4 Disruptive Growth Lessons from the Last Financial Crisis and how they Apply to a COVID-19 World

Even though twelve long years have passed, I can clearly recall the Financial Crisis of 2008 with banks like the Lehman Brothers, Bear Stearns going under, and widespread panic as markets began to crash. Banks went into the mode of prioritizing critical projects only — and Enterprise Software start-ups who had a pipeline reliant on bank business were suddenly under severe pressure. But even in these most trying of times, there were start-ups who managed to thrive despite drastic market conditions, in an environment of fear that shares some similarities to our current global situation brought about by COVID-19.

As a leader in one such enterprise software start-up, focusing in Financial Services, we had much to be concerned about. I had to think fast, plan our strategy and lead the team to execute, despite the distress, uncertainty, and fear that pervaded the market and indeed, wider society. Our most strategic customers, the largest financial institutions in the world, were also the most impacted by the financial crisis.

I am a huge believer that winning and losing comes down to our mindset. The right mindset fosters agility, creativity, and tenacity — all required during times of crisis.

Our concerted efforts and focus during this period resulted in us achieving 5x growth from strategic customers while simultaneously reviving multiple dead accounts to growth — we made our mark as a leading FinTech/RegTech in the world.

With Covid-19 accelerating a global economic downturn; the ensuing credit crunch and high unemployment in the US, challenging times have reared their heads yet again. With no end in sight, I have had business leaders ask me about the growth strategies that led to my success during the last Financial Crisis. In this blog, I am highlighting 4 insights that I have developed from 2008 financial crisis. These principles are highly applicable to enterprise software start-ups that are facing their pipelines drying up and ‘certainty’ deals being seemingly put on hold.

1. Urgency, Urgency, Urgency — today, not someday

Stop focusing all of your attention on the standard pitch of selling your products and solutions — go outside the script.

Your first priority should be to understand the state of your prospect’s business, impact of the downturn, their current priorities, and what urgent problems they are facing that need to be solved, today. If you or your team fail to identify today’s urgent problems that are inhibiting your prospects from achieving their high priority business objectives you will face inertia, which is the death knell of many a sales quota.

All salespeople logically understand the need for urgency, but during times of crisis as a sales leader or founder, you must ensure your sales teams live not just the “why?” but the “why now?” principle.

Adapt to your environment, show a real understanding of your client’s business, and uncover the urgency factor that will give you the best chance of not being sent to the solutions scrap heap of ‘someday’.

2. Instill a founder salesperson ethos and mindset

Ever wonder why founders are normally the best sales people?

Regardless of their personalities, whether they are introverts, extroverts or in-between, most founders are killer salespeople because they truly believe that their products and services will positively impact the lives of their customers.

Prospective customers can feel their passion, and they start connecting with the founder on an emotional level as the founder paints a visual of how their product will make the prospect’s life better and enable them to realize their business goals and targets.

In order for your sales team to become evangelists, they should really prove to you that they are, in fact, evangelical about the product they are selling.

‘Re-sell’ to your sales teams internally so that they can sell with that same founder-like passion and energy externally.

3. Bring differentiating value by asking the tough questions

Should I really challenge my customers?

Am I going to come across as pushy if I ask the hard questions?

What if they won’t agree to my views and have alternate ideas?

Over the years, I have heard these and other variations of similar questions/concerns from sales and business development teams.

90% of the time, these concerns come from a base of fear; a fear of losing the deal. When going through challenging times, the reluctance to ask these so-called ‘tough questions’ can be magnified, as there is seemingly ‘more to lose’ if a deal is in fact lost.

The key to building a successful, long-term relationship is by providing maximum value to your customers — which comes from not simply agreeing to their every whim — but by leading them in the right direction, and not being afraid to ask the tough questions.

The reason customers engage with external providers is to leverage their expertise in respective areas, hence, it is your duty to guide them with your expertise.

I often say to my teams “stop thinking that you are there to sell them something, instead, focus on what problem(s) you can solve”.

Really push your teams to think — “with my expertise and knowledge….How. Can. I. Help?”

Don’t be afraid to lose the deal by doing the right thing; in reality, chances of a loss are far higher when real issues are not put on the table and discussed.

It is important to note as a sales leader or founder that embedding this customer serving ethos in your sales team has to come from the top and be a cornerstone of your culture.

In times like we are currently facing, with no timeline as to when this pandemic will finish, tough questions serve, and are more critical than ever.

4. Work with the psychology of loss aversion to overcome the status-quo bias

The world of enterprise software is often complex and the customers make buying decisions for the long term, so they put a great deal of emphasis on making the ‘right’ decision. The cost of the ‘wrong’ decision could be significant in terms of financial loss, customer impact, as well as operational impact.

To further complicate matters, most human beings exhibit strong status-quo bias. Change is hard for most, hence given an opportunity, many will avoid a massive change in preference to maintaining status-quo, even if status-quo is limiting and has risks.

The reason status-quo wins is because it is ‘known’ to us and hence, it feels safer.

Another dynamic that humans face is what is known as loss aversion — which means that losses are twice as painful for us than the happiness from a similar gain (see figure below).

Conclusion:

Six months into a global pandemic, we are facing unprecedented times, with quite unfathomably, no real end in sight. Many businesses are struggling while others are fighting hard to win. This fighting to win is the spirit that is required more than anything during challenging times as these.

We have seen time and again examples of companies that have emerged during a crisis and became bigger than anyone’s imagination.

The start of such success will come by motivating your sales teams to rise up and keep fighting until they win. The best chance you have of doing this is by creating urgency, instilling the founder salesperson ethos, asking the tough questions and navigating the psychology of loss aversion.