Managing Complex Sales

Smarter sales management

There is a general perception that there are two types of people in
the world – buyers and sellers. Sellers think that buyers are suckers.
Buyers think that sellers are charlatans.

Sales management is one of the least understood areas of business and
it does not help that generally people don’t like sales people. Usually
sales forces are quite separate from the rest of the organisation and
practice the voodoo of incentives, commissions, on target earnings and
discussions under non-disclosure agreements.

So how can we get the most out of this area of business? To build
smart sales organisations we may have to go back to basics to get the
most out of convincing the market to buy our product.

Establishing a high velocity sales
organisation

One of the approaches to sales is to build a high velocity sales
organisation. While most organisations would love not to have sales
people the modern combination of social media, effective marketing and
management of sales processes is creating a new set of metrics for sales
process. And it is not about calling people executives, consultants or
directors to impress clients – it is about doing the work of
selling.

Companies are revolutionising the sales process by effectively
combining inbound marketing through search engines and other social
media with good sales tools and effective follow-up strategies.

Step 1: Generate Leads

To get people to buy your product – you need to speak to them.

Some of the most effective ways to generate leads is still print
advertising and direct calling. People still read and expect to find
information of opportunities in print media. Increasingly online keyword
buying, pay-per-click and keyword auctions drive the delivery of a
message to a specific targeted audience with pre-set demographics.
Another key source of leads is to working through follow-up on older
leads. Cold calling and canvassing target organisations is still
important. Websites generally do not sell products – they generate leads
and people sell products.

Going through the hoops to find the person that you should be
speaking to is a simple “old-school” and very effective way to present
your message.

The key to choosing effective lead sources is to monitor the cost per
click or cost per lead. This is done through tracking the phone calls,
website hits and other types of enquiries that is received shortly after
a campaign in a specific media source. To get 500 “warm leads” it is
estimated that an online cost of about R250 – R 1000 per lead is fairly
common and for print advertising it is usually slightly lower – although
different products may have different experiences.

This then translates back into the outbound sales person’s cost per
call as well. If a person costs you R 20,000 per month and attends 20
meetings with prospective clients – this is a lead cost of R 1,000 per
client. If they are successful 10% of the time that means that those 2
meetings that was successful should yield at least R 9000 profit each,
just to pay for their salary (R 20,000 salary – 2 x successful meetings
= R 18,000 / 2 successful sales = R 9,000). That means that the unit
sales price would have to be at least R 50,000 to R 60,000 for this to
be meaningful (assuming a net profit margin of 15% to 18%). If you
product is not worth that much, or your margins not as high – then
outbound sales is simply not a profitable approach for your business. In
this case you better stick to telesales in which you can go through more
leads quicker and maybe have lower success rates but higher conversion
rates.

Step 2: Properly qualify your sales lead.

James Obermayer in Managing Sales Leads argue that if you do
not as a minimum know the source, contact details and interest of an
individual that it cannot be counted as a lead. It follows in order to
do this, that you need to have a slightly more than superficial
interaction with the client. Qualifying the sales lead to know what the
interest is may mean the difference between having a business card on
your desk and doing the sale. Find out if the client has in your product
and to know where you got that lead. Even on the web it is still
necessary to collect lead information and properly segment the online
market.

For complex sales it is important to build an account plan that
outlines who the key stakeholders are including the decision makers,
influencers and gatekeepers. Each of these will need a separate approach
and there needs to be an agreement amongst the bid team how to approach
the sale.

Step 3: Allocate leads

One of the strategies followed to allocate leads is simply a
round-robin system where the next available person gets the next
available lead and not to get stuck to territories or fixed allocations.
If a sales person has not followed up in 2 hours – reallocate to the
next sales person.

It is also usually a good idea to support a sales campaign with
account managers who work on upsell opportunities and creating
solutions, proposals and other sales tools for clients to support the
sales effort. This allows the sales person to canvas the leads and spend
their time selling – rather than writing proposals.

Lead allocation is a critical component of sales – because getting it
wrong tends to mean that you start losing sales.

Step 4: Sales Tools

Clients always ask you to send them more information and it is
important to have that information on hand. Having a good brochure,
price list and other information to send to clients is the difference
between being responsive and frustrating a client. You should be able to
produce a quote in as little time as possible to really respond in a
high velocity sales environment. Websites must also give the client the
ability to buy the product without much cloak and dagger. You sell more
when people have information and it is easier when that information is
prepared before you start.

