Sales cycles are getting longer. Doug walks through the history of our market to give context about major events that have occurred over the past 25+ years to explain how we arrived at the uncertain and unique market conditions today. Doug also gives advice to revenue operations teams on how to adapt to drive success despite today’s market challenges.
- [RevOps Show] Episode 33: The JOLT Effect - Interview with Matt Dixon, The Impact of Indecision on Your Sales Efforts
- [Blackline Podcast] Episode 55: Selling in Difficult Times
- [Blog] Move Beyond Thought Leadership to Break The Sales Barrier Myth
- [Blog] 5 Actions for Sales and Marketing to Succeed Through Scary Times
Pre-Show Banter: Thanksgiving was a success! Jess cooks her famous turkey every year using a Gordon Ramsay recipe and it always comes out perfect. For our long-time listeners there’s a hidden egg in this discussion (eyes emoji). Jess also confirms she has washed her sweatshirt since the World Series so she can wear it more often.
Sales cycles are getting longer and we’re in a unique/different market. To understand where we are now, it’s important to understand the history of where we’ve been. This market has existed, but there are elements about what’s happening right now that are unique.
There are two important things to consider when we talk about structural challenges:
- Have a hypothesis of how we got here
- Be able to identify what similar or the same
To anyone listening in or reading this, we’re not in Kansas anymore. There’s schizophrenia in some of what Doug is seeing in this market. Many people are going to like what Doug has to share over the next 12, 24, and 36 months, and there will be many who aren’t going to like what he shares because the RevOps function right now has a tremendous opportunity to demonstrate its indispensability. BUT most of the places where RevOps is being talked about is not where they need to be, and Doug worries that RevOps is going to fail to deliver on what it needs to over the next 24-36 months.
So, how did we get here?
We were agricultural, then we were industrial, and now we’re digital. The 1990s into the 2000s brought so much disruption to the American business. Going further back World War II brought on a different level of supply and demand. There wasn’t the same level of demand, so into the 1950s and 60s there was far more demand than supply. By the late 1990s in most cases, there was more supply than demand.
With that in mind let’s start in the late 1990s. We started spending massive amounts of money on tech. Internet 2.0 hit peaks in 2000 with a massive explosion in the markets that disrupted them and messed with interest rates and money. Once we got through that, we hit the banking crisis and the Great Recession. There we learned there was a lot of fake money. Once we got through all of that, we then had COVID.
To break it down more there are three chapters:
Starting with 1995-1999, the S&P500 tripled in value up 200%. In 1999 the S&P500 was up 19.5%. Stocks historically average 8%-10%. If you take a look at the S&P500 and the companies in it, there are companies that made money that year and companies that lost money. You would think companies that made money would do better than companies that lost money, but this year companies that lost money actually had more of a return than those who made money.
By 2002 the S&P500 lost more than 50% of its value. The Fed funds rate was roughly 7% in early 2000. Money was expensive, and inflation was going up. By 2003 the Fed funds rate was under 1%, and from 2003 to 2008 the term QE was introduced. QE = Quantitative Easing. That was the Fed issuing more money, moving money off of their balance sheet, and putting more money into supply. It was a big financial manipulation to flood the system with money and see the market come back.
In 2007 the Fed funds rate peaked at 5.5, and in 2008 the Fed funds rate didn’t go to under 1%, it went to 0%. The Fed funds rate didn’t break 1% until 2017 and peaked at about 2.5% in 2019. Then in 2020 we got COVID and the system stopped again. Fed funds rate goes back to 0% and doesn’t rise again until mid 2022 as inflation starts to take off. And we are where we are now: massive amounts of money flood, massive interest rates at basically zero, and money is free.
What’s the role of tech in this?
For the last 25 years, tech has sucked up oxygen and has defined business strategy. No one knows what game they’re playing anymore. In one generation, we’ve had three extreme once-in-a-generation events. Each one has been radically different and radically unexpected. Where has a lot of growth come from? Tech spend. Why has productivity gone through the roof and wages haven’t? Tech. It’s time for the adjustment to be made.
Demand levels have dropped, and Doug is seeing the ability to make decisions drop, too. People are afraid to commit because they have no context. Every purchase being made is a representation of a prediction that you’re making about the future, and if you can’t pick the winner, how can you commit to something?
We want people to be able to make decisions and to do that you have to create confidence. Today people don’t have context - they don’t know if they’re in the upside down or the downside up.
What does this mean for today? What’s the recommendation?
Inflation could come down, we could have a mild recession, and interest rates could come down. We could return to the market conditions of the last 10 years. This could also become the norm. We could just be in a hard, tight period of time.
The good news is that if you adjust to the things Doug is talking about here and he’s wrong, making these adjustments will not hurt you; they will help you.
You need to adjust your message position. You may need to change your positioning to see where you really fit in the market. So much messaging has been about new gain which isn’t going to have the same impact.
You also need to change your selling proposition. It’s no longer about being ahead; it’s about not falling behind. It’s about loss avoidance today.
Some questions to think about here:
- Do you want to be liked or do you want to be valued?
- How are you delivering value?
- How are you better off for what’s happening in leadership?
Provide that leadership. Help people understand their dangers and their opportunities and how to capture those opportunities.
You have to sharpen your sales process and approach. This is going to be the difference of who wins in the next three years and who doesn’t. Stop focusing on the sale.
We had an interview with Matt Dixon who wrote the Jolt Effect. This comes from the book, “The worst thing you can hear from a customer isn’t no. It’s I need to think about it. It’s no decision when this happens. The deeply entrenched business device says to double down on your efforts to sell the buyer on all the ways they’ll win by choosing you and your business. But this approach backfires dramatically.”
Everyone is so focused on post-intent, but they sell pre-intent. Once purchase intent is established, customers no longer care about succeeding; they care about not failing and that is why everyone is stuck. There will be decision reluctance. You need them to understand the cost of not changing. You need to be building indispensability from the beginning and realize early on everything is going to sound great. If you don’t start addressing things up front, you won’t succeed.
We are in a place of no context. We need to get ahead of decision reluctance, focus on the sales approach and the decision process. Those are the biggest things you can do right now to ensure you’re able to move things forward.
Follow Jess, Doug & Lift on socials for updates on the show or other insights:
Coming Soon: Episode 79!