Revenue Journal®

Economies are driven primarily by consumer beliefs and behaviors. When consumers are confident, they buy more. That's why economists watch consumer confidence levels. But that one measurement doesn't tell the whole story.

The real source of consumer confidence

A large portion of consumers are workers, employed by a company. Their confidence is directly linked to the confidence level of their boss. Workers watch their bosses carefully. If the boss is worried about the future, and openly agonizing about competition, slow sales, or too-high expenses, the worker is going to play it safe and hang on to his money.

He'll nurse his old car along; he won't buy a new house; and he'll resist making other purchases until his boss' attitude changes. He will also be more careful with the company's money. He'll watch his business spending. He'll take longer to make decisions, dragging out the buying process.

His boss, the company's owner, is also a consumer - of both consumer and business-to-business products and services. In addition to having an impact on the behavior of their employees, CEOs and the world's growing league of small business owners have a direct impact on the economy. They play a significant role as their company's top dog, and as consumers in their own right.

That's why it is so important to look at the behavior of company owners. Understanding their beliefs and behaviors will help you approach them properly. If you don't understand what they're going through, and why they're behaving as they do, you'll have a hard time selling to them - or to the consumers who work for them.

Three states: Cowering, Coasting, Charging

We live in a news-dominated environment. We are aware of events occurring all over the world, as they happen. Business owners also follow the news - in fact, their success depends on "reading" the market, so they pay close attention to world events. They also carefully watch changes in regulations; major industry, consumer, and competitive trends; and overall consumer perceptions.

What they see, and how they interpret it, determines how they behave. Their behavior falls into three distinct categories:

Cowering.
Something has made them decide that they had better hunker down and shift into risk-averse mode. It doesn't matter much what puts them in this state of mind; what matters is they aren't going make any major buying decisions during this time.

If they do buy something, they are going to make sure that they won't regret it afterwards. They will get plenty of input on all significant decisions.

During a Cowering period, your sales cycles will be agonizingly slow. Your own cash will be tight; you'll soon be doing exactly what your customers are doing. This is the classic recessionary downward spiral.

To make more sales during these periods, you must focus on being the "safe purchase." This is always a good strategy, but it's especially important during slow periods. Rather than being seen as the new kid on the block, you need to be the seen as the established, bugs-worked-out company that has many satisfied customers and will stand behind its product. You must also be able to answer their most pressing question: "What's going to happen to me after I buy?" Gently but persistently continue to contact the prospect to see if you can answer any further questions or provide data for any new people getting involved in the decision-making process.

This kind of gentle nudging requires a "nurturing" salesperson rather than a "hunting" salesperson. During a Cowering phase, the customers' agonizingly slow decision-making process will drive a "hunting" salesperson crazy. He isn't naturally patient. As a result, you'll lose sales to competitors - sales you should have gotten - because your "hunting" salesperson is pushing and then giving up. Instead he needs to be patient and pleasantly persistent. Teach your hunters how to calm down a little. It will pay off.

Studies analyzed by Mac McIntosh, a top sales lead consultant, have shown that 25% of the customers who express an interest in a type of product will buy within six months. You'll want to be the one they chose - because you kept in touch. You'll have fewer leads in the pipeline during this time. That's why it's more important than ever to make sure that you guide as many sales through to completion as possible.

Coasting.
It's October, 2004. The presidential election mud-slinging is in full swing. No matter which side they are on - "red" or "blue" - company owners are wondering: "How is this going to turn out?" They're not really working. They're watching and waiting. We are a society obsessed with resolution. We want tough situations to have a happy ending. Even an undesirable ending is better than no ending.

When things are still up in the air, people still come to work and go through the motions, but they also spend hours each day thinking about the issue and discussing it - in the hallway, in emails, in online discussion lists, and on the phone. The Drudge Report is just a click away at work, the radio continues to provide coverage for them as they drive to and from work, and the TV and the Internet provide more details when they get home.

