Corona solar demand shock. How to manage and motivate your sales team when sales decline.

solar demand shock forecast

As a commercial director and sales executive I have led sales and trading teams during a period of over 25 years. This is what I learned during the 2008-2013 crisis when demand fell of a cliff (-40%). This  article gives you ten good tips/suggestions for managing your sales department when sales drop and the going gets tough. The situation is serious, Bloomberg NEF just published a solar demand forecast stating that 2020 demand might actually be lower than 2019 levels (108-143 GW). This demand shock will seriously affect sales departments. In this article I share my lessons learned. 

As a sales manager, despite mounting pressure as sales volumes drop, it is of the utmost importance to maintain a supportive and balanced composure. Your behavior as a sales manager or director should be to lead by example which means: radiate confidence, maintain a balanced composure, communicate often and clearly and try to decrease uncertainty. If you look uncertain in trying times, your troops will become uncertain and vice versa. Promote initiative and make sure you accept failure (if the gameplan is being followed). Remember that many of your sales staff have never experienced a real crisis like in 2008-2013, so people are naturally worried. Now is the time to lead by example.

It is important to focus on the areas that are controllable. What does this mean? It means you should not focus on items you can not control which is such as bottom-line sales (you can not put a gun to the head of a customer and force him to book), but instead you should focus on controllable actions to be identified within your sales and marketing funnels.

Focus on:

  • Communicating clear KPI’s 
    Especially less experienced sales people need coaching and guidance. Make sure everybody understands the task at hand. Communicate clear reachable goals. Lead by example.
  • Lead generation. If your conversion rations are dropping than analyse whether it makes sence to increase advertising expenditures, this makes sence if the incremental margin generated is higher than the incremental advertising expense. Expenditures should be targeted at protecting the top line.
  • Time spend per customer . Now is the time to increase time spend per SQL, sales qualified lead.
  • Modifying your product proposition. Analyse any objections to buying and modify. Examples:: soften cancellation policies, modify payment terms, offer discounts, offer additional garantees….
  • Improving the sales pitch. Make sure sales scripts are clear and test various scripts, zoom in on the psychology of your customers. Make sure you communicate to your sales staff that they should harvest positive results from each conversation. To know why a customer is not buying should be viewed as a success, because it gives you the opportunity to modify your proposition.
  • Execution. When the going gets tough the team must execute the agreed objectives. When times get especially challenging, make sure you agree upon weekly controllable goals. What does this mean? It means you should not shout “GO AND SELL 50 systems today!!” because whether a customer books or not can not be controlled, it can only be influenced. Instead you could opt for controllable and measurable goals like: this week we will double the amount of calls made with our customer base. Very important: do not accept bad performance when dealing with measurable goals. Make sure people focus and do their job. There are two reasons for this: it increases booking chances and it reduces uncertainty with employees.

When sales volumes drop a natural reaction might be to sit tight. The opposite should be done, start engaging your customers, not by trying to “hard sell” them, but by listening to their point of view and current considerations and objections. Ask them is there is anything your firm can do to help them and after listening to them for a while ask them under what conditions they would still consider buying from you. Most likely they will ask for discounts or ask for other changes but if they do this presents an option to you. The key is to create optionality. Also, by listening very carefully to your customers you will be able to forecast demand and adapt to the new environment. This helps to optimize your daily operations, cash flow projections and staffing.

If you do not engage you will be “flying blind”, swayed by the currents of your emotions and the media. Try to do the opposite, try to spend more time with your customers, in the end they are the reason why your firm exist. The buck stops with them.

By talking to your customers and asking them what they think, and by listening to your own employees you will receive valuable market data. With your management team you will now be able to make daily, and weekly forecasts and most importantly a worst case scenario.
The worst case scenario should be made, because implementing measures takes time, it takes time to cut costs or to find new financing or both. By making a worst case scenario, you “buy yourself some time”, the objective is to survive the storm, so you need time to prepare.

Cash flow predictions are most important, management literature is littered with examples of companies that should have survived, but were surprised by a demand shock and ran out of money.

Any good sales person will tell you that within one minute they will usually be able to distinguish between a customer that is interested and a customer that is not interested.

Since your sales staff will have to contact more customers to maintain sales volumes, and since management will not increase sales staff when sales volumes are uncertain, there is a necessity to become more efficient as a sales person. As a sales manager you will have to reinforce the right behavior. What is the right behavior? Since more customers will have to be contacted per sales person, this means that the losers need to be cut quicker. A “loser” is a customer that will not buy in the foreseeable future. As customers are worried, they have a tendency to spend a lot of time talking to people, however this is not the time to spend too much time per customer. Train your sales staff and make sure they have a method to quickly but politely cut a call short with customers that are not really willing to buy. Make sure your sales staff does not spend too much time per customer and spends more time with hot prospects. You might even have to limit the use of whattsapp, other social media and email. A recent study showed that on average employees spend upto 30 minutes per day on social media, that’s a productivity loss of 5% per day. Image, you are now at war, would your soldiers be allowed to spend 30 minutes watching youtube?

