Four Steps for Selling More
According to the U.S. National Bureau of Economic Research, the Great Recession began in December 2007 and ended in June 2009. I don’t know how your business fared, but it was particularly hard on professional service organizations, like ours. We lost clients, and they were not easy to replace. We felt like we were suddenly handed a big ol’ bag of boulders and kicked to the bottom of the mountain and told, “Try climbing Mount Everest again.” At the time, it was daunting.
Having learned along with the masses that we, too, were not immune to the unpredictable, our management team abruptly found they had time on their hands. We locked our bruised egos in the closet and dug in. We discovered that we had become complacent, had taken our clients for granted, and failed to keep pace with changing market conditions. It was painful, yes, but also necessary and liberating.
For twenty years we had been a successful B2B lead-generating organization. But, the market had changed, and it became clear to us that providing sales leads was no longer going to meet the growth needs of equipment manufacturers, nor their sales and distributor organizations. Everything had changed, and we were now swimming in unfamiliar waters.
So, we strapped that bag of big ol’ rocks on our back and began climbing by conducting extensive research on the topic of growth. We clung to every morsel a lesson provided to us as we observed the differences between those who fell fast and learned fast and those who fell fast and learned slowly
We studied prospect and customer segmentation, wallet share, customer retention, differentiation and value propositions, the developing field of content, cross and upselling, and the changes that sales organizations were undergoing.
We watched and studied the manufacturing industries reaction to the unraveling of the economy, what Bill Gross at PIMCO described as being the “New Normal.”
Over time, it became unmistakably apparent to us that if equipment manufacturers did the right things, copied what other successful manufacturers were doing, they could gain market share despite all of the challenges and changes brought on by the Great Recession. How?
Our Path To Proof
In 2010 we began the process of reinventing ourselves. We changed from being a one act pony to becoming a business that provided customized growth services. Because many sales organizations no longer actively prospected or farmed their leads, we did. However, that skillset was only a single arrow in our quiver of growth strategies.
The first significant growth strategy that we developed was how to increase average deal or contract size. That was a critical development because it meant that B2B manufacturers if they followed the process, could take a significant amount of market share away from their competition.
While we were focusing on bigger deals, we read two white papers that opened the door to discovering some crucial missing pieces. You see, Bigger Deals do not, by themselves, solve the customer retention problem or other issues that hamper market share and revenue growth. The two white papers provided answers we were looking for.
If you’d like to read them, the two white papers are:
- Value Based Selling: Building a Best-in-Class Capability for Sales Effectiveness, a research brief published by the Aberdeen Group on behalf of ZS Associates (now www.ZS.com.)
- The Simple Formula for Sales Success from the TAS Group (now www.altify.com.
Aberdeen’s survey included 214 businesses who wanted to learn about their value-based selling practices. The Best-in-Class designation was defined based on three key metrics:
⦁ Customer Retention Rate
⦁ Growth in Gross Profit
⦁ Growth in Deal Size.
Here are three charts showing the results of what is described in the white paper as Table 1.
This is a quote taken from the Value Based Selling: Building a Best-in-Class Capability for Sales Effectiveness: “By examining how the strongest performers within this sample have achieved Best-in-Class business results, other end-user companies –who are not able to deliver equivalent customer retention, profit growth, and average deal size increases and stand to gain significant ground on their own performance gaps by emulating the capabilities and enablers most frequently deployed by the Best-in-Class.”
So, what capabilities and enablers did Best-in-Class businesses most frequently deploy?
⦁ Segment prospects and customers based on their annual spend
⦁ Understand Share of Wallet among customers
⦁ Transfer features and benefits into economic value
⦁ Collaborate with Sales and Marketing to deliver effective messaging
⦁ Market using audience-specific content
⦁ Deploy cross-selling processes against customers
⦁ Practice relationship management skills vs. transactional sales skills
One more observation we uncovered is worth sharing with you. The survey, Value Based Selling: Building a Best-in-Class Capability for Sales Effectiveness, was conducted by the Aberdeen Group just as the economy was emerging from the greatest economic recession since the Great Depression. The results shown in Table 1 were “average year over year” results. In other words, this data included results from the Great Recession. The practices of the Best-in-Class businesses had literally recession-proofed their companies.
Whether you want to earn a Best-in-Class designation or not, you surely must want to increase your sales revenue and market share. Value Based Selling: Building a Best-in-Class Capability for Sales Effectiveness represents a straight forward outline of capabilities that could be developed and emulated in your business.
The Simple Formula for Sales Success, published by the TAS Group, described what they referred to as their Sales Velocity Formula. The Formula is:
Sales Velocity = Deals X $Value X %Win Rate / Length of Sales Cycle
Quoting from The Simple Formula for Sales Success: “#Deals represents the number of sales opportunities that are won or lost in a given time period, $Value represents the average value of those deals that you won, %Win Rate represents the ratio of deals won to the total number of deals, and Length of Sales Cycle is the average length of time resources applied to the deal before the deal is won or lost.”
