As we delve deeper into 2019, the international business environment has changed dramatically. NAFTA was replaced with USMCA – a new trade agreement between the U.S., Mexico, and Canada – and it remains to be seen which U.S. businesses will be positively or negatively affected.
Moreover, a trade war with China, the world’s second largest economy, has created volatility in the stock markets and upheaval for certain corporate sectors. The U.S. tech industry, companies using steel, and manufacturers of engineered hardwood floors are already feeling the pain. The situation could become even more tangled if the effects from China spill over into the rest of Asia (or beyond) due to intertwined supply chains.
Companies buying or selling products or parts across international boundaries are likely to see higher costs which, without effort, must be passed onto the customer. These paradigm shifts are very real and demand a proactive response. While some organizations may attempt to save the bottom line with personnel cuts, maintaining a strong sales team is absolutely critical to sustaining relationships with existing customers.
At Peak Sales Recruiting, a big trend we see is that the sales leaders of today are tasked with managing long-term relationships, not just closing deals. They are now the vanguard in controlling the damage and identifying new streams of revenue.
Here are four ways your sales team can help when tariffs are putting pressure on profits:
- Use sales leaders’ relationships to minimize damage: The best sales leaders have developed strong relationships with their clients. If your business has been affected by changes in trade, it is time for your sales leaders to harvest the goodwill from those connections. They must assure buyers that your company is working on new avenues in the supply chain to offset costs and that, hopefully, any increased costs will be temporary. Your sales team should also investigate alternate ways of bringing value to the customers. Above all, be honest, empathetic, and as open as possible.
- Understand the holistic needs of your buyer: Seeing higher prices, customers might delay new purchases and make existing items (like trucks and industrial water heaters) last longer, creating a new need for maintenance and repair. Or, in efforts to absorb rising costs, customers might make cutbacks in areas such as rented warehouse space. These changes may create opportunities where your company could offer assistance. By understanding the holistic and collective needs of the customer base, the sales team can identify openings to aid customers and preserve relationships in ways other than the sale of goods.
- Share the pain with business partners : If one of your suppliers is in China, Mexico, or Canada, the price of doing business with them may have significantly affected your customer offering. It might be possible to renegotiate supply agreements such that the cross-border supplier lowers their cost, in effect absorbing part of the increased tariff. The sales team understands the end-point customers and what they can and cannot accept regarding price. If sales are going to drop as a result of rising costs, it is in the supplier’s best interest to entertain pricing that supports movement of the product.
- Employ the sales team to expand globally: If your supply chain partners simply cannot make their offering cost-effective due to their country of origin, it is essential to identify new markets in which to do business. If your trade partner is in China, it might be possible to find new options in Southeast Asian countries such as Vietnam, Thailand, and Indonesia. It is crucial to understand potential cultural pitfalls when entering new global arenas. A strong sales team with the good regional knowledge and awareness will be needed to help bridge such gaps.
Blunting the effect of new tariffs may require creative thinking and diverse approaches. This might include moving into new territories or beyond existing lines of business. Throughout, the sales force should be kept front and center to capitalize on their relationships with, and their insights regarding, existing and potential customers and supply lines.
Ryan Moore serves as the director of client management at Peak Sales Recruiting, a B2B sales recruiting company. He has more than 15 years of experience in sales and in recruiting high-performing salespeople.