Unresolved, non-work issues run the gamut: critical military battles, high-profile murder trials, elections, and major disasters. Rubber-necking and discussions about current events have become as much a part of our working lives as email and the Web.

During these periods, company owners are just as likely to be distracted as their workers, but they also know they have to keep the company running. They resent the fact that their workers are distracted, and they start throwing their weight around. They push employees to get back to work. Their own focus is on production, not purchases. They can see that their customers are also distracted, so their own sales are slow. The last thing they want to do when sales are slow is make a significant purchase.

To make sales when people are coasting, you need to stay "top of mind." You need to use classic stay-in-touch methods using the usual vehicles - email, letters, "just checking to see if you need anything" calls from the sales force, and so on. However, you can't "push." It won't sit well with your distracted buyer. Your best bet is to become a welcome distraction.

Every contact should be an appreciated contact. Either you are matter-of-factly informing your customer of a new opportunity (keep it very, very brief), or you are making them aware of information that they would find useful. (Not information that you think they should know, but information that they would truly appreciate. There's a difference.)

How do you know what they'll find useful? Ask them! As your salespeople and service people talk to customers, have them ask one question for an entire month: "What's your biggest challenge right now?" You will find a common thread in these answers, and you will be able to then figure out how you can help them solve that problem - either with your product, with information about your product, or with information about a solution that has nothing to do with your product. The helpful assistance you provide will be appreciated and noted by your customer.

Even when people are coasting, they still have deadlines they must meet and projects they must complete. They will break out of their coasting mode for brief periods. You want to be top of mind when they decide it's time to get that project done or to make a decision. "I've got to talk to an SEO vendor, today," the webmaster will be thinking. "I'll contact the company that has been sending me those interesting emails about SEO results."

Charging.

When company owners start charging, the economy shifts into high gear. Suddenly they're not afraid to make decisions. Suddenly they're not distracted. Suddenly they are obsessed with beating their competition, owning their market, and making this their "best year ever."

It appears to us that company owners shifted into full Charging mode on November 3, the day after the elections. Yes, they were distracted by the holidays and then by the terrible tsunami. But their basic attitude now is that they must win, and it's time to get going.

Charging periods are times of expansion and risk-taking. You won't see the heady days of the dot.com era this time; that was driven mostly by fifty-something, self-made-guys giving too much money to twenty-something, just-starting-out guys. It was also a classic technology boom-bust-modest growth cycle that we experienced repeatedly in the high-tech market. It was just played out on a much larger scale.

The executives in charging mode now are wiser than those just-starting-out guys; in fact, many of them are those guys, but they're a little older and a lot more seasoned. Steady growth is always the best growth; barring another major distraction, this year should be a solid growth year.

To make sales during this Charging period, you will have to focus on intelligent implementation. Your buyers are better informed than ever, and very skeptical. They will pay close attention to the difference between what you promise and what you deliver. They will want to work with salespeople who are organized and knowledgeable - and equipped with tools that properly answer all of their questions. They will want your website to be concise, relevant, and informative. They will have no patience for anything less.

Your salespeople should already have sensed that the environment has changed. If they are not seeing any change in the enthusiasm of your buyers right now, you may have a more serious problem. Your river of revenue may have dried up for some reason. You will need to shift into research mode to figure out what is really going on. (My book provides precise instructions on how to do this.)

Bosses matter

Even if you're not selling directly to company owners and top managers, their confidence level will affect your sales. If they're cowering, their employees - the consumers who shop for groceries, clothing, cars, houses, and business products and services - will be cowering as well. If they're coasting, you can bet their employees are coasting even more. If they're charging, your sales potential is at its peak. Get moving. Make hay while the sun is shining, because it won't stay out forever. In today's news-driven world, a single monumental event can send your buyers back into Cowering or Coasting mode.

Keep an eye on company owners. Make a note of the "boss confidence level." Be ready to adjust your methods accordingly, because if you're not in sync with their frame of mind, you won't sell as much - to the boss or to anyone who works for a boss.