Do you enjoy driving? Most people say it depends. 

When the roads are clear, it’s great. But what about when the roads are chaotic and people leap out in front of your car out of nowhere? Not as much fun, eh. Guess what helps? It’s developing 360 degree vision so you can estimate and prepare for what’s going to hit you—or hopefully miss you—next.

Leading a business can be just like that — full of twists and turns. But you gotta keep the steering stable by staying on the lookout for changing market realities. And the #1 question most business owners and leaders are asking themselves right now is:

“How is the macroeconomic situation affecting our business?”

We already know the headlines: “Wall Street Says a Recession Is Coming. Consumers Say It's Already Here” and “Uncomfortably high’: What economists say about the chance of recession”.

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What nobody really knows is the expected impact of the downturn/recession and more importantly, how to survive one if you’re running a business. And while everyone can make educated guesses about the impact of the recession, we thought we’d dig into our call data to see what the crystal ball says. So we looked into all our call data over almost nine months from when the recession came out of oblivion and into focus (October 2021-June 2022).

Here’s what you should know about the challenging macroeconomic situation and how to navigate it.

But first, are prospects even talking about the economic downturn on sales calls? Is it even coming up in conversations?

How frequently are mentions of the economic downturn coming up on sales calls?

There is a definite increase in the number of times that both prospects and reps are talking about the economic downturn (over October 2021-June 2022). And these are as a percentage of total calls made during this time period.

• Prospects are bringing it up 19 percent more.
• Sales reps are bringing it up 18 percent more.

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And by “economic downturn”, we tracked phrases such as economic recession, recession, slowdown, slump, stagflation risk, inflation, economy, layoff, layoffs, downsizing, economic uncertainty, etc.

And now for perhaps the more important question:

What is the impact of mentions of economic downturn on deal outcomes?

The news is in — there is a considerable decrease in the number of deals won when “economic downturn” is mentioned on a call.

When the topic “economic downturn” comes up on a sales call, the deal won rate decreases by 28 percent (from 11 percent in Q2 2022 vs average deal won rate of 15 percent over Q4 21-Q2 22). 

Please note that to measure the impact of a topic on the deal won rate (all deals/won deals), we are considering only calls associated with a deal ie. calls that actually moved into the next stage.

Which begs the question — are prospects asking more for things like discounts or throwing up objections related to budget, timing, ROI and value?

How frequently are mentions of budget coming up on sales calls?

We looked at “budget” as an objection (brought up by prospects) and as a qualification question (asked by reps).

Not surprisingly, both prospects and reps are talking more about “budget” as an objection (prospects) and as a qualification question (reps). 

• When it comes to prospects, they are bringing it up 13.5 percent more during the selected time frame (Oct 2021-June 2022).
  - This means objections from the prospects such as no budget, don't have the budget, too expensive, approval from CFO, cheaper version, no money, don't have any budget, don't have budget, frozen budget, budget freeze, etc.

• Are reps bringing up the “budget” qualification more? Yes, these mentions are up by 12.3 percent.

What is the impact of mentions of budget on deal outcomes?

• When prospects talk “budget” on a call, the deal won rate goes up by 31.3 percent in Q2 2022 vs the average deal won rate of 15 percent (deals/won).
  - This is actually an increase from a deal won rate of 3.5% seen in Q4 2021. This shows the effectiveness of budget as an objection over time.

• When reps talk “budget” aka as a qualification question, the deal won rate increases by 8.5 percent (Q2 2022). But this is actually a decrease from the deal won rate of 27 percent in Q4 2021. This shows that the effectiveness of budget as a qualification question has reduced.

Now what about timing? Is that coming up often as well?

Click here to download the full report.

How frequently are mentions of timing coming up on sales calls?

But first, this is how we defined “timing” as an objection and as a qualification question.

And how often is this topic coming up? 

• Prospects are bringing it up 17 percent less.
• Sales reps are bringing it up 26.5 percent more.

What is the impact of mentions of timing on deal outcomes?

• When prospects talk “timing” on a call, the deal won rate goes up by 39 percent in Q2 2022 vs the average deal won rate of 15 percent.
  - But this is actually a decrease from a deal won rate of 60.6 percent seen in Q4 2021.

• When reps talk “timing”, the deal won rate decreases by 11 percent (Q2 2022). This is also a decrease from the deal won rate of 9 percent (positive) in Q4 2021.

Now what about the other topics such as discount or ROI? Is that coming up more on sales calls?

How frequently are mentions of discount coming up on sales calls?

Not surprisingly, there is an increase in the frequency of mentions of the topic “discount” by both prospects and reps.

• Prospects are bringing it up 16.3 percent more.
• Reps are bringing it up 11.1 percent more.

This means that prospects are increasingly talking about discounts while reps are more actively talking about or offering them as well.

But does it manage to swing the deal won rate in your favor?

What is the impact of mentions of discount on deal outcomes?

• When prospects talk “discount” on a call, the deal won rate goes up by 30.4 percent in Q2 2022 vs the average deal won rate of 15 percent (deals/won).
  - But this is actually a decrease from a deal won rate of 35.6 percent seen in Q4 2021.

• When reps talk “discount”, the deal won rate increases by 14.5 percent (Q2 2022). This is actually a decrease from the deal won rate of 20.6 percent in Q4 2021.

Do you have an active discounting policy at this time? Has it pushed up your deal win rate?

Now, for the last topic —ROI.

How frequently are mentions of ROI coming up on sales calls?

• Prospects are bringing it up 11.4 percent more.
• Reps are bringing it up 16 percent more.

And by ROI, we literally mean return on investment aka are prospects and reps talking more about whether the investment will pay off in the short or long term.

Wondering what the impact is?

What is the impact of mentions of ROI on deal outcomes?

• When prospects talk “ROI” on a call, the deal won rate goes up by 38.7 percent in Q2 2022 vs the average deal won rate of 15 percent (deals/won).
  - This is actually an increase from a deal won rate of 29.7 percent seen in Q4 2021.

• When reps talk “ROI”, the deal won rate increases by 31.7 percent (Q2 2022). This is actually an increase from the deal won rate of 27.5 percent in Q4 2021.

What’s next — drive safe!

Must you have an accident when traffic is chaotic? Nope! You can use your newly acquired knowledge to your advantage. Just need a little practice, which is great because your reps are probably working those leads harder than ever! 

Leaving you with a few pointers that I think could really help your team prepare for the next phase of selling.

Here’s what I would recommend you share with your team:

• Longer sales cycle and nurture: Keep in mind that the deal won rate has decreased by almost one-third. Best to be prepared for longer sales cycles and invest in keeping prospects warm. Disappearing altogether will only make it more difficult to win them back later.

• Discounting: Prospects are asking for discounts 16 percent more. However, the mention of discounts decreases by 2 percent when leads move on to the deal stage. So be prepared with an attractive yet feasible discounting policy (balance average selling price with lifetime value).
  - The number of deals won is still rising when terms like ‘timelines’ and ‘discounts’ are mentioned, but the win rate is not as high as before. So offer discounts with your discretion but be prepared to not win as much as before.

• ROI: Interestingly, rather than discounts, ROI has become the needle-mover. Mentions of ROI by prospects has increased by 11 percent and win rate has increased by 7 percent (on deals where ROI is mentioned). This is in contrast with “discount” where the deal won rate has decreased. So focus more on discussing ROI and proving it.

Most importantly, I’d say spend more time with your team and your prospects. Ask your team about the challenges they are facing, analyze their conversations with prospects, and riff on the best way ahead. After all, tough times don’t last — tough teams do! I’ll toast to that.

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