Mike Burnett: Hi, I’m Mike Burnett, partner and co-leader of the business and financial services practice here at the Alexander Group. Today, I’m joined by my colleague Alan Burleson, principal and lead of our transportation logistics sector. Alan, thanks so much for joining. Today, we’re going to be talking through what organizations are doing, especially in the transportation logistics sector, as it relates to dealing with all the market uncertainty on the heels of the movement and discussion around tariffs. To kick things off, we’re going to talk through some recent research that was conducted in the second half of April of this year. We conducted a survey across industries, and we included a good portion of the transportation logistics within this research. We asked folks to provide an outlook in terms of what they expect, the impact on their business to be on the heels of all this market uncertainty and tariffs, as well as what are the things they’re doing now to try to prepare for all the unevenness that they’re anticipating from a forecasting standpoint. First, and probably not surprisingly, around 75% of respondents were expecting to see a decrease to their sales pipeline. Around 40% are expecting that decline to be greater than 10%. So some pessimism, some hesitation regarding the level of confidence they anticipate for the second half of the year.
The second point was around 55% of folks were anticipating an eventual decrease to their go-to-market and commercial budgets. So we asked, What are you doing now in order to try to rein in those costs and to be more efficient in terms of your operating model? There are really three things that jumped out. Number one was diversifying your supplier network. So what can we be doing to stockpile inventory, be more agile as necessary when we need to meet customer demands. Second, limiting non-essential travel and events, something that’s very common obviously in the space and has a heavy impact on sales teams at large. And then third was just freezing new hiring plans. We did hear about some organizations expecting to or planning to decrease headcount, but I think for the most part, folks were saying, let’s just freeze on new hires for now until we get more clarity and we can make tough decisions at a later date. So, Alan, I’d love to open it up to you. What are some of the things you’re seeing and hearing? How much does this resonate with the transportation and logistics space?
Alan Burleson: Mike, I appreciate it. I completely agree with all of those findings and specifically the ones as they relate to transportation and logistics. I think the tariffs are uniquely affecting our clients. First, there’s a rush right now to get goods into the country, which is taking capacity out of the system, but really only temporarily. The obvious next step is for the capacity to come back with substantially less demand. There are budgetary concerns around the extent of the tariffs and the lasting impact of the situation. As you know, our clients are facing this unknown and uncertainty that we really haven’t seen since Covid-19.
Mike Burnett: Yeah, it’s a great point in terms of the contrast to Covid. So I’m curious, obviously, we were very close with clients during COVID. How are they navigating? What are some of the things that you’re hearing clients kind of grapple with today, and what are some of the things you’re hearing them really try to prioritize in order to navigate this situation?
Alan Burleson: Yeah, there are a lot of focus areas, but really the top three, I think that we’re having across the board. First, one would say is how do we plan our budget with this unknown? The second would be where and how and for how long do we pass off the surcharge? Most people are making it into their list price, but others are getting a bit more creative with that. Mike. And then third, how do we take advantage of the short-term boom and boost while planning for the potential slowdown, even if it’s hopefully temporary?
Mike Burnett: Got it. So obvious questions. Tough questions to answer. What are some of the tactics that you’d recommend and what have you seen working well for clients in terms of how they’re responding in light of all this uncertainty?
Alan Burleson: I’d start with number one, Mike would be it’s all about the customer. Let’s get closer to them. Let’s embrace them. Let’s create a regular cadence of touchpoints, ask them questions and share insights. Embrace your national accounts via solid account management. Number two would be around marketing. I would say update your marketing strategy as well as your messaging. Ramp up the content and marketing and take a more targeted, account-based marketing approach, giving customers different situations, especially in this space. Number three is a more positive if you’re experiencing that short-term boost, embrace it. Do this by enhancing your sales comp plans with spin-offs, as well as other special incentives to kickstart your sales forces. And finally, number four is really around uncertainty. If you’re experiencing uneven demand, lack of visibility into your forecast, build contingency plans that reduce that risk. For example, what we’re talking to folks about is consider comp plan tweaks such as adjusting quotas, shorter sales performance periods, team performance metrics, and even changing pay curves to reduce downside as well as upside. So you’re not only adjusting the volatility on the downside, but also on the upside there as well.
Mike Burnett: Yeah that’s great. Alan, thank you so much for the thoughts. Thank you for the time. Everyone, thank you for joining. If you’d like to learn more about this research that I mentioned, we have launched a tariff microsite regarding what are some of the things that we’re seeing organizations do, which includes a tariff reaction and response playbook. Please visit us at AlexanderGroup.Com and we look forward to connecting soon. Thanks again.