You Have Options
The formula is as brilliant as it is insightful – and it works. If you want to hire the TAS Group (now Altify) to train and coach your salespeople to put The Simple Formula for Sales Success into practice, you will increase sales revenue and be in a position to take market share away from your competition.
However, if you want to save money, keep your sales professionals selling without taking them out of the field for training, and save yourself the hassle of changing your company, you might be interested in this good news, the TAS Groups Sales Velocity Formula can be directly converted into a Growth Formula that requires no training, no coaching, and no loss of sales time and no changes in the operation of your business.
Although our Growth Formula and the TAS Group’s Sales Velocity Formula focus on the same key sales activities, our Growth Formula works on an entirely different basis, and, frankly, one that is more effective, more efficient, and with no ongoing need to train new sales personnel as they join your business.
Growing Market Share 365’s Growth Formula
Growth = SRL X BAD X AWR / LoSC
SRL represents Sales Ready Leads. BAD stands for Bigger Average Deals. AWR represents your business’s Average Win Rate, and ALoSC is the Average Length of your Sales Cycle.
Break It Down
A Sales Ready Lead (SRL) is:
⦁ Exclusive. It is not shared with your competition. We can’t promise that they won’t know about it, but we can assure you that if they do learn about it, they didn’t learn about it from us.
⦁ Customized. We deliver leads that meet your specific qualifying criteria, whatever your criteria are.
⦁ Ready. The prospect or customer has been pre-qualified and is ready to talk. If you wish, we will even schedule the initial sales meeting for your salespeople.
I don’t know the total number of Leads you received during your last fiscal year. You may not know either, but you can have more, lots more with our service, and they will all be sales ready. And, here is why more leads are important.
If you had been able to increase the number of leads available to your sales force by 5%, and held everything else in our Growth Formula constant, no improvement to Deal Size, your Average Closing Ratio stayed the same, and didn’t shorten the Length of your Sales Cycle, because of 5% more leads your total annual sales revenue would have increased by 5%. The Growth Formula works, and it takes the guesswork out of how to grow your business.
For more information see Sales Ready Leads.
Bigger Average Deals (BAD) are based on the fact that regardless of your desire to do so, you can’t sell all of the end users in your sales territory. So, stop trying.
Rather than trying to sell everyone, instead, place greater emphasis on the 20% of the end users in your sales territory who generate 80% of your revenue, and buy 80% of your equipment. You know about the 80/20 Rule, so use it to your advantage.
We know, by using the 80/20 Rule, how to create a prospect list that contains your competition’s most valuable customers. We will need your cooperation to generate the list, but after that, we know where and how to source it. By working with us, you’ll have what you always wanted, a list of your competition’s most valuable customers and a marketing partner that understands growth, and are easier to schedule an appointment with than a big end user, than it is time to schedule one with a little end user. We learned a long time ago that if we are going to prospect, we are going all in. Forget the half measures.
We also know how to help you sell more equipment and aftermarket products and services to your existing customers. In fact, we will provide you a breakdown showing what your customers are buying from you, and what they are buying from your competition. Then, we will use that breakdown to grow your Share of Wallet.
For more information about Bigger Average Deals, and an example of what the breakdown looks like, see, Bigger Average Deals.
Average Win Rate (AWR) is calculated by averaging all of the closing ratios from the various departments throughout your organization that sells equipment and aftermarket products and services.
Increasing your AWR is no more complicated than making a management decision to increase your Share of Wallet. Increasing Share of Wallet benefits your business in two ways. One, you will sell more high margin aftermarket products and services increasing both sale revenue and profits. Two, you will increase customer retention, and more customers mean more future equipment sales. There is no downside to increasing Share of Wallet. But, back to AWR.
Which is easier, selling products and services to your existing customers, or selling them to your competition’s customers?
Selling to an existing customer is five to seven times easier than making a sale to someone you don’t know. It’s also faster and more profitable. When management decides to sell more to your existing customers, your AWR is automatically going to increase!
For more information about this, see Growing Share of Wallet.
The Length of your Sales Cycle (LoSC), is another tool you can manage and control to produce growth. Here’s an example.
Above, in the piece on Average Win Rate, we made the point that selling to your existing customers was five to seven times easier and faster than selling to a business that you hadn’t done business with before. Because it is, you can shorten the length of your sales cycle.
While having all of the elements of the Growth Formula working together is ideal, it’s important for you to note that each element is also independent of the other elements and provides growth within its own construct. By positively manipulating any one them, you increase both sales revenue, and profits. Also, by taking their most valuable customers away from your competition, you also grow market share.
One Decision Only
By partnering with us, you can have control of each of the elements in the Growth Formula. You can have Sales Ready Leads, Bigger Deals, higher Win Rates, and a shorter Sales Cycle. And, we offer our service on a Risk-Free basis.
If you’d like more information about how you can sell more to your existing customers, and take customers away from your competition you can schedule a conversation with me at: https://calendly.com/talkwithkent.