Here we are at the start of 2023, and many sales forces will have just given their sales professionals revenue targets to hit this year. And even though we are navigating through turbulent times, with a recession looming, the 2023 quotas will likely be higher than they were last year. So what new support are companies prepared to offer to help sales organizations optimize revenue going forward?
Unfortunately, the answer is likely to be “not much”—in the current business climate, companies are looking to cut expenses vs. spending more. As we’ve seen through various downturns, one trend tends to repeat itself in the face of uncertainty: The CFO becomes the CF-NO. On the surface it’s understandable that their position becomes one of “We will write checks out as soon as I see a steady stream of checks coming in.”
But let me share two reasons why applying that logic and looking to cut your way to revenue success in a down economy does not work. The first is a 2023 reason. Having conducted sales performance studies for over two decades, I’ve seen that in tough economies closing deals always gets harder. Expecting sales teams to work harder doesn’t cut it. To weather the storm, sales organizations need more help. That can take the form of more leads, better prospect research, optimizing the sales process, better coaching, and new sales content, and all of that needs to be supported by better sales enablement technology.
Historical research shows that firms that provide those services to sales teams have double-digit revenue improvements over those firms that do not—they have more salespeople achieving quota and higher sales force revenue overall. So making those investments in 2023 will generate a near-term ROI to more than cover the cost.
But there is a 2024 issue to consider as well. Going back to the sales performance data from the last major business downturn—2008 to 2010—a significant trend surfaced. In 2009, sales force turnover declined noticeably from 2008. The reason was twofold. Part one was that many sales organizations did reductions in force at the end of 2008 to let go underperforming salespeople at the start of the downturn. So the need for more involuntary turnover (letting a salesperson go) was lower the following year. In addition, voluntary turnover (a salesperson chooses to leave) was also low in 2009 as hiring freezes limited the number of places for salespeople to go to if they quit.
This low turnover caused many companies to avoid asking a very important question in 2009: “Are the salespeople who are onboard in this tough selling environment here because of what we have been doing for them, or in spite of what we did to them?”
The answer came out loud and clear in 2010. When companies started doing better, they started adding net-new salespeople, and the new hires fit this profile: professionals who had sales experience, preferably in that industry. As recruiters started calling experienced sales professionals, reps who felt under-supported by their company in 2009 jumped at the chance to leave, and voluntary turnover doubled.
The lessons from the past are clear. There will be a significant cost if you choose to underinvest in your sales organization at a time they need more help vs. less. Revenue will suffer in 2023, and turnover will create another revenue hit in 2024 as it takes six or nine or even 12-plus months for new hires to ramp up to full productivity. Don’t be blindsided because you didn’t think this through.
Jim Dickie is a research fellow at Sales Mastery. He can reached at [email protected] or @jimdickie.