When turnover drops sales persons might turn on each other if they are only evaluated basis bottom-line sales performance. However, just looking at the sales numbers might not be the right approach as the circumstances per customer segment and customer market might be very different. Make sure that your working environment remains fair and positive, it’s ok to fight as a team against the competition but time spend fighting internally and/or any other negative behavior is really a waist of time and very counter productive. There are various things you can do to create a positive environment, these do not depend on the “outside” environment. Try to do something extra to forge teamspirit. Examples:

  • end of week company gatherings with the team. Maybe just for an hour, but the impact can be huge, especially if you have not organized many employee outings or gatherings before. This is the time to do it, even if money is tight.
  • buy a pooltable or table tennis set or some nice seats for the team, be creative
  • make sure you communicate that you really truly appreciate the extra effort
  • make complements
  • don’t burn people to the ground in front of other employees, don’t add to the feeling of uneasiness
  • communicate the progress of the execution of the plan
  • try to keep everybody on board and make sure most agree with your plans
  • be sincere, people are smarter than you think and will suspect a second agenda.

Your product proposition consists of product characteristics and contractual terms, including but not limited to warranties, payment conditions, force majeure conditions and performance garantees. When faced with a demand shock, your buyers want to reduce their risk. Consider the following options: 

  • Price reductions. This is usually the first demand buyers will have. Whether you grant a price reduction or not depends on many factors and should be discussed beforehand with your sales team. Make sure this will help by interviewing customers first.
  • Adding a cancellation clause, granting the right to cancel the purchase to the buyer, with a firm deadline. This reduces the hurdle to take a purchasing decision as a buyer can buy and cancel up to a certain date. Although this increases insecurity in your organization, this strategy might be a good one. Why? Because if your company is able to put more sales in the books because of this strategy, it will be ahead of the competition. Should the buyer cancel in the end, the sale is lost, but most likely not to the competition. Whether you use this strategy depends on the situation, most likely it can be used only by companies with sufficient cash flow as the uncertainty surrounding your cash flow will increase.
  • Adding more flexible payment conditions. If a customer is worried about his own cash flow, it might be beneficial if the customer knows he can now spread payments over a longer period of time. This flexibility might result in a sale.
  • Adding performance garantees. This might also help if a customer is interested in this. Performance garantees could be either performance garantees relating to the product or relating to delivery conditions.

Some companies wait too long, hoping for a miracle, and in the end they get caught, leaving them without any option. The management team should make a worst case projection and make sure the company stays in control and ahead of the curve. This means cutting fast, cutting deep enough and cutting quickly. Why? Because making a tough decision relatively quickly reduces insecurity. In the end it will be beneficial to sales because insecurity paralyzes your sales staff. After a serious round of cost cutting, management can claim: ok, we have taken the necessary actions and our remaining employees are now more secure. This is in my view preferable over a situation in which management has to backtrack and execute a series of cost cutting programs over time. This greatly increases insecurity. 

So my opinion is: if you have to make a tough decision, do it quickly and communicate it well to the company. I recommend to make substancial cuts in one or maybe two fases, compared to continuous cost cutting without an end in sight.

During severe demand shocks, as we are currently experiencing due to Corona, the government often offers financial aid programs to workers and companies. These aid programs are usually targeted at preserving customer demand and employment. In the Netherlands and in many other countries the government is currently offering various aid instruments, such as interest free loans to companies and unemployment benefits to unemployed workers.

 

Make sure you surround yourself with experienced people that have experienced a demand shock before. Too many times sales managers are continuously putting out fires without having the time to investigate a root cause of the problem. Make sure you can talk to experienced people you can trust. Sometimes you will have to find these people outside of your company. This way you don’t have to burden your colleques with your doubts and also you are not bringing your work problems back home.

Finally, make sure you and your team execute on a daily basis. Focus on the actions you can make, and on the things that are controllable. Make sure you execute as agreed on a daily basis. Although the economic environment seems negative, keep pushing forward and work harder than ever before. Make sure things get done on a daily basis, so increase daily control.

From personal experience I know that if you implement some of the above suggestions, your chances of surviving a serious downturn, will improve.

newsletter

Did you enjoy this article?

Solar United publishes a bi-weekly newsletter
Please send your email, you always have the option to unsuscribe.

Deel dit bericht
Share on facebook
Share on google
Share on twitter
Share on linkedin