Sell More and Work Less: A Strategic Approach to Sales
Sell More and Work Less: A Strategic Approach to Sales
Charles Gonzalez, the president of a commercial landscaping firm in Princeton, Florida, worried for years about the “selling failure rate” in his company. The sales force spent an enormous amount of time and energy on activity, chasing after any old request for bid that flew in the door. He hated the uncertainty, worried about the costs of all that activity, and sweated out the problems of keeping his workers busy. But these days, Gonzalez can sleep at night. Selling at his company has become predictable, consistent and profitable. What made the difference? The company adopted a strategic selling process. They converted their sales department into the strategic function it should have been in the first place.
Previously Gonzalez’s firm, like many others, relied unthinkingly on the conventional wisdom of the ten-to-one ratio, that time-tattered “factoid” that says 10-to-1 prospecting is a fact of life: ten phone calls to get an appointment, ten appointments to get somebody to ask for a proposal, and ten proposals to get an order. Their old forecasting methods were based on optimism, best guess, and CYA. This made forward planning and purchasing a hit-or-miss proposition, a financial nightmare for any business owner. Account executives never knew if they were being productive; they only knew how exhausted they were at the end of the week.
Today, Gonzalez and his sales force know exactly what it means to be productive and effective. They use a specific prospect profile to focus on high-potential opportunities. They focus more on improving the ratio between effort and close than they do on performance against quota. They pay attention to the process, not the revenue. When they want to improve performance, they improve the process.
You can overhaul the sales process in your company and enjoy similar improvements. Whether you manage a dedicated sales force, or do all the selling yourself, there are three things you can do to improve performance:
1. Understand the costs associated with pursuing the wrong opportunities;
2. Define the profile of the Ideal Customer, identifying the desirable characteristics of buyer behavior that predict successful customer relationships;
3. Walk away from the DOA’s – the accounts that are “dead on arrival” and should never have been started in the first place.
The Costs: Return on Investment
Everything in business comes with a cost, and most costs are, or should be, investments that produce a measurable return. It’s easy to overlook the “investment cost” of selling, which is difficult to determine, but absolutely essential that you recognize it. A good approach is to exaggerate it.
Assume that it costs $750 per hour to win a sale. That includes the cost of your time with the customer at her site or yours, finding and managing support resources, working on the proposal, carting the prospect off to see a demo, visiting with the prospect’s technical staff, escorting the prospect to a trade show, and the extra costs associated with missed appointments, broken printers and so forth. Don’t forget out-of-pocket expenses like gas, tolls, meals, collateral materials, courier services, and the cost of opportunities you lost while chasing this one. If you invested ten hours at $750 per hour, to win a $10,000 deal, you just reduced your revenue by $7500. Was there that much profit to lose?
It costs a lot to sell, and once you spend those expensive hours, they don’t come back again. It is essential to view the time you devote to sales as an investment. Selling time must produce a high rate of return. There is no time to waste on unprofitable, marginal opportunities or business that never comes to a close.
The Ideal Customer Profile
The best way to avoid marginal opportunities is to know which ones are worth pursuing. That means creating an Ideal Customer Profile, another selling idea that is easier to talk about than it is to do. The Ideal Customer Profile describes the perfect, or idealized, customer, the one that your company is best suited to serve. The profile lists all the characteristics you would like to see, if you could pick and choose only the best possible customers. Be bold. Don’t forget statements like “they pay me on time,” “they pay me what I ask,” “they’re willing to pay me a premium because I’ve got something special to offer,” and “they laugh at my jokes.” Include as many specifics as possible. Make sure that you include “softer” characteristics as well as the hard facts. Customers that are cooperative, flexible, have realistic expectations and so forth, are far more valuable than those who make impossible demands.
Once you have written down the characteristics of the ideal buyer, now list the things you and your company do particularly well. The Ideal Customer is not Ideal if they want you to do things you can’t do at all, or don’t do well. When listing your strengths, be honest, especially about the size and scope of the projects or transactions you can manage. The worst thing you can do is to over-promise and under-deliver. Compare your Strengths with the desirable characteristics of the buyer, and see where the alignment lies. Pursue the prospects that want the strengths you offer, not those who call on your weaknesses.
