The COVID-19 crisis impacts all businesses, but it has significant bearing on industries that depend on day-to-day customer interactions such as media advertising sales. Specific actions taken by commercial organisations during these uncertain times can make or break the firm in the aftermath.
In a special INMA Webinar on Thursday, executives from Alexander Group focused on how to navigate an advertising sales operation through turbulent times. Matt Bartels, principal and media sales practice lead, and Marc Metzner, vice president, looked at contemporary market flash findings from more than 100 sales organisations.
Alexander Group, International (AGI) is a management consulting firm that helps organisations through revenue growth challenges. The group also conducts research and has a knowledge-sharing community. The company works with hundreds of media companies across various platforms and, now, provides a space for COVID-19 resources.
Media market pulse
Looking at some forecasts from other organisations, eMarketer has forecasted a US$20 billion decline in ad spending, while Nielson predicts a 60% increase in TV usage. AGI found 68% of people surveyed were considering some sort of compensation change due to COVID-19, and the recent INMA survey found 62% of respondents had already experienced a sudden drop in advertising.
AGI’s flash survey of more than 250 people obtained a snapshot of the current state of the market right now. The global audience of the survey represented a large range of industries and locations around the world.
“There are three things that are top of mind for most people,” Bartels said.
- The health of their people.
- Timing: When do we have to make crucial decisions for the next phase?
- Compensation: How do we treat our people fairly, especially in sales?
“We’re going to do this again in a week and see how much has changed,” Bartels added.
Across affected industries, AGI found cuts were most significant in media, tech, and health care, Bartels said: “Everybody is expecting a severe cut in their overall business and revenue. Media was much more pessimistic about the impact this would have on their business than other industries.”
Other findings included:
- 24% of media companies were thinking about reducing head count (compared to 6% overall).
- Media companies are twice as likely to provide quota relief for sales personnel.
- Majority of media companies have moved to fully virtual interactions.
- Media companies are twice as likely to reduce hiring.
Metzner took over to discuss how to address this crisis and prepare for the eventual turnaround.
“As Mark said, media seems to be acting a little more strongly” towards the pandemic and outlook, Metzner said. “Media and these other industries are all trying to figure out what we do now to help society and our advertisers, to be part of the solution; make sure we preserve our resources and customers; and how to drive strategic objectives during this downturn.”
The question is: Do organisations just hunker down to get through this or do they start planning for a strategic response? Metzner said there are four basic approaches to this:
- Duck and cover: Cut costs and hoard cash to ride out the lowered revenue for the year.
- Hoard ammunition: Invest in mid-term growth capabilities to start fast within the market.
- Attack weak spots: Win over desirable customers with additional investments, build loyalty, and achieve a faster growth margin.
- Proactive agility: A combination of the first three approaches, but for the right customers, the organisation will deploy agile sales plays.
The AGI revenue leadership model for navigating a downturn
Metzner introduced an illustration of the journey companies must take to achieve revenue growth in a downturn. “Whichever of those strategies [above] you take, with our clients we always use this model,” he said.
Steps 1-3: Strategy: Revenue segments; value propositions; and revenue motions.
Steps 4-6: Structure: Channel coverage; organisation and job design; and sizing and deployment.
Steps 7-9: Management: Talent, skills and supervision; productivity, quotas and metrics; and compensation and rewards.
“If you think of these as pillars, they all need to be aligned for sales organisations to function efficiently,” Metzner said. “As you think about COVID and how you’re going to operate in the next three, six, and nine months, you really have to move through each stage of this model.”
If someone in leadership thinks about the model as the architecture of their sales organisation, AGI focuses on eight key imperatives.
- Prioritise and protect vital accounts and resources.
- Focus on critical activities and transfer those to the most efficient resources and best salespeople.
- Reposition resources for medium-term growth.
- Deploy a “customer success” mindset, for both customers and advertisers.
- Adjust sales compensation and quotas to optimise performance. Keep high performers from giving up or leaving because of previous goals they’ll never be able to meet in the current environment.
- Develop multiple contingency plans.
- Speed governance, be ready to prioritise and change quickly.
- Lead with action.
