By Geoffrey James

February 9th, 2010 @ 5:30 am

, Key, Behavior, Follow-through, Sales Strategy, Sales Force Management

Want to double, and then redouble, your sales revenue? Believe it or not, that’s not just possible… it’s easy.

Turns out that sales pipelines are like compound interest. Small increases in efficiency, applied simultaneously at different points in the sales cycle, result in geometric increases in final sales results.

Here are five easy steps that can easily be implemented within a single quarter. Any one of these steps will probably double your sales revenue. But if you implement all five at once — Bingo! — you’ll achieve exponentially higher sales revenue – quarter after quarter.

BTW, these steps are based on a discussion with one of my favorite sales geniuses: Donal Daly, CEO of The TAS Group.

Step #1: Increase the average quality of the leads

• The Concept: If you’re calling on the wrong people, you’re spending time on “opportunities” that never had a chance. If your leads are higher quality, you’re less likely to be calling on the wrong people. Therefore, your sales activities will generate more sales in the same period of time.
• The Challenge: A high quality lead, by definition, is one that’s highly likely to become a customer. Your challenge is therefore to come up with a specific definition of what constitutes a high quality lead for your offering, and then get the marketing organizations focused on finding more of them.
• The Key: A marketing group cannot possibly create a useful profile of a high quality lead without the active participation of the sales group. The sales team must therefore provide them with regular, direct inputs who’s interested and who’s buying, along with all the specific details (like job title, industry, typical organizational structure, etc.),
• The Behavior: Once the initial profile is agreed-upon, the Marketing group must commit to generating, and nurturing, leads that correspond to that profile. To do so, they should be given online tools that allow them to mine social networks and business databases to find individuals that are likely to be interested, inside companies that have the money to buy the offering.
• The Follow-through: The sales team should commit to keeping the CRM database current and accurate. Because the CRM system tracks sales efforts, it can provide the marketing group with a treasure-trove of statistical data defining the current customer base and how effective the sales organization has been when selling to those demographics.

Step #2: Decrease the percentage of false opportunities.

• The Concept: Even if you’re calling on high qualities leads, a certain percentage of them won’t be potential prospects, usually because they don’t really have a need for your offering, or they do have a need, but no money to buy. Eliminating these “opportunities” from your sales cycle, means that you’ll spend more time with real ones.
• The Challenge: You must realign your thinking so that your initial conversations with a sales leads are not for the purpose of selling, but rather to identify which leads are most likely to become customers — and which are least likely. Then you make sure that only the most likely prospects are put into your pipeline, so that you seldom, if ever, waste time on false prospects.
• The Key: The key issue is always value. First, the “prospect” must have the budget to buy, or at least some budget dollars that could be spent, if the need is great enough. Second, the prospect must have that need, and the need must have a financial impact that’s overwhelming larger than the cost of your offering. Anything less, and you’ll never be a priority.
• The Behavior: The initial conversation with a sales lead must be peppered with questions can disqualify the prospect as a potential customer. For example: a question like “how would you handle this problem if you didn’t have a solution like ours?” might elicit a response like “we’d probably struggle along for a few more years” in which case the prospect may not be serious about buying.
• The Follow-Through: Sales management must treat the elimination of a lead from your list as much a victory as the conversion of the lead into a real prospect. If you don’t compensate and celebrate the winnowing process and only celebrate when you find a real prospect, you’ll start sneaking questionable prospects into the pipeline.

Step #3: Increase your average competitive close rate.

• The Concept: Even if you’re calling on the right people, if you do or say the wrong things, you’ll spend time and money on opportunities that don’t pay off. Once a lead is completely qualified as a prospect, then the prospect is going to buy, either from you or your competitor. Therefore, increasing your “conversion rate” for a fully qualified lead is always matter of outselling the competition.
• The Challenge: The most frequent reason sales reps are outsold is that they didn’t talk to the right people - and the competitor did. In many cases, the failing sales rep failed to research and completely understand the actually process by which the decision would be made, and who would play what role in that decision-making process.
• The Key: It’s common practice for sales reps to communicate with a senior decision-maker at the beginning of the sales cycle, and then revisit that connection at the end of the sales cycle, in order get final approval. However, if your contacts are limited during the middle of the sales cycle, you’re probably not going to know what your competitor is doing, and who your competitor is calling upon.
• The Behavior: Insist upon being in regular communication with decision-makers, so that there won’t belong periods of time where you don’t know what’s going on, or what’s changing inside the customer account. And don’t be afraid to ask your contacts who else is calling on them. It’s probably not a big secret and (guess what?) your competitor is probably asking them about YOU!
• The Follow-Through: Selling against competitors means constantly differentiating your offering so that it fits the prospect’s need better than whatever the competitor is offering. To do this, you must deeply research the prospect’s business and the competitor’s strengths and weaknesses, versus your own. Remember to be subtle, though. Rubbishing the other guy makes you look bad.

