Sales is a fundamental part of every business. No company can exist without some way of finding, engaging, and closing new business. How companies do this varies based on the markets they serve, the types of customers they target, and their own internal business operations.
Merely having a sales team does not instantly translate into revenue. Having resources focused on selling will generate lots of activity but is it efficient and does it result in the outcomes you are seeking?
Enter sales process. Most companies will benefit from a “less is more” approach here but understanding that the first conversation with a cold prospect does not immediately yield a new customer can goes a long way to set expectations and instrument your business for optimal customer acquisition.
Here are five building blocks for every sales process:
1. Qualification Criteria
Who is your desired customer and what makes them sales ready? To do this well requires moving beyond industry, role, and job title to where a prospect actually is in the buying process – initial research, budgeted project, or no interest? Be stingy with your sales time and focus on those prospects who are ready for sales engagement. The percentage of targets in active buying mode at any one time is in the single digits so apply some scrutiny to how you are spending your sales time and have a well defined marketing nurture process to keep the conversation going with those not ready to buy.
2. Deal Stages
Understanding how your target customer buys is essential to your sales process and your deal stages are where that buying process and your sales process meet. It is important to have a way to identify those who have not had sales touch yet (lead) to those having active conversations (working with) to varying degrees of forecasted to close (qualified, negotiation). Again, less is more here so start with the basics and build the discipline that certain deal stages signal likelihood of close (i.e., negotiation equals 70% or greater probability). This forms the basis of a forecasted sales pipeline giving you a view forward of business performance.
3. Desired End-State
This goes hand in hand with deal stages above. Each customer interaction should have a defined purpose and desired end-state. At the very early stages, it may be further qualification. At more advanced stages it may be getting a commitment to purchase if a certain set of requirements are met. Because sales processes can span many interactions over weeks or months, instilling the discipline of achieving a desired end-state at each interaction will keep the sales process focused and team aligned around actionable outcomes.
The is a view into progress to plan. So if you don’t have a plan with revenue targets, do that now. The plan reveals core assumptions and is a way to drive the business forward. It will also surface key areas revenue contribution per sales representative, lead volume required, and dynamics of the business like average deal size and its impact on total number of customers required.
5. Conversion Rates
It is important to take as step back and measure the performance of your sales process. Yes, revenue and closed deals are the ultimate measures of success but be sure to pay attention to the rate of progress through the sales process. This can be best seen by conversion rates between deal stages. If the number of leads is very large but the percentage that convert to qualified is low you may have a lead quality issue, too stringent of qualification criteria, or a sales training issue. Get behind the numbers by looking at conversion rates between deal stages. If opportunities get to the forecasted stage but fail to close, are they being placed there prematurely or are you losing due to a gap in product or service?
Sign up for PipelineDeals free trial.
Contact us if you’d like us to tell you more or schedule a demo
Image via Flickr