Kathleen Hartigan, above, VP International, Clari
As we head into a new year, it’s important to acknowledge what’s ahead and what is set to be a challenging start to 2023 and beyond, for businesses and consumers alike. Recent research from YouGov has found that almost a third of small business decision makers worry that their businesses won’t be able to keep up with their outgoings during the year ahead, with many entering “survival” mode to get through the next six months.
Though companies entered 2022 with an operating plan designed to help them reach their growth targets based on existing macroeconomic conditions and company structure, various curveballs, including rising inflation and a war in Europe meant everything changed, making it nearly impossible to pivot quickly and with confidence.
Though challenging in many respects, recessions and turbulent economic environments do present the opportunity for sales teams and business leaders to take stock, reassess, and ultimately bounce back stronger.
The common thread for companies that typically emerge more resilient from economic downturns is airtight collaboration and communication between teams, specifically those in the revenue and finance departments. So how can these roles, as well as broader teams, navigate an economic downturn? How can revenue-critical teams master both cost and revenue to thrive in uncertain times? Let’s take a look.
Build trust between revenue and finance
The relationship between revenue and finance can sometimes suffer due to friction and differing priorities. As an example, the sales team might stress about ambitious quota goals with limited resources, while finance needs to keep an eye on the sales team’s spend. It’s not uncommon for these two teams to work independently and have different priorities. That’s why the most important part of the relationship is trust, underlined by an understanding of the different nuances across the business.
When working together as a unit, teams can enjoy better coordination, more efficient planning, as well as informed and real-time decision making in often unprecedented times. By taking time to understand the business and appreciate the nuance of what’s good, what’s bad, and what needs to work better, teams can align, focus, and prioritise, which is critical for growth and stability when the going get’s tough.
While the revenue team is laser-focused on looking for ways to achieve growth, the finance team’s priorities also include managing costs, efficiencies, and doing more with less. This is a natural conflict and a barrier to trust, no more so when the economy is struggling. But when revenue and finance collaborate and truly understand business and growth initiatives, both sides can rely on each other to make decisions that are best for their teams and the company.
Align the whole company on metrics and data
Whatever their size, businesses need to leverage all the resources at their disposal to make good decisions right now. One way to do this is to lean on data, which helps to understand past success, including any learnings from past recessions if available, so they can take the right action in the present and make decisions that unlock better outcomes in the future.
Some of the most successful revenue organisations in the world align their teams with data, also known as a “shared source of truth”, to stay informed and make better decisions faster. In terms of what metrics matter most, annual recurring revenue, quota attainment, and win rates are crucial to make important business decisions, as well as top-of-funnel metrics to help tighten alignment.
Getting executive staff from other parts of the business involved in the process at different stages, so they can understand signals from the customer and how the journey evolves, can help broaden visibility and demonstrate how real-time gameplan decisions are data-led and are impacting things like roadmap, investments made in certain segments, verticals, and geos. By giving other departments a view into how revenue teams operate, there’s an opportunity for them to learn and share feedback.
In addition to top-of-funnel metrics and signals from customers, tracking what has changed in the business is critical for leaders to adjust to the macroenvironment. Ensuring you’re monitoring changes and reacting accordingly is key, with dips in conversion rates, lower volume of IDRs, and elongated sales cycles all signals that you may need to adjust and change tack.
When you’re operating in uncertain times, especially as a start up or smaller business, it is critical that you constantly have your eyes on such leading indicators and remain nimble, otherwise it could prove too late to pivot and course correct at a time when it matters most.
Furthermore, while adjusting to the current environment is key, it’s also critical to keep an eye on the future as you plan for brighter days. Setting yourself up for ongoing growth and success beyond the downturn is important. Tomorrow’s leaders will balance navigating uncertainty and executing well today while making the right growth investments so they can scale next year and leap ahead when the economy bounces back.
Maintain a team-first mentality
One of the challenges that companies often face is that many people on their teams may have never been through a recession or downturn before, which means they have no frame of reference or learned coping strategies. This presents a unique opportunity for leadership to help their revenue-critical teams redefine success and teach them skills they can deploy through their entire career.
With many sales reps early in their career, you have to work with them to reset expectations on what accomplishing success this year and the following year looks like, particularly with very few companies thriving in a downturn. There is the opportunity for reps to hone their skills and messaging, however, and teams should use this time to teach them the foundational sales skills they will need to succeed in any type of environment, as well as taking time to check in on team morale and ensure everyone feels supported.
There’s no doubt we’re still going through unprecedented times after almost three years of uncertainty, both across business and throughout wider society. By keeping the lines of communication open, prioritising data-driven visibility and transparency, and building trust where you can across your team structure, you can ensure your teams and customers feel supported and have the tools they need to succeed, setting your business up for success and longevity when we eventually come out the other side.