How to Tactically Navigate Your Sales Organization Through Challenging Periods

Trying to predict the next recession can be a dizzying task. Over the past year, we’ve been in a constant state of a “coming recession” with supply chain shocks, higher gas prices, and elevated inflation causing the Fed to increase rates — and yet, the economy keeps moving forward.

However, if you happen to be on side of an anticipated recession due to continued supply chain issues, weakening consumer spending, and prolonged higher interest rates that impact corporate investments, you should start to think about how to tactically navigate a potential slowdown in sales activity.

During a sales slowdown, organizations often jump towards options such as adjusting quotas in the sales commission plans or payouts — but there are certain pitfalls that this tactic can create, highlighted in a series of McKinsey reports during the first year of COVID, including unintended reactions from the sales team.

Alternatively, a different tactic is to keep the original sales commission plan in place because it also keeps the through-cycle strategy in place — and then utilize Special Performance Incentive Funds (Spiffs) as the primary tool to guide behaviors that can help the business through more challenging times.

This approach helps to avoid some common pitfalls surrounding the confidence that salespeople have in the adjustment of their commissions structure.

Let’s consider how Spiffs can be generally utilized and then in Cross-Sell and Upsell situations.

How to Utilize Special Performance Incentive Funds to Strategically Navigate Your Organization Through Challenging Times

1. General Utilization of Special Performance Incentive Funds
2. Leveraging Special Performance Incentive Funds in Cross-Selling Techniques
3. Tailoring Special Performance Incentive Funds for Upselling Opportunities

General Utilization of Special Performance Incentive Funds

1. Promote Certain Products

By offering Spiffs for selling specific products, companies can direct the sales team’s attention to products that align with market demand, have higher profit margins, or provide competitive advantages.

This approach can drive revenue growth while maintaining a focus on the company’s strategic goals.

2. Target Niche Markets

During a down market, it can be beneficial to shift your sales strategy towards targeting niche markets. Identify specific industries or verticals that are more resilient or experiencing growth despite the challenging economic conditions.

Leveraging Special Performance Incentive Funds in Cross-Selling Techniques

Cross-selling is an effective strategy for boosting revenue and profitability in a challenging economic environment by identifying complementary products.

1. Cross-Sell to Improve Customer Retention

In a down market, customer retention becomes even more critical.

Rather than solely focusing on acquiring new customers, allocate Spiff resources towards products that are more “sticky” with clients to strengthen the relationship.

2. Cross-Sell to Improve KPIs

Cross-selling substantially improves many customer health metrics including customer Life-time Value (LTV) and its related Customer Acquisition Cost (CAC). Incentivize sales teams with Spiffs resources to improve these health metrics.

For example: if the LTV and/or CAC is known for a Vertical or Client Segment, then use Spiff payouts in deals that measurably improves those metrics.

Tailoring Special Performance Incentive Funds for Upselling Opportunities

1. Upsell to Drive Longer-Term Commitments

During a down market, many businesses face budget constraints but may be open to longer-term commitments.

Consider introducing a Spiff that specifically targets longer-term contracts while (at a minimum) maintains the Annual Contract Value.

2. Upsell to Move Customers Up a Tier

Moving customers to a higher pricing plan is an obvious win for the company.

Create Spiffs targeting either the number of customers that are upsold in each month (or quarter) as well as dollar amount increases in the Upsell.

Final Thoughts on How to Utilize Special Performance Incentive Funds to Strategically Navigate Your Organization Through Challenging Times

Sudden downturns are usually short-lived.

Therefore, when these challenging times come for your business, the first consideration should be figuring out how to tactically incentivize your sales organization to get the most out of the situation.

That’s why Spiffs can be so effective because it creates less disruption within the department as well as higher confidence from sales team members who are working hard to generate deals.