Force-majeures are always mentioned in contracts and agreements. But how many businesses are really ready when force-majeures actually strike?
Since February 2020, the outbreak of COVID-19 has been the reason for major concern for people worldwide. Having affected the countries that represent 40% of the global economy, it puts pressure on both Healthcare organizations and various business areas.
How does it impact the world of B2B sales?
Sadly, B2B also gets affected by the low levels of consumer confidence and hits the most important part of B2B — face-to-face appointments and events. According to the PredictHQ data, the cost of canceled events will be over $500,000,000.
The changes and cancellations have been happening since February 2020. From Facebook and Google to Qualtrics, major companies prefer to play it safe and not take any chances.
The statistics are the same for smaller B2B companies. Scheduled F2F appointments and face shows get canceled as potential buyers and customers go into safe mode. Additionally, potential contracts are never signed due to the need to save on the budget.
Given all these obstacles, the future looks uncertain.
Should you let your prospects go?
Should you focus on your сustomer database?
Is there a way to keep a potential buyer without F2F appointments?
There is no easy answer or solution. Since the effects of the outbreak and its nature are still being studied and new information keeps coming in day by day, it takes not one but many steps to secure your position and find your way through the crisis.
1. Keep calm
We’re not trying to be Captain Obvious here. This incredibly useful piece of advice is often forgotten during the trying times. But the thing is, they happened before. From SARS in 2003 to the H1N1 epidemic in 2011, it’s not the first time countries and economies were threatened by a new virus strain. However, we made it. And we will make it again. All we need to focus on now is what are we going to work with when the epidemic is over and everything starts getting back to normal.
The research by McKinsey & Company outlines at least three scenarios that businesses should consider:
Quick recovery. Most of the impact occurs in Q1, allowing to start returning to normalcy in Q2, the intracomplex transmission is thoroughly contained, so consumer confidence is restored by the end of Q2 due to the absence of new cases, new treatment options, and low fatality rates. The end of Q2 also sees some peaks in cases, proving that the virus is seasonal. All travel bans are lifted, aviation and tourism are back to normal. Q3 and Q4 see a full recovery in all areas. This is the most optimistic and the least likely scenario.
Global slowdown. The massive scale of prevention measures bears fruit only at the beginning of Q2. The case growth is slowly reduced not without an impact on economic growth in major industrial areas. Consumer confidence is still not fully back by the beginning of Q3 while the evolution of the disease determines the recovery of demand. Some industries, such as consumer goods, regain their demand faster than others. In the middle of Q3, travel restrictions are lifted, allowing tourism and aviation to get back to normal and enter Q4 stabilized. This is a realistic scenario.
Global pandemic and recession. The return to normalcy occurs at the beginning of Q2. The reduction of cases is observed only in the middle of Q2, while disease expands to other countries, leading to continued traveling ban (that won’t be lifted till late 2020), frozen state of aviation, low demand and a significant impact on the economic growth. This is the most pessimistic scenario.
Given the latest news, it seems that we’re observing the third scenario. At the moment of writing this piece, the WHO has changed the status of COVID-19 to a pandemic, implying that new economic challenges are coming.
In regards to the measures and the most important things to concentrate on, McKinney&Company outlines the following guidelines:
Prioritize your employees
The outbreak puts a lot of emotional and mental pressure on everyone, including your teams. Aside from helping the company stay afloat, they face unexpected challenges and have a lot on their plate. Keep that in mind and don’t handwave the necessity of adding changes to your policy.
Educate your teams on the symptoms of COVID-19 and safety measures. Even though we live in an age where it’s super easy to find information, many public media outlets cannot resist creating a sense of urgency and distort facts for shock factor. Be the mediator between the media and the people you’re responsible for. They will appreciate you addressing their concerns and helping them stay focused.
Train your local managers to deal with unexpected situations. Inform them about safety protocols, monitoring rules and guidelines to follow. This is necessary for bringing control into your workflow — and for reducing the fear of the unknown among your employees. Where there are structure and clarity, there is a way for your teams to stay calm and confident.
Create a safe atmosphere. Allow your teams to work from home if their range of tasks is not tied to their workplace. Be open to your employees’ suggestions regarding safety measures. Use two-way communication to ensure that there is no room for misunderstanding or unvoiced concerns. Your company will never be focused on survival if your teams’ minds are preoccupied with other things.
Secure the liquidity
We have mentioned that you should always know what you can sacrifice during a tough season. In order to do it right, you should have several scenarios sketched out. Each of these scenarios must include:
Variables that will affect your revenue, complete with numbers, analytics, and input from experts.
An outline of the financial side of each scenario (balance sheet, profit, loss, and cash flow).
All the triggers that are likely to impact liquidity and the means to address them (account optimization, divestments, merger and acquisition strategy, cost reduction).
It’s always advanced to have these scenarios prepared in advance. But the sooner you start working on them, the faster you will be able to understand your liquidity in the current coronavirus outbreak.
Assemble a response team
Since sitting still is not an option in a crisis situation, you should ensure that you cover all work streams that can be impacted by an outbreak. A hand-picked team of experts from all directions must be able to combine their regular duties with tackling the following issues:
- Your employees’ welfare, health, and productivity as well as the means to keep them at an adequate level.
