I was wondering what kind of advice you'd give if one of your authors was in this situation.
Let's say she has had three novels published by a major house. Sales have never been great, particularly for the last one, which tanked. She loves her editor and the feeling seems to be mutual, but her editor has expressed concern about how past sales will affect whether or not the house will want to buy the author's current novel (in progress).
It just seems that, even if the house were to publish the book, nothing would change. It would likely be published as a trade paper original (like the others) without much publicity (also like the others). No money would be dumped into it, no hardcover, no big promotional push. The future seems grim. What would you advise?
Get ready to look for a new publisher. I don't care how much your editor loves you, if the last book tanked, you're in trouble.
But, it might be good trouble. A fresh start at a new publisher with more marketing oomph, or better market penetration, or lower sales requirements to keep the bean counters happy may be a very nice solution indeed.
You also can't count on the publisher, any publisher, to really push the book. You'll have to do that yourself.
This is third down and ten. You're going to need to really focus to stay in the game. You need a comprehensive plan about how to make this work. You didn't mention if you had an agent, but if you do, s/he knows you're in trouble. Work out a strategy with her/him and then follow it.
You're at a critical juncture. A LOT of people do not get past over this "not enough" sales hump.