In defining their Ideal Customer Profile, Gonzalez realized that his company did a great job with big projects, those $250,000 and up, but small projects, under $100,000, were money losers. On the Ideal Customer Profile, they listed “offers projects worth over $250,000” as one of the high-priority characteristics. When they compared the two lists, the alignment was obvious. This observation was a breakthrough: go after the big deals and forget the little ones!
Walk away from DOA’s.
It doesn’t do any good to know the Ideal Customer if you don’t use it to rule out marginal opportunities. Unfortunately, this is harder than it looks. In Charles’s case, the team continued to chase small deals, investing so much time in them that they actually lost out on some attractive projects. Soon enough, they agreed to institute a rule – if the deal is likely to be smaller than $100,000, it needs the personal approval of the CEO! Suddenly, those small deals disappeared from the radar screen, freeing up valuable time to pursue better business.
Use the Ideal Customer Profile as a benchmark. Ask revealing questions early in the relationship, to learn if, or how closely, the prospect matches the profile. Instead of trying to prove that you are “right” for the prospect, ask yourself, “is this prospect right for me?” There is no harm in telling the prospect, “we are not the right provider for you,” or even, “our fees are too high for your budget.” This respectful position can work in your favor, creating friendly allies who may refer you to more appropriate prospects, or call you back in the future when their business needs are a better match for your business.
Work Less and Earn More
The secret to great selling is that less is more. Less confusion creates more clarity. Less activity produces more results. Less indiscriminate effort produces more targeted effort. Selling is the most strategic business function there is, and it ought to receive the thoughtful, purposeful attention you give to the other aspects of your business.
Concentrate on fewer deals that are worth more to your company – more revenue, more profit, more long-term repeat purchases. If the market or the economy forces you to rely on small deals, don’t spend a fortune to win each one. Keep your eye on productivity. It pays off.
Sell More and Work Less A Strategic Approach to Sales - To learn more about this author, visit Ellen Bristol's Website.
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Business is changing. Manufacturing, distribution, communications, hiring practices, and information technology have been transformed over the past twenty years. Among other things, we’ve pushed productivity to unprecedented levels; manufacturers of electronic components, for example, typically produce fewer than three defective parts out of a mill. But in sales, we still tend to believe that it takes $1 million pipeline to close $100,000 worth of business – and that means a 90% FAILURE rate. The sales force works awfully hard to produce nine losses out of ten tries. You would not tolerate those rates in manufacturing, or your receptionist’s ability to take a phone message, so why is it OK for sales?
Charles Gonzalez, the president of a commercial landscaping firm in Princeton, Florida, worried for years about the “selling failure rate” in his company. The sales force spent an enormous amount of time and energy on activity, chasing after any old request for bid that flew in the door. He hated the uncertainty, worried about the costs of all that activity, and sweated out the problems of keeping his workers busy. But these days, Gonzalez can sleep at night. Selling at his company has become predictable, consistent and profitable. What made the difference? The company adopted a strategic selling process. They converted their sales department into the strategic function it should have been in the first place.
Previously Gonzalez’s firm, like many others, relied unthinkingly on the conventional wisdom of the ten-to-one ratio, that time-tattered “factoid” that says 10-to-1 prospecting is a fact of life: ten phone calls to get an appointment, ten appointments to get somebody to ask for a proposal, and ten proposals to get an order. Their old forecasting methods were based on optimism, best guess, and CYA. This made forward planning and purchasing a hit-or-miss proposition, a financial nightmare for any business owner. Account executives never knew if they were being productive; they only knew how exhausted they were at the end of the week.
Today, Gonzalez and his sales force know exactly what it means to be productive and effective. They use a specific prospect profile to focus on high-potential opportunities. They focus more on improving the ratio between effort and close than they do on performance against quota. They pay attention to the process, not the revenue. When they want to improve performance, they improve the process.
You can overhaul the sales process in your company and enjoy similar improvements. Whether you manage a dedicated sales force, or do all the selling yourself, there are three things you can do to improve performance:
1. Understand the costs associated with pursuing the wrong opportunities;
2. Define the profile of the Ideal Customer, identifying the desirable characteristics of buyer behavior that predict successful customer relationships;
3. Walk away from the DOA’s – the accounts that are “dead on arrival” and should never have been started in the first place.
