Posts Tagged Business Development
How to Take Over a New Sales Territory
Posted by Rick Pranitis in SALES BEST PRACTICES on April 10, 2013
The protocol for taking over a new sales territory depends largely on the type of territory into which you’re moving. Is this a territory where you will, for the most part, be pursuing new sales opportunities? Or, is it a sales territory where you will primarily generate new business through existing accounts with established relationships? In other words, will you utilize the Hunter or Farmer approach? The two role definitions below offer some tips on how to attack each of these new sales territories.
“Farmer” Sales Territory Protocol
“Farmer” sales reps usually work primarily with existing accounts, and take on a quasi-consultative role. They are very customer-centric, and nurture relationships and opportunities from within those secured accounts. They cultivate new sales opportunities through these relationships.
Two things to remember about the “Farmer” Sales Territory:
- You most likely have outgoing sales people who should be consulted prior to taking over the territory. Since the outgoing sales person is a farmer, he or she should be able to offer valuable insight and customer information. It’s crucial you obtain the proper customer knowledge so you’re able to continue cultivating the relationship to the point new sales opportunities can be uncovered and capitalized on.
- The outgoing sales person should accompany the new sales person on a minimum of one meeting per client. It’s essential the transition from one representative to another be handled seamlessly and professionally so the customer is convinced they’re still in the hands of a strong player who will always satisfy their needs and behave in their best interests. This will be to the overall benefit of both the clients’ and sales person’s organizations.
“Hunter” Sales Territory Protocol
“Hunter” Sales People are generally those who continually look to secure new accounts and new relationships. These types of sales people draw their energy from winning new opportunities, and securing new business for the sales organization. They are charismatic, independent, and generate lots of excitement. They continually hunt for the next new sales opportunity.
In the case of “Hunter” sales people, the territory transition can be a bit trickier, and as a result there are more steps you may need to take in order to assure it remains a successful territory in the long run.
- The incoming sales person must spend time with his or her sales manager. It is paramount these “Hunters” know the lay of the land before they go in guns blazing. It’s very possible that the sales manager has some inside knowledge about the territory which is critical to properly managing the territory. Or perhaps the sales person’s predecessor didn’t do something well – good information to have when trying to convert new business.
- If at all possible, the new sales individual should meet with the outgoing sales representative. Granted, this may not always be possible, but valuable information can be obtained during these meetings. Don’t miss this opportunity.
- Finally, the new person stepping into the territory should also meet with the sales operations leader. The sales ops leader will have access to background on details within the CRM system (for example: Salesforce.com) which will further educate the incoming sales person on all of the existing accounts and opportunities in the territory. Additionally, they’ll be able to pull information on the current stage of the sales process for existing opportunities. The client opportunity stage in the sales process is incredibly important intelligence the incoming sales representative should acquire as they start the selling process to the clients in the territory.
Make no mistake about it – the #1 key to success when taking over a new territory is information. Whether you are utilizing hunters or farmers, all sales people must know the customer and know the territory before trying to lock down any new opportunities.
Answer these questions: Who is the customer? What do they buy? How do they buy? When do they buy? What are their most compelling business challenges? All of this information will aid in orchestrating the proper sales strategy, as well as leading the clients through the sales process in the perfect manner that fits their needs (and yours!).
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This article was originally posted by Bryce Record to the Sales & Marketing Effectiveness Blog on April 8, 2012.
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The Three Critical B2B Sales Pipeline Metrics
Posted by Rick Pranitis in GENERAL DISCUSSION on November 20, 2012
How healthy is your sales pipeline right now? And what steps are you taking to progressively improve its fitness? Just as your own doctor might measure your body temperature, heart rate and blood pressure before putting you on a personal fitness regime, a pipeline doctor would want to understand your qualified pipeline value, average sales velocity and average sales win rate – and how these factors had changed over time – before coming up with their diagnosis.
Here’s why these three measures are so important…
There are three fundamental things you can do to improve your sales figures: you can generate more qualified sales opportunities, you can shorten your average sales cycles, and you can increase your average sales win rates. Steadily improving all three factors will have a powerful multiplier effect on your sales – and dramatically improve your revenue predictability.
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Bottlenecks and Best Practice
But if you’re not regularly measuring and reviewing all three factors at every level in your sales organization – from each individual sales person through to the whole sales team – you’ll struggle to identify either where your most pressing performance bottlenecks lie or (and this is equally important) to identify pockets of best practice which if adopted more widely would enable you to systematically increase your overall sales performance.
Value, Velocity and Win Rate
Proactive pipeline management involves paying particularly close attention to all three factors – value, velocity and win rate. Together they represent what we have come to regard as the essential pipeline success formula.
