In an economic recession, weaknesses get exposed. We get nervous, and buyers can recognize a desperate seller miles away.
In this inaugural edition of Datateer Amplify, let’s talk about some proven tactics to navigate safely.
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Behavior in Recent Recessions
Recessions are funny. If we all kept our business activity normal, there would be no recession. But the apprehension of a downturn causes some businesses to pump the brakes, causing a sharper downturn, causing more people to limit spending.
It’s a self-fulfilling prophecy!
It reminds me of game theory, where everyone is worried about what the other players will do. My success depends not on a clear-cut right answer, but how my strategy stacks up relative to everyone else’s.
Everyone will start to refer to budgets, and budgets being cut. Yet businesses must continue to spend money.
How do you ensure you are part of the continued spend?
CFOs everywhere are negotiating with heads of other departments. Some will lay down a blanket “x% decrease to everyone’s budget,” and department heads will have to find ways to cut budgets.
Some will be more surgical, looking to cut unnecessary line items, reduce spending commitments on others, and look for more favorable payments terms to stretch cash.
Notice there is no certainty here. No one has a crystal ball about the “right way” to trim budgets without cutting too much.
How do you make sure you are on the list?
This uncertainty is where opportunity lies to champion and justify the ROI of your product.
4 types of buyer postures
Businesses don’t buy things, people buy things. So when considering buyers, it’s helpful to understand
- the company’s budget posture
- your buyer or champion’s level of enthusiasm
- the decision-making committee’s attitude
What is that last one? Committee you say?
Every material buying decision is now handled by committee. Don't believe me? Often it isn’t formalized, but you will see buyers conferring with other trusted sources well before committing.
No one is making a decision in a vacuum.
HBR has a great framework that we can apply to B2B buyers in a recession.
When considering each of these levels in the framework, there are 4 different postures they might take. Remember, these are psychological attitudes, not always aligned with "reality" or what your info might say about the company:
- Slam on the Brakes. These feel most vulnerable and stand to lose the most financially. They will aggressively reduce
- Pained but Patient. Tend to be optimistic in the long term but feel they can’t control the current situation. They tend to cut broadly, but not as aggressively.
- Comfortably Well Off. These feel secure in their ability to ride things out, and are less than 5%. They will continue with existing purchase behavior and will attempt to win large concessions for any new purchase
- Live for Today. These are rare among B2B buyers. They slow down new major purchases but will continue with existing purchase behavior.
4 categories of product
Each of the 4 types of buyers will be mentally bucketing each of their expenditures.
This rarely formally done, but everyone does it. You most likely do it yourself.
- Essentials. Necessary for survival and ongoing operations
- Treats. Smaller purchases that are exploratory
- Postponables. Needed items but that can be put off
- Expendables. Unnecessary, or ROI is hard to see
With each prospect, consider 1) their buying posture and 2) how they perceive your product. Evaluate these for all three levels--company, committee, and your champion
This is crucial, because it informs your tactics.
Knowing where your buyer lands will help you approach the situation with empathy, which is the number one most important skill in selling.
Be more present yet less annoying
Fight the feeling of desperation when your quarter end is coming up and prospects have obviously slowed down.
Being more top of mind is necessary, but constant “hey just checking in” emails will not end well.
Research from Trustradius says almost 100% of buyers prefer to self-serve in the sales process.
Rather than “check in,” share valuable information with each touchpoint. Then maybe your messages will be a welcome sight.
What to share? Here are the top answers from a recent survey.
Think about any and all sales aids you have that fit in these categories, and share something appropriate with them at each touchpoint.
Specific pain over general outcomes
In the Covid recovery, overspending was rampant. The bounce-back spike is obvious, but check out the following quarters. They are really high too!
During those high-spending times, it’s easier to close deals that may have unclear ROI.
Did you get used to easier closes, or even develop some lazy habits?
Avoid generalities that imply ROI, such as “data-driven” or “democratize your data”
Don't ask only about budgets, ask about how budget tightening is affecting your buyer’s top priorities. This is a meaty question that will open up plenty of follow up questions.
Likely you will find at least one priority that your product aligns really well with. Latch onto it, and tie all spend justification to their strategic priorities.
Help them craft the story that your product is required for success in their top priority.
Lower entry points, flexibility in terms
What is in between a trial of your product and the big annual purchase?
If nothing, then you will be looking at a lot of requests to extend trials.
Can you get pre-commitments in exchange for an extended trial?
Can you present a growth plan where they can get beyond the trial, and expand usage as ROI is proven?
Can they start in a single department or with a smaller number of users?
Can you present a spending plan where they spend low during a period and increase spend afterwards?
These ideas are not new of course, but leaning on them will help get to yes. They will help your buyer feel confident that your empathy remains strong, and that you are reducing their risk.
Putting all of the above into practice: have a strategy to target buyers more tightly, and focus on specific problems that your product solves (not generalities). Be aware of the different buying postures, and how they may respond differently to your product in a recession. Create different entry points and offer flexibility in terms to help buyers feel more confident in making a purchase. Finally, be sure to provide value in each communication with buyers, and focus on their individual, specific priorities when discussing ROI.