Business is the only activity that brings money into the company in the long term. If you want to thrive, your business has to run perfectly. And if it's going to work, you need to make sure that as few clients and potential business opportunities as possible fall out of your sales process. But how to do it? Learn how to properly optimize your sales cycle and how to effectively measure if it's working. Download a checklist that will guide you through the process easily and give you lots of tips on how to improve the process.
Let's do it. First, let's define a few basic things.
What is the sales process?
The sales process is a group of activities sequenced from the first contact with a prospective client to the successful acquisition of business. By that, everyone means something a little different. Some people mean signing a contract, some people mean getting the actual order, and others mean invoicing or even getting paid. So define well what responsibilities and authority your salespeople have and what stages of your sales process they are in charge of, so to speak.
In this article, I will discuss the sales process for active customer acquisition of B2B companies with a long sales cycle. If you sell in B2C or have a short sales cycle, you can certainly take inspiration here, but you will likely adapt your sales cycle to many different ways. I'll cover the sales process that takes care of the so-called farming of customers another time and another place.
Mapping the sales process
For successful optimization, a good understanding of the current state is needed. Map the current process. Its strengths and weaknesses. Both at a company-wide level and at the level of individual merchants (which may or may not be the same). Ideally graphically. After all, most of us are visual and simply drawing the situation on a whiteboard or piece of paper will show us what we couldn't figure out for so long.
But watch out!
I've known many companies that were surprised that their internally finely tuned business cycle didn't work. And they asked me why. The answer is simple. Companies often don't respond to what customers want and how they behave. In fact, the customer knows 70% of what they want, how much they want it for, and what their requirements are before their first contact with you. It is therefore necessary to map the buying process of your potential client at the same time. Your sales cycle simply needs to be tailored to their buying behaviour as much as possible. This is the only way to increase your chances of successful trading.
Set 8 to 12 phases
The next step is to identify the different stages of your business process and critically assess them against the aforementioned counterparty buying process/cycle. At the same time, it is a good idea to check how well they describe what is happening in your deal. From my own experience, I can responsibly
to state that the vast majority of companies have woefully few stages in their process. If your funnel consists of contact, offer, negotiation and closing, you really have no idea what's going on in your business. I recommend setting 8 to 12 phases. I have seen longer processes. And it wasn't bad.
The advantage of having so many stages is that as an owner or director, you can immediately see what's happening in your funnel. Where there are so many contacts and business opportunities. Immediately and without asking your salespeople, you can see what you (can't) count on. And you can also immediately see where you (not) have a problem in your business. Where are you succeeding and where are you falling down? How are each of your merchants doing individually? Where are we struggling as a company overall? And that's the most important reason. We want to optimize the sales process, right?
The following funnels are a simplification. Please take them as such.
Conversion rates
We're all used to looking at the business process as a funnel. A lot of leads and contacts fall into it from the top. At the end of the funnel, ideally a few closed sales, and therefore money, fall out of the funnel.
Of course - and unfortunately - not every contact will be able to be guided through the entire process. We'll lose a good part of it along the way. And it is the ratio of converts to dropouts that we can describe with conversion ratios.
The higher the conversion rate, the fatter the funnel across phases. For marketers, this means less effort, more confidence and more drive. For the company, less investment and resources needed to be put into the business. That's why it makes sense to talk about conversion rates and try to maximize them.
Often conversion rates - especially bad ones - are blamed on the incompetence of traders. But it's fair to admit, there could be many more reasons. For example...
product,
Client,
sales channel,
Price,
the market situation,
our own people, their experience and knowledge
and others.
To properly evaluate and maximize conversion rates, it is necessary to comprehensively analyze and understand the entire situation, not simply blame it on the marketers, as is often the case. And I don't want to defend the merchants.
Case One: More Leads = More Sales
This is the dream of many business owners and directors. I wrote about it here. The general awareness of increasing sales goes something like this:
At the top we add more contacts, at the bottom we get more contracts and sell more. This can certainly be true, as long as we keep all conversion rates at least roughly the same between phases.
When can such a situation occur? Most often when we are in an unsaturated market and still have potential clients whose needs are addressed by our products and services. If we have enough internal resources to handle the next batch of such leads, we're in business. You have to judge for yourself whether your existing staff or you yourself have enough time to reach out to them, follow- up meetings, develop proposals, etc.
If you have the capacity, go for it. You just have to remember that more customers means more products or services. You're thinking "that's what this is all about, right?" Sure. But you'd be surprised how often companies run into problems with fulfilling orders, delivering goods or services on agreed deadlines after the initial flurry of business activity. The reputation of many of them will be marked for years to come. Disappointed customers do not simply forget. In B2B especially.
