Remember: we are not actually in a recession yet!
Posted on: August 5, 2022
Reading Time: 4 minutes
Category: Business growth
Remember: We are not actually in a recession yet!
It feels like you can’t move right now for headlines about an impending recession.
Google searches about the recession have increased seven-fold in recent months.
We’ve even covered the topic ourselves, outlining the methods you can take just in case a recession does hit the business world.
The “incoming recession” mantra is repeated so often that it’s easy to forget one simple point.
We are not actually in a recession.
Quarterly growth of GDP in the UK
Not only that, but the Bank of England has not even predicted that the UK economy will dip into a recession.
They do think a contraction of less than 1% is likely in the last quarter of this year. Growth is then expected to be zero, on average, across 2023.
So if your sales conversation rates are suddenly down 20%, I’m here to tell you that it’s not because of the wider economic climate.
So why are my sales down?
So why are sales down for many businesses?
Analysis of the extensive Sopro dataset, with almost 2 million emails sent every month, reveals that Out Of Office automated replies are at a record high.
The above chart shows the proportion of all emails that are Out of Office replies, the proportion of initial prospecting emails that receive an Out of Office reply, and the proportion of all responses that are Out of Office replies.
All three have hit record highs as we head into the holiday season.
Particularly among senior executives, there are unprecedented levels of annual leave. Never before have so many decision-makers been on leave.
This pent-up demand for summer holidays has been building since the start of the pandemic. For many senior business leaders, this is their first holiday opportunity in three years.
Slower and longer buyer journeys
A report from Forrester reveals the changes in B2B buyer behaviour since the start of 2021.
First, buyer groups containing multiple senior managers are needed for sign-off, as the act of buying becomes more complex.
“Independent buying scenarios, in which only one or two people are involved, are getting harder to find. Now 63% of purchases have more than four people involved”.
Second, the number of sale interactions needed to complete the buyer journey increased from 17 to 27!
The combination of unprecedented annual leave and increasingly complex buyer behaviour inevitably slows decisions down. If one buyer is on leave, and then the next, then another, it’s no wonder checks and consensus can take a while.
But crucially, they don’t all stop working over the summer. The wheels are still turning at your target businesses. It’s just the decisions have been pushed further out.
We saw a similar thing during lockdown periods – the financial uncertainty of that period slowed down decision-making.
Before and after lockdowns, it took our sales team 36.9 days, on average, to close each sale. But during the lockdown period, leads took an incredible 72 days to close, nearly double the amount of time.
The current climate is similar.
Answering the right questions
Most people have a natural fear of failure. And this fear drives a common behavioural trait to embrace excuses. It’s far easier to go into the board meeting and say “sales are down because of the recession… just look at the headlines”. It’s a get out of jail free card.
It’s far harder to say “I’m going to get to the bottom of it”, and then look deeper, find the real reason, act, and then have the courage and patience to wait for the results to improve. Most people see the headlines and don’t analyse any deeper.
To compound this mistake, some people see a decline in their sales figures and respond by turning off the tap of marketing.
Sure, fewer sales might create the need to tighten the pursestrings somewhere. But cutting off your flow of new business opportunities? Because your decision time has increased… This panicked behaviour makes no sense.
As we’ve covered in our summer slump report, you don’t deal with fewer deals coming out of the bottom of your pipeline by reducing new leads going into the top of the funnel. You ramp up and knuckle down.
Covid lockdowns, summer slumps, holidays or recessions: the only answer to any economic downturn is to carry on driving new demand in your business.
Never, I repeat, never turn off the tap.