Creating a process that delivers consistent and profitable revenue involves a whole range of functional collaboration from the agreement of the strategic objectives to the relationship building that occurs after the early honeymoon of the first sales.
It takes time, effort and commitment from a lot of people, and importantly a process that is sustainable.
The usual metaphor of a ‘Sales Funnel’ is well understood, but flawed in many respects, principally because the behaviour of existing and potential customers is rarely as predictable and linear as a funnel assumes.
However, the sales process can be broken into a series of steps that reasonably represents the sort of activities required to assemble leads and develop them into long term customers.
To my mind, prospecting has three elements.
- Building a wider network of relationships within existing customers, focussed on the servicing of existing business, with the objective of increasing the share of wallet
- Identifying and making contact with those to whom the value proposition has the potential to resonate in the existing market segments
- Go exploring, seeing where the capabilities you have may be applicable in ways that are not as obvious. I find the 70/25/5 rule applies as much to sales prospecting as it does to the more complicated and holistic challenges of a business turnaround. 70% of a sales prospecting time should be spent finding ways to increase the share of wallet of existing customers, and perhaps chasing those generated who have lapsed, 25% devoted to identifying and engaging with new customers who fit the usual profile of a prospect, and 5% being ‘out there’ exploring.
All three elements recognise the role played by the tools of digital marketing. People are expensive, so it is managements task to leverage the cost to the maximum extent. Much of the role of the traditional sales rep has been overtaken by digital tools, but it still takes a person to ‘close’ and build a relationship. Such people are not order takers, they are amongst the most important people in your business.
Metrics present challenges, the adage that what you measure gets done is largely true. Therefore prospecting needs to be tasked and measured in meaningful ways that direct the effort made in alignment with the strategy. There is a whole list of elements that are present in a prospecting toolkit, such as: time bound revenue objectives and qualified sales opportunities, conversion rates of leads generated, outbound calls and contacts, Identification and relationship building with new contacts in existing customers, same for prospective customers, understanding and profiling of a prospects business,
Long term revenue generation requires a mix of repeat business, new business from existing customers, and business from new customers. The mix will be different in each case, and some level of management of these needs to be reflected in the way the metrics are set up. For example, a start-up leveraging new technology will have targets very different from an existing business that operates in a mature industry. Nevertheless, the process of conversion needs to be managed so that there is a steady and predictable as far as possible flow of business. Predictability of the business coming in is a key to managing a business with as little ‘internal friction’ as possible. When there is predictability, most of the revenue is generated in a semi-automatic way, but when there is little predictability, everything is a crisis, and crises consume inordinate amounts of management time and attention, leaving the important but not urgent stuff undone.
The sorts off metrics used can be broken into a number of classes:
- Revenue generated
- Leads generated and conversion rates necessary to generate the revenue
- Data base management. This applies to the data on the markets in which you operate, the number and type of prospects in a market, as well as the more common CRM type data that accumulates detail on calls, responses, status of enquiries and what next type information.
- Quantification of the funnel, how many leads are just ideas, to the hot prospect stage. As noted earlier, customers rarely behave in a linear fashion, but the metaphor often helps to ensure that the right resources are allocated at the right times.
Measuring the state of a relationship is never easy, the measures are usually subjective, and only truly evident over time. Like good parenting, we all know it benefits the kids, but the outcomes are really only evident over time.
- Share of wallet my personal favorite B2B ,measure the most useful and often overlooked measure of the effectiveness of a relationship and of the sales personnel involved. How much of the spending of a customer that you could supply, do you actually supply? How much of their available ‘wallet’ comes to you? You can delude yourself in the manner in which you define the wallet, but defining the wallet in accordance to the things you can reasonably supply Vs would like to supply, is sensible, and leads to the building of capabilities that will get you into other areas of a customers wallet.
How they see you. Are you the supplier of a commodity product, one that relies on price to make the sale, or at the other end of the scale, are you a trusted partner who collaborates for mutual success, and the sales you make are simply an outcomes of receiving an order from a purchasing system. For 30 years, I have used a sliding scale between these two points to measure the state of relationships. You easily create such a scale for yourself, but it does require some objectivity, just asking your sales reps for their assessment on a once off basis usually delivers nonsense.