- Working on the contingency plan and stress-testing to evaluate your financial preparedness.
- Monitoring of your supply chain and ensuring its resilience, building a quick response system.
- Damage control for demand shocks in the marketing and sales departments.
- Coordination of the work between departments that will comply with the guidelines on employee welfare.
Timely goal-setting and a stable cadence are the keys to the successful performance of your response team. Don’t stop at outlining your long-term goals. Know what you will be doing in the next 48 hours, next week, next month. Review your plans and decisions to make adjustments, so you wouldn’t do any unnecessary work and lose time that could have been spent on important matters.
Keep your supply chain stable
It’s not a surprise that the first months of the coronavirus outbreak took their toll on the supply chains connected with China. The shutdown of numerous factories in Q1 leads to a number of disruptions the full effect of which we are yet to see and experience. Even though factories and large companies are currently back to their capacity, there is a still delay in shipments (from 8 to 10 days) and a significant lack of workforce.
This is why you should have a clear understanding of how your supply-chain was affected by community transmission. To do this, you must be able to answer the following questions:
- How do aviation and travel bans affect my product distribution?
- How dependent I am on production shutdown? Is there any extra stock I can use and ration?
- Should I invest in pre-booking air-freight delivery?
- What am I going to do when supply is normalized?
- How can I optimize my network? Are there any channels that I don’t really need right now?
- Are there any spikes in demand that I should pay close attention to?
- Should I be looking for new suppliers to ensure extra stabilization?
Expect your stabilization to be long-term because the unexplored nature of coronavirus makes it uneasy to predict when the situation will go back to normal.
Don’t abandon your customers
The last thing your customers should experience is the “everyone is out for themselves” scenario. The research by McKinsey & Company established that the companies that stay close to their high-value customers are better at dealing with disruptions. For example, while many consumers in China shifted to online shopping and delivery during the outbreak — because they were provided with an option to do so.
Your customers need you as much as your employees. You have to make sure they know that you are there for them. Develop a flexible strategy for every customer segment.
Don’t push your newest clients into the contract — offer them to take a couple of months off to let them prepare a contingency plan for their company, give them access to features that will let you cooperate remotely.
Ask your long-time customers about their situation. Offer assistance or free consultations in case a part of their concerns is something you can help with.
Always provide an alternative. Don’t insist on a face-to-face meeting. Moreover, be the first to suggest to reschedule the meeting or talk via phone or Skype.
Practice, practice, practice
We can talk all we want about contingency plans and etc., but the theory is nothing without practice. Your safety protocols must be fully functional and viable.
But how do you make sure they work? Luckily, you don’t have to actually wait for trouble to see how well you’re prepared. Instead, you can use various simulations to assess your measures and see what kind of decisions will work out for your company and which protocols should be reworked immediately. Such simulations require your response team to be present because when the storm hits, you want swift communication and 100% efficiency.
Be a part of the community
The fight against coronavirus is everyone’s responsibility. Whether it's altering your production to produce medical uniforms, protection equipment, and medical masks or becoming a project investor, your contribution to community efforts will pay off — both in resisting the crisis and restoring the growth after the crisis ends.
2. Stay nimble
When it comes to managing your B2B sales in the middle of a coronavirus outbreak, letting your potential customers and intended meeting attendees is not an option. This is where you should get creative and smart. Luckily, the modern age provides plenty of ways to connect with your prospects without meeting in person.
Embrace digital opportunities
Events may get canceled, but the show must go on. If you have an event planned for March/April, don’t wait until your invited prospect sends you a count-me-out email. Prepare to transform this event from a physical conference to an online meeting — and inform all participants about it via email. Make the most out of this opportunity by enriching your prospects’ experience with downloadable materials and creative presentations. If your resources allow it, prepare small but meaningful gifts (test packs, discounts, etc).
Make more content
This is your general chance of exploring a new direction in your marketing. Think of the materials that your potential prospects may like. Maybe there is a tutorial for your SaaS product that you’ve always wanted to upgrade? Maybe you have time to design a mascot for your social media? A little bit of creativity mixed with useful information will be a pleasant distraction for your prospects.
Ignore the distance
Your communication tools and assets should be available to your customers regardless of their location. Highlight your 24/7 availability to your prospects, arrange kickoff meetings via any messenger they’re comfortable with. Give them access to all online tools and programs necessary for working with you. When your target audience sees how easily you switch between offline and online, they will feel easier about working with someone so flexible and responsive.
Cases like these give you an opportunity to assess the value of your events and activities. See when cancellations hurt your lead nurturing — or if they hurt your nurturing at all. Maybe it makes sense to go fully digital and stop investing in events that don’t bring much profit?
Hope you are well.
We often use this line in our template and each time we mean it. Right now, these words are as relevant as ever. We hope that you are well, prepared and calm — and we can’t wait to congratulate you all on making it when the crisis is over. Keep calm, take care of what matters, follow the guidelines, help people around you — and stay in touch!