Here are a few white papers that may be of interest”
- How to prevent losing sales after a merger or acquisition
- The case for account management as the core customer activity
Forecasting is critical to any sales organization. See our blog post on how it affects your credibility.
Forecasting is related to funnel management. Each opportunity in the funnel should have some probability of success associated with it. For each opportunity do the following calculation:
Probability x Revenue of the Opportunity = Forecasted Revenue. Then the total within each person's forecasted revenue becomes that person's forecast. Sum all the sales reps and you have the group's forecast.
There are two key problems and issues with forecasting.
- You should never allow each sales rep to assess the probability, you need a standardized way to do this. And, it IS NOT based upon your sales process. Instead it's based upon your customer's buying process and how that is mapped to your sales process.
- The individual stages in the sales funnel need to be very well defined with entrance and exit requirements. Never leave it up to the rep to determine if an opportunity should exit one stage and enter another.
These are simple concepts, but very difficult to define. We've worked with many companies on forecasting and have been very successful in improving forecasting dramatically. In addition to our own experience and consulting we also use a combination of Miller Heiman's Strategic Selling® methodology and Funnel Scorecard® to help fix this problem.Read More
As a sales consultant, I get to work with a lot of great companies. One that I’ve worked with over the past few years was in an interesting situation, they were going to buy a new CRM system. Being on the buying end, rather than the selling end was quite a learning experience. The attached presentation is a summary of the sales process and the mistakes made by the three vendors, Salesforce.com, Netsuite, and SugarCRM. It’s interesting reading.Read More
You are the vice president of sales and you are preparing to meet with your CEO to discuss how you will grow revenues by 20% next year. Your CEO wants you to do it with the same headcount as last year. What are you going to do?
There are only four things you can do.
Solution 1: Put more opportunities into your sales pipeline
How do you do that? Think about doubling the number of opportunities per prospect or client. Fully understand the customer’s concept. When talking to a prospect, are you recognizing all the places you could add value? Are there two things they’d buy from you rather than one? What about your client base? Your daily discussions with clients can become a source of leads if you pay attention. Who says that it’s only your sales people who can uncover leads? Whoever touches your customers should be constantly on the lookout for new opportunities. That comes down to recognizing what the customer wants to fix, accomplish, or avoid..
Solution 2: Close deals faster
If your average sales cycle is four months, what would it mean if you closed them in three, or even two months? Easier said than done, but a worthy goal. Are you chasing the right opportunities? Deals with a poor chance of closing are a waste of your time. Define your Ideal Customer Profile (ICP). It’s much more than just your target market. Target markets are solely demographic in nature. The ICP also involves psychographic aspects. For example, for my consulting practice I look for companies that sincerely want to address their revenue issues, not just companies who go through the motions. I can usually gauge their level of sincerity in the first phone call or meeting. Knowing your ICP and evaluating your opportunities against it is the best way to know whether an opportunity is worth pursuing. If you are not wasting your time on bad opportunities, you’ll have more time for the good ones.
Solution 3: Increase your close rate
If you now close 30% of the deals in your pipeline, you can increase it to 40% or more. The best way to do that is to work only on opportunities where you fully understand what the customer wants to do and can connect it directly to what you have to offer. You do this by listening! When you visit a client, who does most of the talking? Are you listening more than you’re talking? Are you waiting to understand the client’s concept fully before giving your pitch? More importantly, are you willing to walk away because you can’t solve the client’s problems? This is a very hard thing to do. However, concentrating on clients with a demonstrable need for what you have to offer will surely raise your close rate.
Solution 4: Negotiate better deals
Most people think negotiating happens at the end of the process, but you are always negotiating. As you ask questions to determine the customer’s concept, you will also discover their other values. They might tell you price is the most important thing, but if you’ve learned that avoiding risk, timeliness, or delivery terms are of critical importance, you’ll have other areas to focus on when it comes time to discuss price. Remember, if you have not differentiated yourself and fully explained your “whole product” in the customer’s mind, they will use their most common tool to decide: price.
Virtually all strategies to grow revenues fit in one of those buckets. Figure out where your biggest opportunity lies and go for it.
I had a tricky twelve footer or so, downhill with a left to right break. I put a good read on it and selected my line, I hit it, a perfect stroke! It was heading right toward the hole and I was convinced it was going in. But, alas, as the golf gods would have it, it broke an inch or so more than I expected in the last foot and just lipped out.
At first I was angry. But, then I thought about it. I had analyzed it correctly. I stroked the put correctly. I had the right line. But, for some reason it didn’t go in. I asked myself what I would have done differently and the answer was “nothing”. So, rather than be angry, I felt good about it.
