Considering that 2016 has experienced the worst start to a year in the history of both the S&P 500 and the Dow, businesses worldwide are asking themselves what this means for the future of their companies and the overall economy. As an avid observer of all things sales and marketing, I figured it would be a good idea for me to weigh in on the subject.
Indicators that this year's rocky start isn't going to get better right away abound. For instance, North American VC investments have already experienced a 32 percent quarterly decline and oil prices are at an all-time low since 2003. Some are speculating that the downward trend means the tech bubble could burst at any moment, potentially triggering a new recession.
With this in mind, we analyzed over 5.4 million anonymized sales pipeline transactions and surveyed over 600 sales leaders for our recently released quarterly Business Growth Index (BGi). The findings revealed truths contrary to the popular opinions of industry pundits and Friday evening market quarterbacks.
Despite the effects the current state of the market could have on the infusion of capital for technology companies, it seems most businesses have little to fear. In fact, even with a down-sloping market and investment landscape, many industry leaders are bullish on revenue predictions for 2016 with 75 percent of sales leaders predicting steady or accelerated growth for the year. For example, while tech companies closed 5 percent fewer deals in 2015, sales opportunities increased by nearly 11 percent and deal size grew by 10 percent.
The Benefits of a Decreasing Investment Market
Last year was lukewarm in terms of IPOs and M&A activity, and it's not likely to change in 2016. With well over 150 unicorns in the tech market valued at around $550 billion in aggregate, the tech boom sought after by VCs and hedge funds is looking less than likely. Even tech companies that have gone public like Box, Apigee, and FireEye have generated returns below initial estimates. In turn, investors are holding their purse strings close and have become more discerning about their investments. However, slowed investment and slight underperformance do not appear to be causes for worry for sales leaders. Their forecasted sales growth numbers and deal sizes are growing with little sign of retrenchment.
In fact, market volatility has actually been a boon for companies that have managed to deliver real business value to their customers. This is especially true for West Coast tech companies, which have enjoyed a greater increase in the number of opportunities (16 percent) than the rest of the country (11 percent). Conversely, companies talking the talk, but not walking the walk are feeling the full weight of the downturn.
Today's investment market is not about being a unicorn, but a thoroughbred--a real company built on delivering lasting customer value that hinges on strategic plan, and designed to go fast consistently.
Becoming the Sure Bet
The key to being the thoroughbred of choice is to offer services and tools that directly and positively impact customers' revenue growth. This can be done any variety of ways, from offering the ultimate customer service experience, to delivering the most innovative technology, or simply the best business value.
Amazon is a prime example of a company who went from zero to 100 in no time, all with its highly customer-focused approach as the lynchpin for its mission. By providing a positive experience for customers during their purchase cycles, they've leaped to the forefront of e-commerce. In the enterprise, Salesforce.com is the poster child of generating value for its customers--creating an entirely new market that has changed the sales game forever while helping its customers accelerate and streamline their own sales cycles to generate more revenue.
Part of this process is keeping control of your business and focusing on keeping a revenue-positive business model. This implies consistent and increasing sales even in turbulent markets--a reality much easier to achieve than most think possible today. Hype can go a long way, innovation can drive additional funding, but if you can't convert demand into revenue and satisfy your customers, you can't deliver success over the long haul. Market volatility should not be a moment of panic, but a moment of reflection and self-improvement to become the winning horse in your market's race. The deals are there for the taking if you make the right bets and stay focused on customer success.