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And just in case you wonder whether the effort is worthwhile, a series of studies have shown that organizations that take a data-driven approach to proactive pipeline management show significantly accelerated revenue growth compared to their peers.
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Qualified Pipeline Value
The key word here is qualified. Measuring pipeline value without imposing a company-wide universally agreed definition of what a qualified sales opportunity ought to look like will simply generate misleading, unhelpful and ultimately useless data. And “leads” or “enquiries” don’t count. As I’ve pointed out before, tracking the number of leads generated in the absence of a consistent quality standard tells you nothing and may even lead you to do more of the wrong thing.
You’ll need to craft qualification criteria that address the specifics of your offering and your markets, but at minimum, a qualified sales opportunity must satisfy all of the following:
- Have they identified a clear need?
- Are they likely to buy something?
- Do we have a reasonable chance of winning?
- Would they make a good customer?
Sales Cycle Velocity
Most sales managers would acknowledge that the longer a deal hangs around in the pipeline, stuck at its current stage, the less likely they are to buy. Sales cycle velocity – the amount of time it takes for an opportunity to move from start to finish, and from stage to stage – is therefore an incredibly important predictor of sales success. And if you can shorten your average sales cycles, you have the capacity – without increasing your resources – to sell more.
Given all of this, it always surprises me to see CRM systems that are not set up to report on how long each deal has spent at each stage, or to throw up an exception report when opportunities have been stuck for long than the typical time taken for winning deals to progress. If you’re mot measuring or reporting on this, take an initiative today to deal with it. In fact, if your current CRM system can’t provide it, I would seriously think of changing it. It’s that important.
Sales Win Rate
This is an obvious metric, but even here not all organizations track it with enough granularity to learn the significant lessons this metric can provide. You need to be tracking all possible outcomes. In most complex B2B sales environments, there are at least four:
- You win the deal
- A competitor wins the deal
- The prospect decides to implement an internally developed solution
- The prospect decides to do nothing
You’ll miss the opportunity for incredibly valuable learning if you categorize the last three outcomes simply as “lost”. If you’re not evaluating the outcome of every opportunity into at least these four categories, I strongly suggest you start doing so today – and that you retrospectively analyze recent sales outcomes.
Measure at Every Level
My final recommendation is that you measure these three metrics at every level within your organization, as well as analyzing outcomes by source of opportunity – including comparing different marketing campaigns. You’ll inevitably find outliers in both directions: poor performance that clearly needs to be corrected, and exceptional success that needs to be replicated.
In fact, the latter may provide some of the most valuable learning opportunities: where are you currently being most successful today, what can you learn from this, and how can you enable the rest of the organization to embrace the winning habits you have identified?
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The Four Phases of Customer Evolution
Posted by Rick Pranitis in GENERAL DISCUSSION on November 10, 2012
There are only four customer phases, and all customers will be in one of these at all times. There are many erudite articles written about the interdependence between sales processes and buying processes, but – being primarily focused on new customer acquisition – many miss a critical consideration; The Four Phases of Customer Evolution.
Customers go through three Growing Phases and one Dying Phase. You should understand the phases and particularly the reason why customers more from the Growth Phases to the Dying Phase. The critical thing is not just to recognize which phase they are in – that is fairly obvious – but to understand that if they are to become a customer, then they will inevitably morph from phase to phase. It is only a matter of time.
The four phases are:
- Prospect
- Customer
- Loyal Customer
- Former Customer
The fundamental substance of all the management theory, strategic advice and best practice writings about customer management, key account management or account planning any should be to accelerate phase transition through the Growing Phases; phase 1, 2 and 3, and then decelerate the inevitable transition to phase 4, the Dying Phase.
Here are some facts to chew over:
- The cost of new customer acquisition is 500% that of customer retention
- Increasing customer retention by 2% equates to decreasing costs by 10%
- Reducing customer defections by 5% can increase profitability by up to 125% (depending on industry).
Source (Leading on the Edge of Chaos – Emmet C. Murphy and Mark A. Murphy)
The Road to Customer Defection
Before you read the rest of this section, I want you to consider two different scenarios. Each is real, and I hope you will easily identify with them both.
Scenario A: In the first scenario you (or your company) are selling a product or service to your customer. This scenario should be real and should relate specifically to your existing company. Stop and think for a minute about why prior customers have stopped doing business with you.
- Why have they left you or your company?
- What do you think are the top three reasons?
- Write them down – now, before you play out the next scenario.
Scenario B: In the second scenario; you are the customer. We might all be forgiven for thinking that being a customer is easier than being a supplier – but that is not always the case. In this scenario you need to think about the last time you (or your company) decided to stop doing business with a particular source.
If you take a personal perspective on this, that source might be a restaurant, a clothing store, a hairdresser, an online bookstore, an airline, or an online community. From the perspective of your company, the source may be your stationery provider, IT services supplier, sales trainer, telecommunication equipment vendor, or any one of the many other options.
