Selling in a Crisis: Why Holding Back on Sales Gets Expensive

The reflex to stop everything

When an important customer leaves, the industry weakens, or interest rates rise, many businesses react the same way. Travel costs are cut, the trade fair canceled, the newsletter paused, and new quotes are written only on request. The owner pulls decisions to themselves and checks every expense personally. That feels responsible. It is also often necessary when liquidity gets tight.

This essay nevertheless asks: Why does holding back on sales during a crisis often cost more than it saves, and when is it still right? To answer it, I first introduce a mental model that explains the reflex, then examine what studies show about active selling in a downturn, weigh two perspectives, and finally derive what a business should cut and what it should protect in a crisis.

If you stop sowing in the crisis, you harvest nothing after the crisis.

The mental model: the threat-rigidity effect

In 1981, the organizational researchers Barry Staw, Lance Sandelands, and Jane Dutton compiled findings on individuals, groups, and organizations. They found the same pattern at every level, which they called the threat-rigidity effect. Under pressure, people and organizations process less information, and control is concentrated in a few people. They fall back on what is proven instead of looking for new paths.

That is not always wrong. In a genuine emergency, concentration helps to act quickly. The authors stress that rigidity can be functional or harmful. It becomes harmful when the situation has changed and what is proven no longer fits. Then the business narrows its view precisely at the moment when it should widen it.

In sales, rigidity shows up in three places. First, activities whose effect only becomes visible later are stopped, above all approaching new customers. Second, decisions move to the owner, so quotes become slower. Third, people reach for the most familiar tool, the discount, because it works immediately. An analogy makes the pattern tangible: a driver who starts skidding on black ice reflexively slams on the brakes, although that is exactly what locks the wheels. The right move would be to declutch and steer.

What studies show about selling in a downturn

Srinivasan, Rangaswamy, and Lilien (2005) surveyed 154 senior marketing executives about how their companies had reacted to a recession. They distinguished two parts of a proactive response: interpreting the recession as an opportunity and deriving an offensive approach from it. Companies with such a response achieved better business results, and did so even during the recession. Proactive responses came mainly from companies with a strong strategic emphasis on marketing, an entrepreneurial culture, and financial reserves. The harder the recession hit the industry, the rarer the proactive response.

The authors draw a cautious conclusion that is often overlooked: not all companies should respond offensively in a recession. Those who benefit are mainly those who already had programs in place to build on, such as well-known brands, differentiated offerings, targeted communication, and good service.

A second finding concerns customer relationships. Morgeson, Sharma, Schultz, and colleagues (2024) linked data from the American Customer Satisfaction Index from the period immediately before the stock market crashes of 2008 and 2020 with the share price performance of listed U.S. companies. Companies with higher customer satisfaction and loyalty fared better in both crashes and had lower firm-specific risk; a higher complaint rate had the opposite effect. One standard deviation higher corresponded to 0.9 to 2.4 billion U.S. dollars in market value, depending on the calculation. Notably, the effect was at least as strong in the crises as in normal times.

This fits a finding described in the guide planning the marketing budget. Srinivasan and Ramani (2019) found myopic cuts in 15 percent of company years among 781 listed U.S. companies, that is, reductions in advertising and R&D spending to reach a short-term profit target. The authors stress that such cuts harm long-term performance. All these studies concern large companies. Whether this carries over to a business with twelve employees cannot be derived from the figures.

Two perspectives: protect the cash or hold the market?

The first perspective says: in a crisis, liquidity counts and everything else comes after. A small business has fewer reserves than a corporation, and if it becomes insolvent, it wins no customers after the crisis either. This view has the data on its side when survival is at stake. The analysis growth costs liquidity shows how quickly money gets tied up in open receivables and advance outlays.

The second perspective says: if you stop sales in the crisis, you create the next crisis. New customers take months from the first approach to the order. A pause of one quarter is therefore missing not in that quarter but in the following ones, when the crisis may already be over. In addition, competitors who also stand still leave customers without a contact person.

For most businesses I consider the second perspective the more accurate one, but only on one condition: liquidity must be secured for the next six to twelve months. If it is not, the first perspective takes precedence. The mistake I consider more common lies elsewhere, though. Many businesses do not cut where it is necessary but where it is easiest, and that is usually acquisition, because its absence does not hurt immediately. That is the threat-rigidity effect in pure form.

The discount as a false friend

The second typical reflex is the price discount. It seems sensible in a crisis because customers have to save. The arithmetic behind it is harsher than it looks, though. The guide managing discounts sets it out: every percentage point of discount comes entirely off the contribution margin. At a 25 percent margin, a five percent discount costs a fifth of the profit and must be offset by 25 percent more volume. In a crisis in which volume is falling anyway, that offset is hardly achievable.

In addition, discounts granted in a crisis rarely disappear again. The customer remembers the lower price as the new reference price. If you want to help, help with terms rather than prices: smaller delivery quantities, staggered payments, a leaner package with less service. That way the price per unit of service is preserved, and the customer still gets a solution for their situation.

What to cut and what to protect in a crisis

From the model and the findings I derive a distinction. Cut what customers do not notice. Protect what carries the relationship with them and what will bring revenue in six months.

1. Clarify liquidity

   Calculate how many months your funds will last with falling revenue. Only then decide how much sales activity you can afford.

2. Call existing customers

   Talk to your most important customers about their situation before they cancel. How to do that is described in the guide growing existing customers.

3. Keep the pipeline going

   Keep the number of first conversations per week stable, even if the close rate falls. The stages and probabilities from the guide pipeline management for mid-sized companies show where things get stuck.

4. Do not centralize decisions

   Set approval limits instead of checking every expense yourself. Otherwise the owner becomes the bottleneck, precisely when speed matters.

What follows in general

Looking at crises also changes how one looks at good times. The study by Srinivasan and colleagues shows that it was mainly companies that already had reserves, differentiated offerings, and good customer relationships beforehand that could respond proactively. The ability to sell in a crisis is therefore acquired before the crisis. The essay entrepreneurial resilience describes the same logic with Duchek (2020): recognize threats early, cope with a crisis, and adapt afterward.

I want to state the limits of this reasoning openly. The studies cited come from large companies and mostly from the United States. They show associations, not causes, and the 2005 survey is based on self-reports. For a small business in a situation that threatens its existence, they do not replace the conversation with the bank and tax advisor.

Conclusion: why holding back gets expensive

To the guiding question: holding back on sales gets expensive in a crisis because it hits activities whose effect only becomes visible months later and because it weakens relationships with customers, which act as a buffer in crises. The threat-rigidity effect explains why businesses act this way anyway: under pressure the view narrows, and you cut what hurts least immediately. The studies favor a proactive response, though mainly for companies that built reserves and strong offerings beforehand.

Holding back is right when liquidity is not secured. Then survival comes first. In all other cases: cut what customers do not notice, protect existing customers, the pipeline, and prices, and keep decisions flexible. For this week, that means working through liquidity for the next twelve months and calling your five most important customers.

The sober observation is this: a crisis rarely decides who sells. It decides who still has customers afterward.