When it comes to the next recession, it’s only a matter of when, not if – so let’s get prepared. The promo industry has reported declining sales for Q1, although we see lots of distributors still growing, especially larger companies. Here are some tips for distributors to keep growing sales and even profits regardless of tariffs, the economy and recession concerns.
First, let’s get our mindset right. Yes, industry sales may be trending down, but that doesn’t mean you have to accept it and follow the trend. Be a positive leader and make sure you and your sales team make a conscious decision to always grow. Build that culture that has your sales team feeling like nothing can stop them. Some distributors will stick their head in the sand and accept the reality of recessionary times, but you can do better!
If your current clients are buying less, then let’s use that extra time to focus on getting more clients. In our nearly $27 billion-dollar industry, there is a lot of business to be had, and this is the perfect time to grow your market share.
New Business Development
Growth-minded distributors have a “New Business Development” plan that is always being executed in good times and bad. One of the reasons larger distributors do better during recessionary times is that they often have a consistent focus on NBD. They have proven strategies they consistentlyexecute to acquire new clients.
When the inevitable recession hits, or they lose that large account, they don’t have to figure out what to do next and how to replace the lost business because they already have a pipeline full of prospects that they’ve been nurturing for years. If you don’t have a culture of NBD, now is the perfect time to get started.
Randy Conley
President, Promo Consulting
Another common strategy for fast growing distributors is that they have dedicated resources for NBD. Yes, your commission sales reps should spend more time on NBD, but once traditional reps get busy managing a large book of business, NBD time drops significantly, and it’s difficult to suddenly ramp back up when needed and start building a prospect pipeline from scratch. Plus, finding new sales reps that can hunt and build a million-dollar book is like finding a needle in a haystack.
- You heard it here first: the traditional straight commission sales rep model is the No. 1 contributor to slow and inconsistent growth.
Rapidly scaling larger distributors have often taken company control of NBD. They have a full-time hunter who is solely focused on turning prospects into opportunities for the account management team. The NBD role is solely focused on selling your company to prospects and convincing them to give you the opportunity to do business with them.
- I call this the “client sale.”
Once the client has agreed to do some business with your company, then you can turn them over to your account manager who will focus on their project/product needs.
- I call this the “product sale.”
Separating “sales” into two dedicated roles allows the NBD role to consistently provide a steady stream of new clients that are ready to buy from you. Many of the fastest growing distributors in the industry have at least one full-time person doing nothing but NBD.
On The Hunt
But what if you can’t afford or can’t find that full-time hunter? Often this NBD expert already exists within your organization, and it’s usually the distributor owner.
When you started your business, you focused on hunting and as you got more clients, you gradually spent more time working on “product sales” instead of “client sales”. Now growth has slowed or even stopped. While you may not be able to work on NBD full-time, you can execute strategies that will allow you to spend significantly more time hunting and mitigate the effects of a recession. It’s a lot easier to hire someone that is good at “product sales” than it is to hire a great hunter.
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Account managers are great at managing client relationships, exploring sales opportunities with current clients and providing creative project solutions with high levels of responsiveness and customer service. Back-office staff can be hired to take order management and bookkeeping off your plate and industry service providers, such as Office Beacon, can provide offshore staffing solutions that are very affordable for distributors on a tight budget. The strategy is to offload tasks that can be done by others while you return to growing your business by focusing on NBD again.
And if you are like most distributors we work with, NBD is the part of the business you really enjoy and are good at, so go get that next big client.
Watch Admin Expenses
Recessions can also take their toll on profitability, especially if you’re investing more in NBD.
So, watch your administrative expenses, especially if cash flow is tight. If you experience a dramatic drop in sales, I encourage fast action to align your expenses with the reality of your current revenue. If you don’t have a pipeline full of prospects that can be turned into new business quickly, then you run the risk of running out of cash.
Too many distributors ignore the reality of lower sales and underestimate how long it will take to return to profitability. You have good people working for you and you don’t want to lose them, but lower sales require lower overhead to remain profitable, and a failure to align your expenses with the reality of your new revenue can lead to some very bad results for your business and your family.
As sales come back, you can always hire more good staff to handle the growth. The best way to prevent this difficult situation is to develop a culture of NBD.
To recap:
- Be a positive leader and get your sales team hunting again.
- Develop a NBD strategy that will deliver consistent opportunities with new clients.
- Get someone to work on NBD full-time.
- Hire account managers and/or back-office staff to free up time for NBD.
- Watch your overhead expenses and align them with the reality of your current sales.