Combine the personal and company perspectives (if you have both) and write down the top three reasons why you defected. If you are like most people, the answer to Scenario A will start with price or product features, and the answer to Scenario B is more likely to be more focused on ‘how I was treated’.
The problem is that in the real world these two scenarios converge and the disconnect between what suppliers think and the opinions of their customers send their relationship hurtling from a Growing Phase straight into the spiral of the Dying Phase.
Why do customers leave? The reality might be different than you think. According to Rightnow Technologies (now part of Oracle):
- 73% of customers leave because they are dissatisfied with customer service, but companies think just 21% leave for this reason.
- Company thinks that nearly half (48%) leave because of price, when in fact, according to the customer perspective, this happens only 25% of the time.
- The U.S. Small Business Administration and the U.S. Chamber of Commerce support these findings. According to their research:
- 68% leave because they are upset with the treatment they’ve received (Customer Service)
- 14% are dissatisfied with the product or service
Serenade your customer
You’ve abandoned me.
Love don’t live here anymore.
Just a vacancy
Love don’t live here anymore
The lyrics here are from the 1978 song Love don’t live here anymore by Rose Royce, an American soul and R&B group who had a number of hit singles in the 1970s. While the reference to this song might be a little contrived – I’m a sucker for musical references – the sentiment is well expressed and relevant.
If your customers leave you, it is because they don’t love you, and that is usually because they feel unloved. The reason they don’t love you is usually because they feel you have abandoned them. If there is a vacancy – your competitor will rush to fill it, and your customer will inevitably become a former customer.
It is hard to accept that the reason your customers don’t love you is because you have underserved them. It is much easier if you can point to price or product features as the determinants of defection. That hurts less because you can convince yourself that there is little you could have done about it.
Ask yourself this. If you knew that the customer was going to move from a Growing Phase to the Dying Phase, and there was nothing that you could do about price or product features, what actions would you take to serve them better so they would stay? So what are you waiting for? Write down your answers – and take action now.
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This article was originally posted by Donal Daly at DEALMAKER 360® on November 6, 2012
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Six Essentials in Building a Value Proposition
Posted by Rick Pranitis in GENERAL DISCUSSION on October 23, 2012
A great deal of conversation these days is about the way the buying process has changed. Sales professionals are discovering they must step up their game to stay in line with customers’ expectations. One thing that hasn’t changed is the buyers’ expectation for receiving value in each transaction be it goods and services or just conversation. There’s been a good amount of interest in the” Value Proposition” as a method of satisfying this expectation and being a “silver bullet” to sales success.
There isn’t quick fix or an easy answer but you’re going to pursue this path here are essential six things to help smooth your value proposition journey.
1. Create first, communicate second
We often find that there is confusion between creating your value proposition and then how you take it and communicate it during the selling process or through marketing channels.
In my experience, it’s absolutely critical to do the high-level creation part BEFORE attempting to communicate the value proposition to your customers and potential customers. Doing it this way around makes the communication part, and therefore the selling part, so much easier. Suddenly we all become clear about the key messages. They’re obvious, simple, clear and based on reality. One of the biggest problems we come across is good sales professionals doing their best to create value messages in the absence of any wider understanding of where the source of their company value lies. Suddenly, the sales professional is forced to come up with a value proposition based on the latest opportunity – retrofitting their messages back into the rest of the organization. Hard work and almost impossible to achieve – I’ve seen many demoralized sales teams sweating this one.
2. Top down, not bottom up
It’s so much easier for sales people to have a clear, high-level, company-wide, value proposition created, and then they are free to tailor this to specific opportunities, rather than having to make them up from scratch. Also, doing it this way around (i.e. top-down) will reduce your cost of sale as you’ll know which opportunities are worth pursuing and which aren’t.
So the starting point needs to be company-wide, or division, or sector or product group, before translating the messages into major accounts or specific products or sales opportunities.
3. Involve all stakeholders
A value proposition is a promise of value to be delivered and a belief from the customer of the value that will be experienced. And you can’t create this by thinking up some clever words. You need input from many sources including people in your organization and your customers.
4. Understand customer risk
We use the value equation where Cost must also include the risk taken by the customer in choosing to buy from you and your company. Benefits are shown squared because the benefits you discover after going through the value proposition creation process must significantly outweigh the costs:
Value = Benefits – Cost
5. Value is not just rational
During the value proposition creation process, it’s not just the rational dimensions of the client’s organization that need to be taken into account but also the political and emotional/psychological. Look at the 3 dimensions of:
• Rational (price, ROI, speed and feeds, features etc.)
• Political (e.g. how is this going to affect the buyer’s job? How will this value proposition be received by their organization?)
