Sales is a tough job under normal circumstances, but throw in a recession and things get even more complicated.
As whispers (or shouts) of an economic downturn persist, salespeople need to shift from defense to offense. This means retiring the old playbook and getting creative with your sales strategies.
Here, we cover the top consumer spending trends in 2023, along with five key strategies for selling during an economic downturn. Let's dive in.
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Top Consumer Spending Trends in 2023
1. US consumers are spending more conscientiously right now.
More than a third (35%) of US consumers are planning to make fewer purchases due to a possible recession. Additionally, 29% are planning to spend money more conscientiously than they have in previous months.
As a result, sales cycles tend to get longer. Consumers need more time to make purchasing decisions — and each purchase is more scrutinized, regardless of how essential. It's also common for consumers to have less confidence in their decisions, so expect to face more objections in the process.
2. In response to a recession, 44% of U.S. consumers are planning to "greatly decrease" their home budget.
As the inflation rate continues to stay at problematic levels, consumers are tightening their home budgets. Back in July 2022, 30% of US consumers were planning to "greatly decrease" their home budget if a recession was declared. Now, this number has increased to 44%.
At the same time, 1 in 5 US consumers say their home budget will stay the same. However, they still might reevaluate their spending priorities. For instance, they might delay larger purchases or switch to more cost-effective brands.
3. During uncertain financial times, the majority of U.S. consumers spend the most money on essential items.
Unsurprinsingly, the majority of US consumers spend the most money on essential items — like groceries and food — during uncertain financial times. Rent, housing bills, and hygiene products also top the list.
Based on this data, we can expect consumers to pull back on discretionary spending, such as travel, luxury items, and eating out.
Ultimately, sales teams need to be more flexible and creative in the face of changing market conditions. Let's take a look at a few strategies for selling in a recession.
Strategies for Selling in a Recession
- Don't ignore your existing customer base.
- Expect more touchpoints in the sales process.
- Change up your pitch.
- Incentivize customers with compelling perks or flexible pricing.
- Focus on what you can control.
1. Don't ignore your existing customer base.
Acquiring new customers is crucial during times of economic uncertainty, but not at the expense of your existing customer base. Never assume this group is "safe," especially if these relationships have gone stale. After all, it's your loyal customers that carry you through a downturn.
It's common for the rep-customer relationship to fall into routine — so make it a point to initiate conversations, iron out any issues, and deepen these relationships. From these conversations, you may even find opportunities to upsell or cross-sell. At minimum, a quick note of appreciation for their business can go a long way.
2. Expect more touchpoints in the sales process.
33% of sales reps say they average 2-4 interactions with prospects in the sales process. However, selling in a recession often entails more touchpoints, more objections, and slower decision-making from prospects.
A deal that normally takes weeks to complete could easily become a few months. To make things more complicated, you may have to manage more stakeholders in the process.
Instead of chasing down every lead, concentrate your efforts on a smaller pool of highly-qualified prospects and connect with them more frequently. By doubling down on the prospects most likely to convert, you can prioritize your time and maximize your chances of landing a deal.
3. Change up your pitch.
If you're feeling the pressure of a downturned economy, your prospects are too. This is why they tend to "play it safe" in their decision-making. They want less risk and more reassurance.
For salespeople, you have to work harder to earn their trust. It's not the time to be pushy or aggressive. Instead, you need to become a consultant.
With a consultative approach, you present focused solutions instead of risky gains. You take the time to understand your prospects' pain points — including new ones that have emerged in response to economic conditions. Then, you adapt your pitch accordingly.
You also back up your pitch with actual evidence. This means providing information, demonstrations, testimonials, and case studies that present a solid case for your product's value. If a prospect feels confident about your product or service, it becomes much easier to cross the one-yard line.
4. Incentivize potential customers with compelling perks or flexible pricing.
In times of economic uncertainty, it can be tempting to slash prices and offer deep discounts. While some discounting is normal, it's important to approach this strategy with caution. You don't want to devalue your product or hurt profit margins too much.
Fortunately, you can incentivize your prospects without offering steep discounts. For instance, consider providing additional services or perks, such as extended free trials or complimentary tech support.
On top of that, you can offer flexible pricing plans. Tiered pricing, for example, can capture customers with a wide range of budgets. They can start with a lower-priced tier and upgrade later once they're in a better financial position.
Another option is the freemium model, which divides users into a free or premium tier. The goal is to attract users with the free version of a product or service — often in a limited capacity — and then convert them into paying customers with the premium version.
32% of sales professionals offer prospects freemium options, and about 90% of them say it's moderately to extremely effective at turning prospects into paying customers.
5. Focus on what you can control.
A little pressure can be a great motivator for salespeople. But too much pressure — especially in the context of a recession — can start impacting your performance
Recessions are tough but it's important to stay positive. By filtering out the negative noise, you can remain productive and clear-headed.
It's also helpful to focus on what you can control: your sales activity. Set yourself daily goals — such as cold calls, LinkedIn messages, and referral requests — and work on hitting them every day. Make your goals aggressive but realistic to avoid burnout.
Back to You
Instead of being reactive or defensive to market changes, salespeople need to adapt to them. This requires equal parts creativity, flexibility, and persistence. By nailing this balance, you put yourself in the best position to push through.