Outbound Has Gotten More Difficult: What To Do About It
An In-Depth Look At How Macro Conditions Affect B2B Buying And Selling Behaviors - And What to Do About It
Editor: Shannon Needham
Prelude: The Road Ahead
Any time you log in to LinkedIn, there's no shortage of people who want to whine about how much more difficult executing outbound has become.
In most cases, their thesis will fall under one of a few buckets:
(1) Seller Behavior - The proliferation of sales enablement technology has dramatically increased the amount of noise in traditional sales channels, leading to buyer fatigue, skepticism and lower response rates (The Bridge Group's annual Sales Development Report would seem to corroborate this)
(2) Buyer Behavior - consumer preferences have fundamentally changed because of the internet, and that information-enabled buyers no longer want to engage with sales people (typically citing the Gartner study on how 57% of the buyer's journey is completed before a customer engages with a sales rep)
(3) (Generic) Economic Factors - Often sellers will cite headlines: "(Major Index and/or Recognizable Public Company) was down X% today", "(Big Name Company) lays off (Intimidating Looking Number of) employees" etc. - as self evident truths about how "the market is bad", and "everybody knows" that when "the market is bad" "nobody is buying"
In today's article I propose to do a deep dive on (3), as much of the commentary I've seen has been very surface level and provides minimal context - both for the purposes of education as well as taking action - on economic headwinds that alter both buyer and seller behavior. Fear not, as I propose that the things that make you strong in a risk-sensitive (notice I didn't say "bear") market will allow you to soar past your competitors when cyclicality inevitably does its thing and market participants become risk-tolerant again.
Those of you confident in the implications of macroeconomic policy can skip the following section - however, if you're a junior sales rep, this is the type of context that can accelerate your progression along the learning curve from desperate product pusher to informed consultant: I took all the boring economics classes so you wouldn't have to. Grab an espresso, pop a ZYN and strap in.
A Crash Course in Central Bank Policy
The Federal Reserve has what's called a dual mandate, which is to say they're responsible for maintaining the delicate balance between unemployment and inflation. In their own words: "The Federal Reserve's monetary policy objectives are to promote maximum employment and stable prices in the U.S. economy."
Linguistically, the use of the word "and" is a bit misleading: It implies that the Fed's machinations allow for the pursuit of both concurrently - without trade offs. If only life were so simple. From Principles of Macroeconomics (Rittenberg):
"Ultimately, economics is the study of choice. Because choices range over every imaginable aspect of human experience, so does economics...
Not only must we make choices as individuals, we must make choices as a society….
We would always like more and better housing, more and better education - more and better of practically everything.
If our resources were...unlimited, we could say yes to each of our wants - and there would be no economics. Because our resources are limited, we cannot say yes to everything. To say yes to one thing requires that we say no to another. Whether we like it or not, we must make choices.
Our unlimited wants are continually colliding with the limits of our resources, forcing us to pick some activities and to reject others."
The Federal Reserve, too, is a victim of economic reality, and the policy changes supportive of maximizing employment necessarily courts destabilizing prices.
When the Fed lowers interest rates (through a variety of mechanisms too abstruse for the purposes of this article) , it makes borrowing cheaper for businesses and consumers. This encourages spending and investment, leading to increased demand for goods and services. In order to support this demand, businesses typically expand their operations and hire more employees, which reduces unemployment. In this way, lower interest rates are a tool for stimulating economic growth and increasing employment.
However, as the economy grows and more people have jobs and money to spend, demand can outpace the supply of goods and services. This imbalance often leads to higher prices, or inflation. In other words, while lower interest rates support job creation, they can also contribute to rising inflation by fueling demand.
On the other hand, raising interest rates has the opposite effect. When the Fed increases rates, borrowing becomes more expensive, and both consumers and businesses tend to cut back on spending. This reduces demand for goods and services, which can slow down the economy. As companies experience lower demand, they may cut costs by reducing their workforce, leading to higher unemployment.
Although higher interest rates can increase unemployment in the short term, they are a necessary tool to control inflation. By slowing demand, the Fed aims to bring prices back into balance with supply, stabilizing the economy in the long run.
