A large number of organisations have limited Key Performance Indicators (KPIs) around sales performance. What this means is they have limited information available to them about how their sales team is performing. In many cases, they report revenue achieved versus budget on a monthly and yearly basis by sales consultants, but when asked about:
- Win rates
- Average length of sales cycle
- Time to first sale
- Percentage of leads converted
It is surprising these key indicators are not being measured and/or managed. Revenue generation underpins a company’s success, and demonstrates the ability to attract and retain a customer base. Often, the lack of insight is because organisations haven’t put systems in place to measure the sales process. In addition, many companies do not have a consistent and repeatable sales process – so when they are asked to replicate the “same customer sales experience”, they find it almost impossible to do so.
For example, consider a sales consultant with a $1 million annual quota and an average sale price for their products of $50,000. This effectively means 20 sales are needed a year to meet their quota. If they average a 33 per cent win rate, they need to work a continuous weighted pipeline of $3m (60 prospects) of potential sales. In other words, the consultant loses $2m of business each year. These are big numbers to lose when multiplied by the number of sales consultants in the company!
Consider which business to service
In hindsight, we often reflect on what went wrong, but sales consultants rarely walk away from upfront opportunities. For some reason, they push on and often make the same mistakes over and over. What would be the impact if we could predict what business we can win and what business we will lose? A good poker player is skilled at assessing his chances and mitigating possible risk.
So are there guidelines and red flags you could use in the sales process, or concerns we should be identifying in the opportunities – such that we walk away? I think so. In fact, I challenge you to enforce and teach your sales consultants to remove a number of opportunities from their pipeline each month. Have them choose the “least likely to win” prospects (customer leads with the lowest probability chances) and send them a “Don’t Come Monday” letter (similar to the communication used when you are being dropped from a sports team). This “DCM” letter should outline why you don’t think that customer is a good fit for either you or their company.
Sales consultants are naturally optimistic and find it very difficult to decline a potential client, especially when history suggests they are going to win 33 per cent of their pipeline! But by introducing a checklist, we can potentially increase our results by $2m in this example.
All too often as sales consultants, we become subservient in the buyer/seller relationship. We are too eager to please and provide everything available to ensure a customer understands the company and what it does. But a solid, long-term relationship is built on a WIN-WIN basis. So my suggestion is this – when you uncover an opportunity where a client wants your products and services, evaluate using a checklist to see if YOU should make an exception and allow them into YOUR sales process.
Here are some suggestions on how you can devise your own checklist and examples of where you should issue your customers a “DCM”.
1. No business driver
- What problem are they trying to solve? If they can’t articulate that, red flag it.
2. No power
- Who are your sales representatives talking to?
- Can you be introduced to the decision maker at the start of the sales process?
- Only sell to people who can buy.
- As a sales consultant, you need to be able to understand the customer’s cost of doing business today without your products and services.
- The customer needs to be willing and able to answer questions. With these answers you can determine savings you can create together. This takes pressure away from price.
4. No vision
- If they don’t take ownership and create a vision there will be no sale.
Deborah Miller is the CEO of Acuere, a sales and customer service advisory firm. email@example.com