• Emotional/psychological (how does the customer feel about you, your products/services and your company?)
6. Offerings deliver value
You can often achieve a huge surge in value for your customers, with very little outlay, by re-bundling or re-packaging existing offerings.
So, is a value proposition a silver bullet? No, it isn’t, but it will significantly help with lead generation, conversion rates and overall profitability but only if you put some blood, sweat and tears into the creation process first. Mine the silver first, hand-carve the bullet and then aim it at a precise target.
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Keys to Building a Startup Sales Team
Posted by Rick Pranitis in GENERAL DISCUSSION on August 27, 2012
Okay, you’ve developed an innovative product or service and you ‘hung your shingle’ out to the world a couple of years ago. Lo and behold, your idea took off and you’re making good progress – and a little profit as well. Congratulations! Now you’re telling yourself it’s time to expand, add a few people to your organization, AND hire a sales team to really make the business grow.
These days that’s great news from any perspective. I’m all about building and growing business. Here are some things you should keep in mind to help guide your expansion and keep you on the growth (and profitability) track.
- Don’t hire sales people too early. In the early days (and even if you’re a couple of years into the start-up, it’s still the early days) you the founder should be able to sell (and should be selling).
- You don’t need sales people, you need sales. Don’t think VP of Sales — think Revenue Engineer. (Not the greatest analogy, but just like you won’t hire a development ‘manager’ as one of the first five people in a start-up, you shouldn’t hire a sales ‘manager’ either). Don’t get caught up in fancy titles — focus on dollars in the door.
- Don’t hire several sales people at once. Your goal is to figure out the pattern of what kinds of people are best based on what you’re selling and who you’re selling it to. You need some feedback from the system so you can continue to iterate on your hires.
- If you’ve never hired or been around sales people before, be prepared for a bit of a shock to the system. They’re not bad people, they’re just different. If you’re somewhat of an introverted geek, it’s helpful to remember that your start-up needs to sell stuff.
- Resist the temptation to create complicated compensation plans. If it requires a spreadsheet to figure out the commission, it’s too hard. You’ll have plenty of time to confuse sales people later — start simple.
- Agile methodologies can work in sales as well. Iterate! Refine your demo script, your slides, and any other collateral information. Capture the lessons learned by the best-performing people and spread it to the rest.
- Sales people will generally act in mostly rational (but often surprising) ways based on incentives. The rules-of-the-game defines the behavior of the players. Be forewarned!
- You should always connect incentives somehow to ultimate customer happiness. If you reward just “deals getting done”, you’ll get deals — but at too high a price. You might get push-back that sales people don’t control/influence customer happiness, but they do. They “pick” customers, they set expectations, they control the degree of “convincing” applied.
- Make sure you understand the economics of your business. Figure out your total COCA (Cost of Customer Acquisition). This includes sales people, marketing people and marketing campaigns. Quick example: Let’s say you paid a sales person $10k, a marketing person $10k and you spent $5k on Google AdWords (for a total of $25k) last month. If you sold 10 customers last month, your COCA is about $2,500. Different businesses have different needs in terms of sales vs. marketing spend. Make sure neither is too far out of whack.
- Your Life-Time-Value (LTV – how much revenue you expect to generate per customer) should be higher than your COCA. No, you don’t need a degree from MIT to figure that out. Once your LTV is a multiple of your COCA, you’re ready to start turning the knob and scaling the business a bit (hiring more sales people). But, if your LTV is way lower than your COCA, proceed with caution. If there is no hope for LTV getting higher than COCA, you’ve got a problem. Don’t try to hire additional sales people until the economics sort of make sense.
- Track data maniacally (even if it’s just in a spreadsheet). Information you will want includes: What was sold, who sold it, when, for how much, etc. This data will be invaluable later as you start to scale. For example, you should be able to answer the question: We had 14 customers cancel last month — who sold those customers? Is there a pattern? In the early days, you likely won’t have the volume (or the time) to analyze the data — but you should at least capture it for future use.
- Your pricing should be in line with your sales structure. For example, you can’t expect to have an outside sales force (that meets with customers in person) if your average deal size doesn’t cover your cost of sales. The math won’t work.
- Once you get beyond three or so people, running your sales in a spreadsheet will become painful. Start looking at CRM systems (like Salesforce.com).
- Start watching the shape of your ‘funnel’ as early as possible. How many leads are you getting a month? How many turn into opportunities? How many of those convert into paying customers? Once you understand your funnel, you can slowly start tweaking your system to fix the ‘leaks’.
I know this is a lot to juggle along with running your business and everything else you have on your plate. But if you want to keep your company, and your profits, growing you have to accept the fact ‘expansion’ means more than just adding bodies to the personnel roster.
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