“This downturn admittedly looks pretty bad at the moment, but so did 2008 and so did the ones before it,” Metzner said. “We know the market and advertising will come back up. Advertisers are eager to help their customers in this situation, so media companies need to be able to help them.
“Let’s look at how severe this really is for media,” he continued. “You need to think about what you’re going to do differently.”
In INMA’s survey two weeks ago, 62% of respondents said they had already experienced a sudden drop in advertising. With the more recent AGI survey, 95% of respondents expected the COVID-19 crisis to have a negative impact on revenue.
Prioritise high-value customers
Advised strategies to combat this include developing contingency plans. Metzner recommended aligning on the highest priority advertisers, partners, and sales resources, and then identifying those most at risk. From there, a sales organisation can develop tailored coverage, engagement, and communication plan(s) to manage this group closely.
He also suggested that organisations drive nurturing conversations with existing customers and take advantage of the increased available sales time due to lack of travel to deepen relationships with vital customers.
“Over-communicate. We want to over-communicate how we value them and that we’re still in the game. Engage with advertisers, try to do good for them and for the community.”
This crisis and downturn will be a catalyst for publishers to become far more customer focused and listen to their needs, Metzner said: “We’ve got to turn the sales process to more two-way conversations, and solution-oriented sales platforms.”
Focus on critical activities and transfer resources
“This is a time to change your habits,” Metzner said. “Many sales people spend a lot of time in low-value activities. Think about these activities. Which ones can we offload? Which ones can pre- and post-sales people do efficiently?”
At the same time, organisations need to realise that sales people are going to need more time to make sales right now.
Four steps were outlined for this step:
- Recognise that downturns reduce revenue per hour, so every second is priceless.
- Understand how much more sales effort is required to facilitate and close deals.
- Identify the most critical sales activities and deploy the right resources against them. Support sellers by prioritising sales actions, and providing clear expectations.
- Strategically rebalance headcount for productivity. Do not over-compensate, and only reduce headcount of non-quota carriers (i.e. sales support).
Reposition resources for medium-term growth
A total of 56% of media companies surveyed by INMA said their primary pain point involved balancing different strategic priorities.
“This is not stuff that’s going to take care of itself. It needs to be taken care of by management,” Metzner said. Actions to achieve this include:
- Sustain new product momentum (educating reps and customers, developing advocates).
- Strategically target new customers, budgets, and market share neglected by competitors. Move resources from low to high growth sectors, and build internal expertise.
- Re-evaluate growth bets, determine where scale and payoff will be attainable in this new environment.
- Lay the groundwork for stronger customer relationships to ramp-up ahead of the market.
“This is a perfect time to be engaging with advertisers and getting them excited about new products, particularly in customer service roles, during the crisis,” Metzner said. “It’s kind of a low-risk way to engage with buyers.”
Bartels added that all this goes back to the timing elements AGI clients are asking. They wonder if they should introduce new products, and if so, what is the right timing?
“The risk is if you try to launch it full-out and it doesn’t work. However, the general consensus of the group was, if you talk to the client and express that you have these new products, they will give you the answers as to when the timing to introduce them is right. The idea is not just worry about right now, but think about where the next phase is going to lead us.”
Customer success mindset
It’s vital that media companies adopt a customer success mindset. In disruptive times, customer success is the first line of defense in preserving revenue and mitigating churn.
“All of this is going to require a customer success mindset,” Metzner said. “We need to really develop this. It will pay off in the shorter term, and will pay off big-time when the market turns around.”
Steps to pivot to that mindset are:
- Understand critical customer needs during this difficult period. Ask how you can help as a trusted advisor, and truly understand what customer success means to them.
- Develop a comprehensive plan and communication strategy for CSMs/AMs to empathetically reach out to clients. Focus on instilling confidence and reinforcing the value of your solutions.
- Tailor value propositions to focus on helping advertisers add value in a practical way during the downturn.
- Refine sales processes and prioritise account planning.
“We need to think about giving our sales people some good ammunition for what kinds of questions to ask and what solutions to give, to advertisers. We can see this is a leadership situation,” Metzner said.
Leverage key customer success strategies
The media goal of leveraging this customer success mindset includes two sides of media selling.
Customer success objectives:
- Talk to customers’ business goals.
- Drive continuous two-way engagement.