One of the most important sales tools is for sales people to
understand what the real value of the product is to the end client. Let
them see, understand, play with and experience the product and you will
soon see sales increasing. It is always easier to sell something you
believe in.

Step 5: The actual sale

After planning to sell and having all the tools together we need to
recognise that a sale is a process. A well-defined sales model can be
tracked through a pipeline methodology or a tool such as salesforce.com.
It usually assigns a value to the sale and shows the percentage
completion per activity. An example of such a process is outlined
here.

10% – lead is qualified (interest, project has requirements, timing
is <6 months) If a rep doesn’t act on a lead in two hours it is sent
to another rep.

25% – product identified, value estimated, pricing discussed,
discovery process, demo scheduled

50% – demo completed (meeting, pre-recorded, webinar or 1:1),
requirement reviewed, decision maker identified

60% – client-reviewing information, verified requirements

75% – selected as vendor, pricing sent

90% – awaiting signed paperwork, verbal commit

95% – received paperwork, submitted to finance for review

100% – received payment

Each organisation may have a slightly more or less complex sales
process.

Step 5: Manage sales performance

High velocity sales organisations have a critical focus on recruiting
suitable reps and managing out any non-top performers. For many sales
organisations this process is seen as predictable and repeatable and it
is a form of an endurance sport – one that you can succeed at if you
follow the process and drive your leads forward.

Sabnis, Chatterjee, Grewal, Lilien (2013) show that as many as 70% of
leads generated by marketing departments falls into what they call the
sales black hole. Sales representatives do not pursue these black hole
leads and this results from competing demands on sales reps’ time. The
proportion of time that sales reps devote to actual work on leads
depends on how well qualified those leads are and the voracity of the
managerial tracking processes (extrinsic motivation), as well as
marketing lead volume (opportunity), and sales rep experience and
performance (ability).

Their research indicate that management processes need to focus on
supporting high performing sales people to manage volume, while pushing
less experienced sales reps to gain more experience faster so that less
leads end up in the black hole.

Step 6: Improve your sales metrics

Most enterprise companies work on a quarterly/semi-annual/annual
reporting cycle whereas high velocity sales companies are more of a
daily/weekly/monthly metrics pace. This is a huge culture change for
most sales organizations but one that can provide sustainable advantage.
One habit of power sales companies is to update sales forecasts
weekly.

To get there you need to understand your sales metrics.

On the most basic level it involves

1. What is the average price of my product?

2. What is the average length of time it takes to close this sale
   (days)?

3. What is my costs over this period?

4. What is my sales targets that need to be achieved to cover costs
   and achieve targeted profit?

5. How many of these do we need to sell?

6. How many new deals is that per month/week?

7. How many deals is that per rep per month?

8. Are we giving discounts and how does this influence the
   target?

9. What is the conversion rate of a rep?

10. What is the target per rep per month? Typical targets of between
    5 x Salary to 50 x Salary (depending on the product) is not
    uncommon.

11. What is the spend that I will put in as a cost per lead to get
    the leads to the rep?

12. Does this include or exclude commissions and how does this
    influence the target?

13. Where are all our deals in the sales process?

14. What deals have we lost and why?

15. What are we doing to fix areas where we have lost deals?

16. What deals are simply in the leads black hole?

17. How busy are reps really?

Once these metrics are designed – you must then start monitoring that
this is what people are actually doing. Creating visibility of targets
is very important and following up aggressively on non-achievement is
the key to sustained sales performance.

In conclusion

A lot of people say that business is about whom you know and not what
you know. Sales people know that it is about how many people you can
speak to and having the tools and process behind you to deliver on your
promises. Being in sales is not just about having “networks”. A person
that claims to have networks that give them business is usually a person
that has poor prospecting skills. Just because you can talk to people
does not mean you can get them to give you business. A sales person
cannot rely on past clients and friends to give them business. Sales is
about getting out there and looking for new avenues to sell products.
Sales people have to hit the streets to get new business. They also have
to knock on the doors of people that work with you competitors to get
your product noticed.

This article shows that sales management is a process that needs to
be actively managed to achieve performance.

Reference:

Sabnis, G, Chatterjee, S, Grewal, R, & Lilien, G 2013, ‘The Sales
Lead Black Hole: On Sales Reps’ Follow-Up of Marketing Leads’, Journal
Of Marketing, 77, 1, pp. 52-67, Business Source Elite, EBSCOhost, viewed
4 May 2013.