This is an article about buyer and seller behavior, which means I won't go too far down the rabbit hole of macroeconomic policy, but safe to say that policy changes create a backdrop of incentives which create a cascading waterfall of reactions. It is on this chain reaction that we will focus our attention.
Buyer and Seller Impact
The majority of you reading this sell for early stage start-ups, which means you exist downstream of an incentives game that starts first and foremost with investor expectations and the explicit agreement between investors and for-profit businesses. To complicate matters, these agreements are dynamic in nature, and look very different in low-interest vs. high-interest rate environments. As this is something rarely explicated to junior front-line sellers, we will cover those differences in detail below:
Low-Interest Rate Environment Agreements
When interest rates are low, asset classes that are traditionally deemed "safe" - cash, bonds, real estate etc. - fail to earn appreciable returns. This is by design, as the explicit aim of low interest rate policies is to incentivize investors to take risk in the form of taking their cash (which isn't earning any appreciable return just sitting around) and injecting it into businesses (in return for fractional ownership - otherwise known as "equity" - or promises of future repayment with interest to cover both the risk and opportunity cost of that capital - otherwise known as "debt").
The explicit agreement is as follows: Investors will give businesses capital to expand their operations, with the understanding that expanded operations will result in increased revenue, and as a byproduct of increased revenues - and the increased revenue occurring as an agreeable function of the expenses necessary to capture that market share (otherwise known as "profitability" - more on this later) - the ownership stake investors hold will become more valuable than what they originally paid for it.
With this agreement formed, businesses take the capital they've raised and hire people, spend on technology, spend on marketing and spend on whatever else they think is necessary to grow. The more perceptive of you will realize at this point that there is an obvious self-fulfilling prophesy here for buyers and sellers alike: If the macro environment encourages businesses to spend, and if on the opposite side of every buyer is a seller, then in these environments the burden of creating a compelling case to buy is greatly diminished. After all, the easiest person to convince of a course of action is the one who's already committed to it, and buyers enabled with a mandate to spend on solutions to unlock growth will do just that.
To complicate the moral hazard further, investors who have already accepted risk as a mechanism to earn higher return have made peace with the fact that 90% of startups fail - the billion (literally) dollar question, of course, is which of these start-ups will be the one to "make it big", but absent hindsight this is an unanswerable question, with the only course of action to pursue being to spend in pursuit of the coveted "hockey stick growth". In such an environment, careful scrutinization of the associated costs for securing the promised growth is swept under the rug for another, darker day.
It's for these reasons and more (redacted for article length purposes) that sellers in low-interest rate environments tend to have an easier time of things.
Warren Buffett once said: "Only when the tide goes out do you discover who's been swimming naked."
And brother, there are an awful lot of sales people skinny dipping.
High-Interest Rate Environment Agreements
When interest rates are high, asset classes traditionally deemed "safe" – cash, bonds, real estate, etc. – become much more attractive due to their ability to earn significant returns. This is by design, as the explicit aim of high interest rate policies is to reduce risk-taking and incentivize investors to seek safe havens where capital can grow without exposure to the volatility of more speculative investments. In such environments, holding cash or bonds offers a solid, low-risk return, reducing the pressure to inject capital into businesses, especially those with uncertain paths to profitability.
The implicit agreement changes: Investors become more selective about where they allocate capital. Businesses seeking investment must not only promise growth but also demonstrate profitability and stability. The focus shifts from growth-at-all-costs to ensuring that any expansion undertaken is sustainable and will generate positive cash flow. Promises of future gain take a back seat to clear evidence that an investment will be repaid with interest (in the form of debt) or result in strong dividends or steady value appreciation (in the form of equity).
With this agreement altered, businesses must carefully allocate the capital they raise, focusing on cost efficiency, reducing unnecessary expenses, and proving that their operations are lean enough to weather economic downturns. They hire cautiously, spend on technology that directly drives efficiencies, and market strategically to sustain their revenue, not just to fuel speculative growth. In this context, the burden of creating a compelling case to buy becomes significantly greater. When businesses are mandated to save or conserve resources, sellers must work much harder to justify their solutions and show that the return on investment is not only probable but necessary.