- Focus on multiple platforms solutions to increase wallet share.
Top customer success enablers:
- Strengthen AM capabilities.
- Develop new metrics and reporting.
- Invest in customer insights and brand building.
- Help advertisers manage reduced demand.
Metzner suggested conducting a brainstorming meeting with your top twenty to forty advertiser accounts. “Think about what we can do during this crisis to help people, and enhance their brand in the process.”
Adjust sales compensation and quotas
This leadership strategy is about taking away the floor, the worst-case scenario, so sales people can go about their business without worrying about that, Metzner said.
“What we’re hearing and seeing is that most organisations are thinking about a minimum amount on the floor of pay,” Bartels said. “The biggest trend we’re seeing is that, rather than giving them a guarantee or some sort, actually mixing in measurement against other activities — not just revenue-generating things.” These include things such as breaking into new relationships and developing strategy for future revenue without worrying about current revenue.
- Reflect new market realities in prioritising activities and accounts.
- Focus reps on relevant revenue maintenance and growth activities.
- Consider different metrics that focus on new as well as existing buyer relationships and strategic product momentum.
- Protect the earnings of “keeper” reps by considering draws, temporary redesign of mechanics, contests, etc.
- Mitigate risks to the business plan.
“Keep the wheel going,” Metzner added. “It puts their mind at ease on worst-case scenario, and lets them move forward.”
Develop multiple contingency plans
A total of 27% of media companies surveyed by INMA cited a lack of structured guidelines to manage the coronavirus response. Organisations can:
- Develop multiple decision-tree contingency plans based on duration, scope (number of affected advertisers), prospects, partners, and financial severity.
- Determine milestones that trigger specific actions and assign individual accountabilities.
- Establish metrics to ensure oversight and coordination to manage and evolve plans.
Speed governance and lead with action
“To do that, we’re going to have to speed governance,” Metzner said. “We can’t be asleep at the wheel, so to speak. We’ve got to be managing quite proactively during this time period. And we’ve got to be leading with action.”
- Create a structure for reviewing data, agreeing on action(s), and adapting quickly to market changes.
- Conduct more frequent, but shorter, meetings.
- Conclude meetings with specific calls to action.
“Before the general economy picks back up, you can be sure a lot of these advertisers will be spending money because they want to get ahead of the curve. And they’re going to be looking at customer service activities a lot,” Metzner said.
Companies are re-imagining how people within workplaces will now get business done, from video meetings to offsite teamwork. Leadership should:
- Demonstrate a commitment to medium-term growth so the sales force will follow.
- Leverage the first-line sales managers to reinforce stability to the team and communicate strategies as they evolve.
- Gather learnings from inside sales leaders to increase focus on sales activities in a time of delayed results.
- Reinforce not letting perfect be the enemy of good.
Metzner and Bartels concluded by sharing a number of upcoming events that will address these issues and strategies. AGI plans to re-conduct its survey every two weeks to see a longitudinal map of trends.
INMA: Guaranteeing reps’ compensation may not be the best thing to do. Our industry is not flush with cash and this might cause solvency issues. How would you address this?
AGI: Back to the point of not cutting all of your muscle, what is your organisation going to look like in four months? I know a lot of folks are doing a balancing act. They are getting creative with salaries, etc.
INMA: Long-term solutions are great, but we need cash flow now. Where do we go for the short term?
AGI: There’s no getting around that if your business is having cash flow problems, you’re going to have to cut costs. Our point is to do that strategically. It’s all about the people you can’t lose and the accounts you can’t lose. How do you preserve those? You may have to make some business decisions to cut back on those of less value.
With what you have left, what are the best offensive moves you can make? It’s going to have to be a balancing act. If you can manage to integrate in some offensive bets while you’re on the defensive, it’s going to be a much better opportunity as well — not just in the upturn, but you’re going to find revenue during the crisis as well. Find where your advertisers are trying to do good.
INMA: Would taking the discounting route hamper long term prospects and discounted rates become the norm?
AGI: Yes, any time you discount you’re at risk. You have to position it as a one-time discount and see if that flies. You have the context that this is a very unique situation, you have to frame it in that context. Frame it as we care about you and are trying to take care of you at this time, but this is a one-time thing.