Case two: More leads = fewer sales
However, it often happens that by "adding" new contacts, the opposite happens. The sales machine grinds to a halt and paradoxically starts generating less business.
Such cases often arise in a saturated or even crowded market. Ideal customers have run out and the pressure to make further sales without product or service innovation forces us to look for customers outside our target group. While we are fishing in what we believe are related waters, they are not sufficiently explored. Our offer is therefore unlikely to fully meet the needs of newly added contacts.
Another risk is that we overwhelm our own resources. We don't have time, we don't have time to make appointments, we don't have time to prepare offers, we don't have time to produce. The bottleneck can be anywhere. Lower conversion is caused by pissing off the potential customer and then spreading negative advertising.
Case Three: Fewer Leads = More Sales
So how to optimize the sales process and get more sales? Take your foot off the gas and focus only on what's most important - the most profitable clients, where you have the best chance of delivering exactly what the customer wants. Make every single customer count, give them due diligence, ask them what they need. This will significantly improve conversions between stages of the cycle and at the end you will often find that you have closed more business with fewer leads.
This approach pays off when opening new markets where there are many potential customers, but you are not yet ready to handle the rush internally. Here, too, "measure twice, cut once" applies. Choosing one target application, target customer group and building up the beachhead for further expansion step by step pays off statistically more than an all-out foray into the market.
Business is not linear
You'd think we'd have won. Not quite. In the funnel, business works as a linear process. For simplicity's sake. But in fact, the modern business process is not linear, as I explain in the article What should the modern business process remember? This may still be true in B2C, but certainly not in the modern B2B world. And especially not in complex sales. Here, business is a highly non-linear affair and you need to react appropriately to the situation, yet not in a chaotic and haphazard way.
Why is the business process not linear?
Multiple decision makers intervene in the purchasing process. Realistically, look for 5 to 7 people to talk you into a deal. It depends on the product, service and market segment. But one thing is more than certain. You can't get by with one contact in a company anymore.
The buying side never progresses in a linear fashion. It is said that up to 70% of the buying decision is made before the counterparty is met by the salesperson. However, each decision maker has his or her own sources of information, his or her own speed of absorption, all dependent on his or her priority in purchasing a given service or product.
Even companies as a whole enter our business process each at a different internal purchasing phase. Some are almost clear, others are just getting a feel for the market. In some places the deal will take a few weeks, in others it will drag on for years.
If you stubbornly insisted on the linearity of the business process, your conversion rates would start to drop after a while. In my opinion, it is better to think in terms of a "dynamic" business process. Accept that a business case can start at any stage and respond sensitively.
Much more important than "how the salespeople should work" at each stage is to monitor "what information they are expected to deliver at each stage" in order to successfully push the business case forward.
Identify all decision makers in the purchasing process.
For each of them, recognize the relationship to your company and the buying process. Their work and personal motivation.
Identify the buyer's sources of information, their most pressing questions, the speed of response to our questions, overall attunement, etc.
That's why I advise clients to focus on each phase and prescribe to their team what needs to happen rather than how it needs to happen.
How do I know if I'm doing well?
If we want to improve something, we also need to be able to measure it. And that goes double for business. In a long sales cycle, it pays to measure the entire process. The longer the cycle, the more closely we should monitor and analyze all phases. How? By using key metrics that give us an instant overview.
Metrics should be appropriate for the length of the sales cycle. If you sell fast, you can get by with tracking billing and margin per order. But if you have a long sales cycle that lasts more than six months, or even a year, you need to make sure everything is going according to plan every month. So you'll need more metrics that affect the entire sales cycle.
What are the key metrics?
1. Beginning of the process: are we doing anything at all?
number of leads, meetings, activity on LinkedIn...
2. Process centre: are the activities meaningful?
the amount of money offered, the number of analyses performed... 3. End of process: how well do we offer and analyse?
invoiced volume, ordered volume, custom margins...
The most common metric is ultimately money. But if your business process involves more than three basic stages (which is very likely), try to think about and choose an appropriate measurement for each stage. Then record all the results in your CRM system, where you can regularly track, revisit and analyse them.
When you see something not working, respond immediately and suggest a solution. Would it be a good idea to add another business stage or does the whole process need to be updated? The sales cycle is dynamic and should always respond to what is actually happening. Yes, it's kind of a never-ending job.
Not going as well as you'd like? Do you have lots of contacts but no real results? Contact me and together we will start your business process.