In such an environment, buyers are more risk-averse, and they require far stronger business cases to justify spending. The conversation shifts from "unlocking growth" to ensuring survival, and every expense is viewed through the lens of necessity and long-term return.
Key Takeaways on Low vs. High Interest Rate Considerations
What To Do
If you've read this far, congratulations; you've demonstrated one of the requisite traits necessary to sell and thrive no matter what market conditions look like: Resilience.
You'll notice that I didn't say "to thrive in down markets". This is intentional. It's my belief that good seller behavior does not alter much - two sides of the same coin rather than two different coins. Bull markets do not necessitate different strategies so much as they lower the bar on what it takes to be successful as a seller. Alas, if you're reading this, you likely have no interest in simply clearing the bar, but rather vaulting it by leaps and bounds and taking control of your career trajectory.
Learn these skills and you will thrive no matter what market conditions look like:
Executive Acumen -
A bad seller vomits features and benefits, a good seller speaks to the resolution of pain points, and a great seller speaks business case and executive language
It's likely that your buyer is focused on direct costs already, whereas they may not be as focused on the indirect costs of their challenges, which may not be as immediately obvious unless you've got a rare combination of both subject matter expertise and executive acumen. Develop this skill and you'll stand apart from the rest of the pack that's either vomiting features and benefits or going on "fishing expeditions" (H/T Eric Shaver) hoping to uncover a problem.
Understand the three financial statements: The income statement, balance sheet and cash flow statement, and how changes to one impact the others.
Become comfortable reading 10K reports, shareholder letters and analyst reports to identify headwinds that you can help resolve
Read the Wall Street Journal and other financial publications catered towards executives to benefit from what experts think will appeal to executives and familiarize yourself with their vocabulary.
Resources:
The Wall Street Journal
COMBO Prospecting by Tony J. Hughes (see also everything Justin Michael - the book’s case study - has written)
Financial Intelligence by Karen Berman and Joe Knight (H/T Elijah Awoke, Marc Periou for the recommendation)
Personal Finance and Investing
Manage your finances from the perspective of You Inc. - even as a W2 employee, you have much of the same levers to pull to positively impact your financial situation as a corporation: You are paid a gross income, you have expenses associated with performing your job (you can spend less), you pay taxes etc. Work with a financial advisor and take action to maximize your outcomes - not only will this have a dramatic impact on your quality of life, you'll also be mirroring the work an effective consultative seller does when helping companies, albeit on a much smaller scale.
Evaluate companies from the perspective of an investor - AKA the "final bosses" of the business people you will interact with in your day to day. Doing this will give you the acumen to pinpoint how executive performance is quantified, and subsequently provide you the necessary context to introduce yourself as a prospective strategic partner rather than "just a sales guy" with a transactional agenda.
78% of Americans live paycheck to paycheck. By managing your finances and cash flow well, you empower yourself with the ability to take a long term perspective. Sellers who "need" their next commission check don't have the luxury of killing the profit motive and focusing on how they can help, and the ensuing "commission breathe" repels.
Get a Tastytrade account and put together a company watch list - follow along with Martin Shkreli’s Finance Lessons - determine entry criteria and exit criteria and become a shareholder for a company you’ve done the work to believe in.
Resources:
Martin Shkreli's Intro To Finance lessons on YouTube (linked above).
NOTE: AVOID ALL short-term trading stuff, options, quantitative finance, crypto etc. These are cool but have nothing to do with what we're discussing here and put the cart before the horse in a big way
Negotiation
Understand the different levers you can pull to extract equitable compensation for your organization's services - if you can get creative and exchange value outside of direct upfront renumeration (case studies, testimonials, referrals, payment schedules etc.) then you raise the probability of forming productive partnerships
Outside of "closing", negotiation is also about brokering intermediary agreements: As sales cycles lengthen, keeping stakeholders engaged to a mutual action plan is a form of negotiation, and essential to the ultimate consummation of a partnership.
