Warning signs are flashing around the world that the global economy is on the brink of a severe contraction. With the eurozone anticipated to slip into recession in the coming months and inflation rates surpassing 9%, far beyond the European Central Bank’s 2% target, B2B companies are bracing for difficult times ahead.
We’re already seeing deteriorating demand and rising inflation take a toll on sales across different industries. Recently, German industrial orders suffered their steepest decline in over a year due to the drop in demand from foreign countries, decreasing by 5.3%, with orders from eurozone countries plummeting by 10.3%.
High inflation is also having a direct impact on the payment behavior of B2B buyers. In the first half of 2022, German lenders and suppliers reported an average payment delay of 10.5 days, up from 9.97 days the previous year.
Patrik-Ludwig Hantzsch, Head of Economic Research at Creditreform, states that the decline in liquidity is primarily caused by a sharp rise in costs. This has had a particularly pronounced effect on small and medium-sized enterprises, whose average payment delay is significantly above the average at 12.1 days.
As the economy continues to struggle amidst high inflation and declining growth, b2b businesses must quickly adapt to the new circumstances and go the extra mile to retain and increase sales. This means finding ways to generate more leads, reach and convert more prospects, deliver added value that helps customers ease their financial burdens. Here are five strategies every B2B company can use to achieve these objectives.
Leverage a hybrid sales approach
Shifting from a traditional sales approach to a hybrid sales model has become increasingly important over the last few years as a way for B2B companies to keep up with the buyer demands for more convenient and personalized omnichannel experiences.
However, in light of the current high inflation and slowing economic growth, this shift is more critical than ever since it creates a dynamic and comprehensive sales process that’s more effective in reaching and engaging customers and maximizing sales opportunities.
A hybrid sales model combines the advantages of both digital and physical sales strategies to serve customers where they prefer to buy. It enables a more flexible, scalable and customer-centric approach to sales that can help B2B companies provide more personalized experiences which can lead to increased customer satisfaction and loyalty, resulting in higher sales.
Reward loyal customers
One of the most cost-effective ways to increase sales and revenue is through nurturing existing customers with reward programs; however, B2B companies rarely take full advantage of them. With buyers often tightening their budgets and scouring for the best offers in times of economic hardship, such programs can be a particularly effective strategy to drive sales.
Rewards effectively show customers they are valued while incentivizing them to stay loyal to the business. They help to boost engagement and motivate customers to make repeat purchases.
Reward programs can be structured in various ways, such as providing a tiered system based on purchase amounts, business-specific discounts, loyalty points, and rewards for customers who refer new businesses. In a tiered rewards system based on the amount of a purchase, customers can be rewarded with discounts, free shipping, exclusive access to new products, and more as they reach higher levels in the rewards system.
Customers can also receive loyalty points for every purchase they make. These points can be redeemed for discounts or other rewards. Reward programs can also be created for existing customers who refer new businesses to incentivize them to bring in new customers.
Beyond reward programs, simply offering discounts or bundling products together to create attractive deals tailored to each customer’s business needs can help incentivize purchases and increase sales.
Offer more payment flexibility
High inflation and economic instability can significantly affect B2B sales. When inflation rises, businesses experience decreased purchasing power, leading them to reduce their spending and resulting in fewer B2B sales. Furthermore, higher inflation causes higher costs for businesses, resulting in decreased profit margins and lower demand for products and services. Moreover, as banks limit their lending terms and raise borrowing costs, many companies – particularly SMBs – struggle to obtain credit.
Offering buy now pay later can help increase B2B sales by providing customers with more flexible payment options that enable them to purchase items over time. This allows them to free up cash flow and ease the initial financial burden that accompanies a purchase. BNPL has been proven to increase conversion rates by 20-30%.
It also empowers buyers to make additional and more frequent purchases and buy high-value products they could otherwise not afford due to budgetary constraints. According to Mondu’s internal data, online B2B merchants experience up to 57% increase in average order amounts after adding BNPL as a payment option.
Additionally, businesses that offer more flexible payment options can enjoy a competitive advantage as most B2B companies don’t currently offer payment by invoice and installment payments, despite high (and growing) demand among B2B buyers for these payment methods.
Harness the power of partnerships
Partnerships can be incredibly beneficial for businesses during periods of economic uncertainty because they allow for quick and cost-effective access to new customers and markets which can result in more sales. Furthermore, partnering with other businesses can help increase credibility, as customers are more likely to trust a company associated with a well-known brand.
Different types of partnerships exist with the intent to produce a mutually advantageous alliance, allowing both companies to benefit from their combined resources – be it direct sales, promotion or heightened visibility.
Joint marketing initiatives: Partnerships can allow B2B companies to reach a larger audience through joint marketing initiatives such as co-branding, cross-promotions, and advertising campaigns.
Cross-selling opportunities: Partnerships can enable B2B companies to take advantage of cross-selling opportunities to expand their customer base. By combining their products and services, companies can offer a more comprehensive solution that benefits both parties.
Referral network: Partnerships can create a referral network where each business refers customers to one another. This can be a great way to generate more leads and boost sales.
Invest in lead generation
Generating high-quality leads is always key to succeeding in B2B sales but that’s even more the case during an economic downturn. As many prospects may be hesitant to purchase due to budget constraints, it is essential to be proactive and create as many leads as possible. The more leads you create, the higher the chance that some will convert into sales.
