Here are typical stages that a buyer for a complex product/service may go through.
• No pain felt. Business as usual – the company (the potential buyer) has no pain.
• Identify pain. A person within the company determines that they have a pain. It may come at annual planning time when a goal is established and the company realizes that it needs help.
• Validate pain/ gain support. The person who identifies the pain begins the process of gaining support to find a solution. May identify other areas that are affected by the problem • Research solutions. The person begins to research potential solutions. S/he person may reach out to selected companies for informational purposes.
• Vendor/supplier discussions. The company begins to talk with vendors/suppliers: formal introduction, gather literature, initial meetings, etc.
• Identify leading vendors. The company selects one or more leading vendors/ suppliers. The leading vendor is the “benchmark;” the buyer will typically engage in more detailed discussions with the leading vendor than with the “supporting” vendors.
• Formalize bidding process. The company sets its formal objectives, budget, and parameters for the project, then seeks bids/proposals.
• Review bids. The company reviews the bids/proposals.
• Negotiate with finalists. The company narrows down to 2-3 finalists and negotiates terms.
• Choose solution. The company identifies its solution and notifies the winner.
• Negotiate contract. If the buyer and vendor must negotiate a contract, it’s done at this time.
• Result: Execute contract/purchase. When the contract is executed, the initial sales process has concluded and you’re ready to fulfill the contract.
• Result: Lost to a competitor. Customer purchases from your competitor, but is willing to keep up a relationship with you for potential future business.
For each product/service and sales channel, think about the steps your prospects take from the time they identify a need to the time they buy from you. If you don’t have historical data to review (especially if you’re a new entrant to the market), be extremely conservative – in many business-to-business sales processes, it takes prospects weeks to move from one step to another. Build your marketing plans with these assumptions, and if you underestimate, your marketing efforts could fall dramatically short.
If your company is already established and the sales process mirrors the buying process, you can use historical data to estimate the actual time it takes to move prospects forward. You can also ask your sales reps to give you an estimate and/or to talk with customers to obtain this information.
Next identify what you can deliver to the customer to help move them forward based on their needs. What literature, tools, or information can you provide to meet the customer’s need at each step? Tools are items that aid the salesperson convince the prospect to purchase. For example, product demos, samples, case studies, savings analyses, ROI calculators, news articles. Who from your company should be involved at which steps?
Finally, estimate the percentage of prospects that move from one step to the next. Calculate each percentage independently, not cumulatively – OF THOSE who made it to a particular step, what percentage move on? For example, if you generate 10 proposals for consulting services and six move on to the negotiation stage, your conversion rate from proposal to negotiation is 60% (6/10). If you end up signing three contracts for service, your conversion rate from negotiation to contract is 50% (3/6).
Define Your Sales Process by Analyzing your Customer’s Buying Process - To learn more about this author, visit John Brennan's Website.
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John Brennan
(Visit John's Website)
John Brennan Ed.D.
Dr. Brennan is President of Interpersonal
Development, LLC, a training and
development firm. Interpersonal
Development has provided sales training
and coaching to more than 3,000 sales reps
from over 100 companies.
A native of Australia, Dr. Brennan
received his doctorate from the University
of Rochester. His dissertation researched
the effectiveness of Behavioral Modeling
Technology in training people in
interpersonal skills. While he has spent
most of his career designing or delivering
training, he was also a Vice-President of
Sales of a training and development
franchise with operations in 25 markets.
Dr. Brennan has designed and delivered
sales training in North America, Asia,
Europe, Australia and the Middle East. He
has been a guest speaker at numerous
national and regional professional
conferences.
When Microsoft wanted Best Practices
articles on sales for their web site, they
called Dr. Brennan. The results are at office.microsoft.com/e
n-us/FX011387391033.aspx
His firm’s clients have included Volvo,
The Prudential, Merrill Lynch, Eastman
Kodak, Gannett, Equifax Europe, the
Economist Group and countless small
businesses.
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