Internalize the reality that life is negotiation and persuasion, and that you’ll miss 100% of the shots you don’t take. Start making asks wherever you go - my wife is legendary for dropping the Chris Voss “would it be absolutely outrageous if we asked to check out a few minutes later?” whenever we travel. You’ll be amazed the doors that open when you simply ask.
Take a page out of Mark Raffan’s book (literally) and have a plan for every negotiation you enter. People love the parlor tricks but so much of negotiation is seeing ahead and having multiple contingency plans ala chess. Hint: Ask for more than what you want - you’ll either get it or be able to fall back to what you actually want - either way, it all starts with ideating a roadmap and then stress testing it.
Developing these skills also allows you to advocate for yourself effectively within an organization, a must for career progression.
Resources
Mark Raffan (previously mentioned)
4. Opening Conversations
Outbound becomes much more important when buyers' first instincts isn't to buy but to conserve capital (duh). If buyers aren't coming to you, then your ability to open conversations and educate buyers might be the difference between crushing quota and looking for a new job.
If you're not a heavy cold caller, become one yesterday, as it's the outbound channel with the highest conversion rate and the highest density of information (you will almost certainly learn more from a 3 minute conversation than an email response)
Life becomes better when you embrace possibility - and if you’ve learned nothing else from this post, reward goes hand in hand with risk. In this case, the risk:reward profile is asymmetrically positive: Opening a conversation with somebody could change your life, and at worst, they may not want to continue it. This is ok. Abraham Maslow, who knew a thing or two about human needs, defined self-actualization as “being independent of the good opinion of others”. Start putting yourself out there and blunt your rejection sensitivity via exposure therapy - you have nothing to lose and everything to gain.
Follow Justin Michael’s “Rule of 900”. In his words: ““Contact 30 prospects every day each month, that’s 900, and the cumulative impact on your funnel is insane (doesn’t matter if you do it while watching Netflix - it stacks up - hit 30 every day of your waking life: I still do)”
Most of this Substack is about outbound, so I won't belabor the point too heavily here, but if you learn nothing else but to generate pipeline, you'll always have a job.
Resources
Ryan Reisert
Gerry Hill
Chris Beall
5. Information Synthesis/Story Telling
90% of the world's data was generated in the past 2-3 years (IBM). The ability to create compelling value narratives based off of harnessing the sea of information we're all drowning in is what differentiates you and your competitors. This is not the creepy and desperate "noticed you went to William & Mary, go Tribe!!" personalization most sellers insert into their messaging, but rather demonstrating relevance at scale by cutting through the noise and providing value by tying together the 3-4 biggest trends you're seeing in your prospect's world.
Storytelling is an art that transcends culture, race, age. Rather than present a tired, static snapshot of what your product/service will do, construct a narrative arc with your prospect at the center - leveraging case studies to show a "before" and "after" state. Embody the mentor taking your prospect over the threshold into the unknown world and inject some excitement into what might otherwise be a mundane day to day
Read great fiction and step inside the human condition - Dostoevsky is unbeatable here
Resources:
Joseph Campbell
Carl Jung
In Conclusion
If you're reading this and feeling a bit discouraged by the realities of selling in a bear market, I encourage you to reframe your perspective. Firstly, this too, shall pass. The average bear market lasts only around 14 months (Schwab). By contrast, the average bull market is 3-5 years (Schwab). Thus, a full market cycle is approximately 4-6 years, with a 4:1 or 5:1 ratio of good times to bad.
The implication of this is that if you can build the skills to thrive during tough economic conditions, you will be head and shoulders above competition when macro-conditions shift once more in favor of expansion.
Just remember to invite me on your yacht once you get there.
To your success,
Charles
A big thank you to all mentioned in this article for their direct or indirect contributions, including but not limited to: Shannon Needham, Joseph Campbell, Carl Jung, Mike Bosworth, Gerry Hill, Ryan Reisert, Chris Beall, Mark Raffan, Chris Voss, Jim Camp, Justin Michael, Eric Shaver, Marc Periou, Elijah Awoke, Tony J. Hughes