Lead generation strategies can include a variety of tactics, such as email marketing, webinars, and content marketing. Each of these strategies can be tailored to reach the desired prospects and bring them closer to becoming paying customers.
Content marketing activities can draw in potential customers and keep them engaged. Creating engaging blog posts, videos, white papers, and case studies that demonstrate expertise and address customer pain points is a great way to get new leads and convince existing prospects to purchase.
Sending targeted emails to prospects can also help generate leads, build relationships, and nurture them until they’re ready to convert. Creating personalized emails and using segmentation to target specific customer groups with relevant messages is key to success.
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FAQ: How to increase B2B sales in an economic downturn
B2B companies can increase sales during an economic recession by implementing several strategies:
- Adopting a hybrid sales approach that combines digital and physical sales strategies
- Rewarding loyal customers with incentive programs
- Offering more flexible payment options, such as Buy Now, Pay Later (BNPL)
- Forming strategic partnerships to access new customers and markets
- Investing in lead generation through various marketing tactics
These strategies help businesses adapt to changing economic conditions, retain existing customers, attract new ones, and maximize sales opportunities even in challenging times.
A hybrid sales approach combines digital and physical sales strategies to create a more flexible, scalable, and customer-centric sales process. During a recession, this approach can help B2B companies in several ways:
- It allows businesses to serve customers through their preferred channels, whether online or offline.
- It enables more personalized experiences, which can lead to increased customer satisfaction and loyalty.
- The approach is more adaptable to changing market conditions and customer needs.
- It maximizes sales opportunities by leveraging both digital and traditional sales methods.
By implementing a hybrid sales model, B2B companies can better reach and engage customers, potentially leading to increased sales even during economic downturns.
Reward programs can be an effective strategy to drive B2B sales during tough economic times for several reasons:
- They show customers they are valued, encouraging loyalty when budgets are tight.
- Rewards incentivize repeat purchases, helping to maintain or increase sales volume.
- Tiered systems based on purchase amounts can motivate customers to buy more to reach higher reward levels.
- Programs offering discounts or free shipping can make purchases more attractive when businesses are cost-conscious.
- Referral rewards can help acquire new customers through word-of-mouth marketing.
By implementing well-designed reward programs, B2B companies can encourage customer retention, increase purchase frequency, and potentially attract new business even in challenging economic conditions.
Buy Now, Pay Later (BNPL) is a flexible payment option that allows B2B customers to purchase goods or services and pay for them over time. BNPL can boost B2B sales in several ways:
- It provides customers with more flexible payment terms, easing their initial financial burden.
- BNPL can increase conversion rates by 20-30% in B2B transactions.
- It enables buyers to make larger purchases or more frequent orders by spreading out payments.
- According to Mondu’s data, B2B merchants can experience up to a 57% increase in average order amounts after adding BNPL.
- Offering BNPL can provide a competitive advantage, as many B2B companies don’t currently offer this payment option.
By implementing BNPL, B2B companies can attract more customers, increase sales volumes, and potentially boost their average order values, even during economic downturns.
Partnerships can be a powerful tool for B2B companies to increase sales during a recession in several ways:
- Quick and cost-effective access to new customers and markets
- Increased credibility through association with well-known brands
- Joint marketing initiatives that reach larger audiences
- Cross-selling opportunities that expand customer bases
- Creation of referral networks to generate more leads
By forming strategic partnerships, B2B companies can leverage combined resources, expand their reach, and create new sales opportunities even when economic conditions are challenging. This approach can help businesses weather the recession and potentially emerge stronger.
During an economic downturn, B2B companies can use various lead generation strategies to increase sales:
- Content marketing: Create engaging blog posts, videos, white papers, and case studies that demonstrate expertise and address customer pain points.
- Email marketing: Send targeted, personalized emails to prospects to build relationships and nurture leads.
- Webinars: Host online events to showcase products or services and provide valuable information to potential customers.
- Social media marketing: Engage with prospects on platforms like LinkedIn to build brand awareness and generate leads.
- Search engine optimization (SEO): Optimize website content to improve visibility in search results and attract organic traffic.
- Paid advertising: Use targeted ads on search engines and social media platforms to reach potential customers.
By investing in these lead generation strategies, B2B companies can create a steady stream of potential customers, increasing the chances of converting some into sales even during challenging economic times.
Inflation can significantly impact B2B sales and payment behavior in several ways:
- Decreased purchasing power: As inflation rises, businesses have less buying power, leading to reduced spending and fewer B2B sales.
- Higher costs: Inflation increases costs for businesses, resulting in lower profit margins and potentially decreased demand for products and services.
- Extended payment terms: According to the article, German lenders and suppliers reported an average payment delay of 10.5 days in the first half of 2022, up from 9.97 days the previous year.
- Cash flow challenges: Higher costs and extended payment terms can create cash flow problems, particularly for small and medium-sized enterprises.
- Credit constraints: As banks tighten lending terms and raise borrowing costs, many companies may struggle to obtain credit, further impacting their ability to make purchases.
Understanding these effects can help B2B companies develop strategies to mitigate the impact of inflation on their sales and adapt their payment policies accordingly.
