e.g., between reps and customer success specialists) more straightforward. Sharing important customer context is key when transitioning from striking a deal to the customer success phase. Tools that make this process simpler will help you maximize early customer value and help avoid onboarding churn.
- Implement tools that help your team be more productive with less, like Troops. Any tool that helps reinforce sales activities and meets modified sales goals is a worthy addition to your tool stack. This is especially true if your team is struggling to adapt fully to remote working. Ease of communication and access to sales analytics can be decisive for a sales department trying to reach sales targets in spite of budget cuts. Troops also helps in this regard, pulling Salesforce data into Slack, so everyone can see what they need without digging through your CRM.
Making expenditures after a budget cut can seem counterintuitive. However, the method for success following cutbacks is to make it easier for your sales professionals to do more with less. Whether your priority is your mobile workforce or customer support, the right tool stack additions can bring rapid and significant ROI to your sales department.
Collaborate with Your Marketing Department
Sales management should focus on bringing sales and marketing together (particularly if marketing has also suffered a budget cut). The two departments can work hand-in-hand to identify opportunities to scale back unneeded expenses and surface new opportunities.
Assess weak geographies/industries that might be cut from marketing spend. Consult with marketing to redistribute funds toward market segments that still see value in your company’s product. You might target more of the kinds of companies that are typically seeing lower productivity post-COVID-19, for example.
Sales and marketing can work hand-in-hand to identify opportunities to scale back unneeded expenses and surface new opportunities.
Also, consider whether you might target prospects more (or less) through different channels. With cold calling volume and relative connect rates down, you may, for example, want to devote more resources to social media and social selling than usual. Looking long-term, you may also think about upgrading your content strategy. The companies that do not only enhance their brand credibility but also stand to reap major rewards after relative (new) normality is restored.
Once the two teams have settled on a forward path, your sales department should share appropriate analytics that will help marketing shape the details of their strategy. Share sales insights from existing customers or recent sales about new or developing needs, challenges, or pain points your customers are facing. Make them a feature of your outreach.
Fostering collaboration between the sales and marketing departments in this way can help reduce CAC and lower pressure on your sales team to perform as before, even after a budget cut.
Take Care of Your Reps
When dealing with a budget cut in your department, it’s crucial to take care of your sales team. Your sales reps might resemble machines when they’re at their best and selling with abandon. But in worrying times, they need the right support from sales management to keep an even keel and do what they do best.
Be transparent from the first announcement of budget cuts and what it could mean for your sales representatives. When having these conversations, Devin Bramhall, VP of marketing at content marketing agency Animalz, abides by the maxim, “Don’t make promises you can’t keep. Rather, express your intended positive result by cutting budgets.”
This is as important for small businesses as it is for larger ones. Show your sales team how you intend to keep moving forward, even with less cash in the coffers.
Give your sales reps visibility into your company’s vision for dealing with the present market downturn. Bramhall says that “Sharing the bigger picture helps your team understand the broader context of budget cuts and why they are necessary. Show them how budget cuts are a solution to a problem.” Provide your sales department with weekly updates on progress and new developments.
And as always, celebrate any and all wins, and be candid about weeks when things have not gone quite so well. As per Bramhall’s philosophy, this candor is a key part of pastoral care after a budget cut.
“Call out the elephant in the room: this is going to hurt. By facing the situation head-on and not being afraid to name the parts of it that are painful, you gain more respect from your team and potentially more of them will even support the cuts.”
Finally, make yourself available for your team members. Free up one-on-one time in your schedule for your reps. Listen to their concerns and be as accommodating as possible.
Doing More with Less
Budget cuts can bring down sales departments that lack clarity — clarity about what the cut actually signifies, how to trim the fat, and how to make the most of the resources that remain. As a sales manager, providing this clarity to your sales team will engage your professional and personal faculties. Your stewardship is more important now than ever. It can seem a daunting prospect.
Nevertheless, even a budget cut can be mastered by training your sales department’s focus in the right direction. Many of the tools your department needs to flourish — a customer base, the right tools, the proper marketing channels — are already there. It’s a case of losing the ones that aren’t helping and maximizing the potential of what you’ve got.
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