Step #4: Increase the average dollar value of each sale.

• The Concept: There is a fixed amount of time and resources connected to every sales effort. While it may take more effort to cut a $1 million deal, it’s usually not nearly ten times as much as effort as cutting a $100,000 deal. Therefore, the more money that you can make on each sales opportunity, the more you’ll make overall.
• The Challenge: You must fully develop the customer account during the sales process. This means giving each account your full attention, and spending enough time on it to be able to uncover the full opportunity. Fortunately, this will be easier to do if you’re implementing the first three steps, because then you’ll be selling to fewer prospects, but with a better chance of making the sale.
• The Behavior: Research the prospect thoroughly, prior to your first sales call, and then continue to research and probe during the sales cycle in order to continue to uncover additional ways that your firm can help that customer. Make this a constant element of your sales process.
• The Key: Remember that you’re not trying to pump up the sales price, but to truly be of service to the customer. Your entire attitude, from start to finish, MUST be can result in a proactive collaboration, between you and your customer contacts, to make sure that the (mutually advantageous) deal is as large as possible. That way you’re helping them even more.
• The Follow-Through: Always use discounts as sparingly as possible. In the case of standard discounts, that drop in margin is already reflected in the business model. However, extraordinary discounts offered merely to secure the sale, can not only make the current deal smaller, but (if publicized) can result in discounts (and smaller deals) from future customers.

Step #5: Decrease the average sales cycle time.

• The Concept: The more time that you spend on an opportunity, the less time you have to spend on other opportunities. There are two types of “time” that are at issue. The first is the elapsed time that it takes to move a prospect from initial contact to closing the deal. The second is the work-hours that you actually spend on that opportunity.
• The Challenge: Most sales reps focus on the elapsed time, believing that they can influence the customer to buy more quickly. However, in most cases, the customer already has a time frame in which they intend to buy. Because of this, efforts to “speed the process along” are usually a waste of time. As such, they add to the number of work hours that the rep spends on the account, with no particular payback.
• The Key: Focus instead on the “work-hours” that you spend on each account. Find ways to make your interactions with each customer more intense and more productive. Schedule multiple meetings on a single visit. Use web-conferencing to reach remote individuals. Don’t reduce the amount of service you’re providing; just find a way to spend fewer work-hours doing it.
• The Behavior: Focus on discovering the customer’s “compelling event” which will actually trigger the buying process. For example, a prospect might have a certain amount of budget to spend in the current quarter, in which case the “compelling event” would be the end of the quarter - after which the money will disappear. Similarly, a prospect might be waiting for an order from a large customer before making a purchase of additional component.
• The Follow-Through: Once you know the compelling event, then you schedule your activities backwards from that event, so that you spend the right amount of time (neither more nor less) developing the opportunity. If done correctly, you can ensure that every moment that spend with the prospect (soon to be customer) is productive.

THE BIG PAYOFF!!!

Here’s how these five steps geometrically increase sales, when implemented simultaneously. I’ll keep it simple.

Suppose you spend 1 day a week prospecting and 4 weeks a day selling. Your prospecting results in 10 prospects, of which 2 turn into customers by the end of the week. You spent 1 day of time to secure each customer, and 2 days of time on the other 8 customers who didn’t buy. Each of those two customers spend $10,000 each. Your commission is 10%, so you just made $2,000 in that week.

Now suppose you implement the changes above, and still keep to the same basic schedule. Your 1 day a week of prospecting still results in 10 prospects, but they’re all highly qualified. Because you’re spending less time on each customer, spend 1/2 day each, to close 6 customers, while 2 fall by the wayside. Each of those 6 customers spend an average of $15,000. Your commission is still 10%, so you just made $9,000, which is geometrically more than what you made before — for the exact same amount of time and effort!

Cool, eh?

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BTW: The TAS Group has a much more sophisticated model (called “Sales Velocity”) that can really help improve the performance of an entire sales team. If you’re interested, I strongly suggest you contact them directly.

http://blogs.bnet.com/salesmachine/?p=8188&tag=col1;post-8188