The Costs: Return on Investment
Everything in business comes with a cost, and most costs are, or should be, investments that produce a measurable return. It’s easy to overlook the “investment cost” of selling, which is difficult to determine, but absolutely essential that you recognize it. A good approach is to exaggerate it.
Assume that it costs $750 per hour to win a sale. That includes the cost of your time with the customer at her site or yours, finding and managing support resources, working on the proposal, carting the prospect off to see a demo, visiting with the prospect’s technical staff, escorting the prospect to a trade show, and the extra costs associated with missed appointments, broken printers and so forth. Don’t forget out-of-pocket expenses like gas, tolls, meals, collateral materials, courier services, and the cost of opportunities you lost while chasing this one. If you invested ten hours at $750 per hour, to win a $10,000 deal, you just reduced your revenue by $7500. Was there that much profit to lose?
It costs a lot to sell, and once you spend those expensive hours, they don’t come back again. It is essential to view the time you devote to sales as an investment. Selling time must produce a high rate of return. There is no time to waste on unprofitable, marginal opportunities or business that never comes to a close.
The Ideal Customer Profile
The best way to avoid marginal opportunities is to know which ones are worth pursuing. That means creating an Ideal Customer Profile, another selling idea that is easier to talk about than it is to do. The Ideal Customer Profile describes the perfect, or idealized, customer, the one that your company is best suited to serve. The profile lists all the characteristics you would like to see, if you could pick and choose only the best possible customers. Be bold. Don’t forget statements like “they pay me on time,” “they pay me what I ask,” “they’re willing to pay me a premium because I’ve got something special to offer,” and “they laugh at my jokes.” Include as many specifics as possible. Make sure that you include “softer” characteristics as well as the hard facts. Customers that are cooperative, flexible, have realistic expectations and so forth, are far more valuable than those who make impossible demands.
Once you have written down the characteristics of the ideal buyer, now list the things you and your company do particularly well. The Ideal Customer is not Ideal if they want you to do things you can’t do at all, or don’t do well. When listing your strengths, be honest, especially about the size and scope of the projects or transactions you can manage. The worst thing you can do is to over-promise and under-deliver. Compare your Strengths with the desirable characteristics of the buyer, and see where the alignment lies. Pursue the prospects that want the strengths you offer, not those who call on your weaknesses.
In defining their Ideal Customer Profile, Gonzalez realized that his company did a great job with big projects, those $250,000 and up, but small projects, under $100,000, were money losers. On the Ideal Customer Profile, they listed “offers projects worth over $250,000” as one of the high-priority characteristics. When they compared the two lists, the alignment was obvious. This observation was a breakthrough: go after the big deals and forget the little ones!
Walk away from DOA’s.
It doesn’t do any good to know the Ideal Customer if you don’t use it to rule out marginal opportunities. Unfortunately, this is harder than it looks. In Charles’s case, the team continued to chase small deals, investing so much time in them that they actually lost out on some attractive projects. Soon enough, they agreed to institute a rule – if the deal is likely to be smaller than $100,000, it needs the personal approval of the CEO! Suddenly, those small deals disappeared from the radar screen, freeing up valuable time to pursue better business.
Use the Ideal Customer Profile as a benchmark. Ask revealing questions early in the relationship, to learn if, or how closely, the prospect matches the profile. Instead of trying to prove that you are “right” for the prospect, ask yourself, “is this prospect right for me?” There is no harm in telling the prospect, “we are not the right provider for you,” or even, “our fees are too high for your budget.” This respectful position can work in your favor, creating friendly allies who may refer you to more appropriate prospects, or call you back in the future when their business needs are a better match for your business.
Work Less and Earn More
The secret to great selling is that less is more. Less confusion creates more clarity. Less activity produces more results. Less indiscriminate effort produces more targeted effort. Selling is the most strategic business function there is, and it ought to receive the thoughtful, purposeful attention you give to the other aspects of your business.
Concentrate on fewer deals that are worth more to your company – more revenue, more profit, more long-term repeat purchases. If the market or the economy forces you to rely on small deals, don’t spend a fortune to win each one. Keep your eye on productivity. It pays off.
Sell More and Work Less A Strategic Approach to Sales - To learn more about this author, visit Ellen Bristol's Website.
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