What does that have to do with selling? A lot! You see, as you get ready for a sales call, you prepare. (You do prepare, right?) You think about who will be at the meeting, what their issues and concerns are, what questions you will ask, and how you’ll present your offering. Sometimes the sales call is successful and sometimes it’s not. Should you be angry if it doesn’t go right? Well, since it’s like putting, if, and that’s a very big question, you prepared correctly and thoroughly, then no, you shouldn’t be angry.
But, that’s the big question. Did you actually prepare as well as you could have?
We at Miller Heiman have a methodology for managing sales calls and “customer focused interactions”, it’s called “Conceptual Selling”. Properly applied, our methodology will ensure that you have prepared correctly. Think of it as a checklist the pilot uses before taking off. Sure, they know to check all that stuff, but having a checklist and forcing them self to check all the important systems before take-off significantly raises the odds of a successful flight.
So, what are some of the things you need to prepare for?
- Do you understand who will be at this meeting, why they want to be there and what they hope to accomplish?
- Do you understand what each person who will be at the meeting wants to fix, accomplish or avoid?
- If there is disagreement among the participants, do you know how you will manage the discussion?
- Do you know enough about their business to be able to show how dealing with you would add value to their business?
- Do you know what criteria you will use to judge whether they are worthy of your selling time?
- Do you know what questions you will ask?
- Do you know what commitment you will ask them for to keep the sale moving forward?
That’s only a small portion of the laundry list. If you’d like to ensure you make more putts, and close more business, then give me a call.
This is the third installment in my series of blogs about the implications on sales of Tracey and Weirsma’s great book “The Wisdom of Market Leaders”. Last week we talked about companies who compete based upon “Product Leadership” (see below) and today we’re going to discuss those who compete on Organizational/Operational Excellence… from the sales perspective!
If you remember, your target market is smaller than you think because certain customers will want different things from their vendor. So, even though you may target “small to medium sized businesses with more than fifty knowledge workers in New England”, certain customers will want certain things from their vendor and other companies will want other things. You, as a vendor must decide upon which of these definitions of value you will compete, and thus organize yourself and run your business. As the authors so beautifully put it:
“If a company is going to achieve and sustain dominance, it must first decide where it will stake its claim in the marketplace and what kind of value it will offer its customers.”
The three types are:
- Companies who compete on “Customer Intimacy.” These companies appeal to those customers who look for “the whole product” and want a vendor who will understand their business and their needs. IBM and Nordstrom are such companies.
- Companies who compete on “Operational Excellence.” These companies appeal to those who look for the lowest total cost. Staples and Acer are such companies.
- Companies who compete on “Product Excellence.” These companies appeal to those who look for the latest and best products. Apple and Lexus are such companies.
So, what are the characteristics of companies who compete on operational excellence? Operational excellent companies focus on offering the lowest total cost. Sometimes that means the lowest product cost, but not always. For Wal-Mart it does mean lowest product cost, but for FedEx it means lowest total cost.
Customers and prospects sometimes differentiate between the tangible product cost and the intangible costs.
- Does your local 7-Eleven provide the lowest product cost? Hardly. But, when convenience is considered it many times can be the lowest total cost.
- Why does Toyota run ads touting the fact that their 98% of their cars sold in the last twenty years are still on the road?
- Why does Maytag advertise about the fact that their repairmen are lonely?
So, how does a company who competes on operational effectiveness operate? Well, for starters they are highly regimented and follow strict formulas. Everything that deviates from the norm adds friction to their operation and adds cost; and when cost is added they can no longer compete on total cost.
A few years ago I worked with the corporate division of Staples. Staples is a company that competes on operational efficiency. Their product costs are just a few percent more than the absolute lowest cost you can find anywhere, but, when you add in the ease of doing business with them they are certainly the lowest total cost provider.
I remember interviewing a bunch of their best corporate sales reps trying to determine their best practices. The best always said the same thing: "we are not sales people as much as we are logistics people. For our customers we make sure that they are never out of toner in their Wichita office. Although we are not the lowest absolute cost on that toner, the value we add to their operations is significant."
So, from a sales perspective, here are some thoughts if you compete on operational excellence.
- Sales people must be very disciplined and trained to not deviate from standard practices.
- Qualifying is critical. You need to find the customers who want the lowest total cost and not the ones who want "one-off" stuff or who need hand-holding.
- Working in teams is essential. Sales people need to be interchangeable. Sometimes combination of inside and outside sales teams work well.
- Customer service behind the sales team needs to be flawless. Friction in the system in terms of dealing with returns and customer complaints is deadly.
- Never have sales! Variety in price is bad for business. You will train your customers to wait for price. Think Wal-Mart's "Everyday Low Prices".
- Sales people need to always be thinking about how to drive cost out of the system. Remember the Staples sales people who think of themselves as logistics experts as much as product experts.
As usual, I would appreciate hearing from you on your thoughts on this topic.