3 Leading Indicators That Drive Sales

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Purchasing in the business–to–business environment has changed in the last few years.  Buyers are more critical, more informed, and more careful with their spends. Their focused budgets have eroded sales, which has caused sales organizations to become hyper vigilant on lagging indicators like revenue, sales-to-quota, and close ratios as a measure of success. However, lagging indicators only allow for post–mortem analysis. 

Conversely, leading indicators allow for course correction before targets are missed. Here are three leading indicators that can help you reach your revenue goals. 

  1. Opportunity Pipeline Value – This is a good, early quantitative indicator.  This ratio should mirror your close ratio.  Do you close 1 out of every 3 opportunities?  Then you need 3 times the dollar amount in qualified opportunities to make your annual quota plan.  
  2. Meeting Summary – This is the best qualitative measure I know. A meeting summary is a written communication between buyer and seller. When this is a customer-facing document, then important analysis can happen. Managers can see whether this is a qualified opportunity or not and if the sales person is spending the appropriate amount of time to move the sale along. Also, sales people tend not to exaggerate the size of the opportunity when it is discussed and reflected back to the customer, which makes the pipeline totals more accurate.   
  3. Implementation Plan – This is another auditable, qualitative checkpoint. A clearly communicated plan between buyer and seller, crafted while the opportunity is still being developed, shows commitment on both sides. First of all, it’s auditable. A manager can look at the plan and offer steps that have been missed and strategies to ensure closing. Also, the probability to close increases to 80% when the customer is involved with an implementation plan, thus making the opportunity pipeline numbers more reliable and concrete. 

Above all leading indicators, it is the auditable documents that track the communication between buyer and seller that provide the most accurate lens for the “crystal ball” that we call sales forecasting.  Let us help your organization create auditable documents and an improved focus on leading indicators.   

 

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5 Surprising Ways the Sales Process Drives Revenue

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There’s no set formula or silver bullet for sales success. If there were, sales would be a lot easier! But neither should sales be attempted in a haphazard manner. A set sales process can help to shorten sales cycles and improve productivity, while also giving managers insight into their salespeople’s performance.  

A sales process does more than help salespeople work leads through the buying cycle, however. It helps sales managers make informed decisions too. Specifically, here are five ways a manager can use the sales process to generate revenue more effectively: 

  1. Use objective criteria. Once defined, a sales process provides objective criteria and the framework to make decisions. Say a sales group is underperforming. What numbers or facts are available through the lens of the sales process to pinpoint the problem? From the pipeline or opportunity review standpoint, there are specific data points you can rely on for analysis. Is it in the types of clients they are calling on? Are your sellers getting stuck in prolonged evaluations that never yield a decision? Or is it in the close ratio? It doesn’t matter where the problem is. What matters is that you are able to look at each problem objectively with certain criteria and then correct the course. 
  2. Allocate human and technological resources. How much should you spend to hire and train people? Or how much should be invested in CRM or other sophisticated software tailored to your business? As you pinpoint where bottlenecks exist, the lens you look through will help to determine whether you need people or technology to improve.  
  3. Spot the need for sales training. On the front end of the process, many solid lead generation services exist to help identify qualified opportunities. Usually the challenges that happen toward the end of the selling process stem from the skills of the seller—or lack thereof. With a sales process in place, you can identify weaknesses in your sales team’s skills. Is the problem how they qualify an opportunity and create value on the solution? Do they struggle to effectively negotiate and close? Once you’ve realized the weak areas, you can provide training to overcome them.  
  4. Increase visibility into new areas for growth. This may be viewed as a decision based on gut feel and economic trends, but hard data is needed as well. A sales process delivers the hard data you need about what types of customers are attracted to your product (prospect profile) and why they are attracted (which capabilities and related value). If this data is not captured in a consistent way, then the top management loses connectivity and an ability to analyze trends with proper perspective—leading to poor and costly decisions. 
  5. Lose quickly. This is not a popular topic, but it’s a reality: There are two winners in sales, the vendor who gets the business and the vendor who withdraws quickest from the competition. When you have the necessary insight, you’ll know when to withdraw and get your sales team focused elsewhere. 

This is only a partial list, but it demonstrates that a sales process does more than guide your salespeople to closing. It helps drive revenue in a number of key ways! 

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Wrap Up of Sales Kickoff (SKO) Meetings Season: It’s Time to Execute!

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We just concluded the fourth of four SKO meetings with our customers over a five-week period, and we ready for a nap. The cities included Sedona, AZ, Tampa, FL, Cleveland (Aurora), OH and Kingsport, TN. How much knowledge, excitement, reflection, presentations, awards, conversation, redundancy, partying and planning can be packed into a 3- or 4-day session? Well, it turns out that A LOT is the answer. 

There was your regular run of the mill events at each of the four, but also tremendous highlights as it pertains to new team members, capital infusions, product launches and laser like focus on customers and emerging markets.  Our part was to contribute to the continual learning for the Sales teams, and other individuals in customer facing roles. While all companies embraced their own “theme” for the meeting, we intertwined and reinforced the fundamentals on the tactical execution of sales success as it relates to our customers’ commercial strategy.  

Many of our competitors are working on the next, new shiny object in selling; not us. In the sales training business, some are looking to offer the silver bullet, or latest trend on what can appear to be a fashion industry-like approach. The leaders of the companies we work for are focused on executing the basics well, then taking it to the next level. But we have to get the fundamentals right, and we help them to do that in all skill set capacities.  

To the teams we recently trained: now that you’ve let all that information you received at your SKO settle in, and got back into your regular routine, pick up your Sales Tool Kit, review the on-line modules of your sales process and get ready to have better conversations with customers and prospects. And Managers, it is your job to make sure your sellers are improving their selling skills, one opportunity at a time. Let’s get going! 

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MANAGING SELLING EXPENSE

salesIn the song “Cheaper to Keep Her”, the words spell out the trials and tribulations of whether to stay in a bad relationship or make the painful decision to cut ties.

Companies are always looking for a big finish; then the analysis begins.  The bottom line seems to get all the attention.  Did we make more money than we did last year?  Every expense gets the once over.  And the biggest expense in selling is walking around on two legs: the sales force.  The compensation, training, travel and entertainment and benefits all add up to the overall expense.  How can companies rationalize the investment in sales people?  When do Managers make the decision to stick with an average contributor, or move them out of the organization?

The three quantitative measurements in relation to expenses that Management needs to look at are total revenue produced, margin on sales, and the mix of products sold.  There are also important qualitative measurements that should be considered, and they will be addressed in the next article.

1.  Revenue Production:  The most common quantitative analysis done on sales people is at the macro level; did they hit their revenue number for the year?  The challenge is that some of the sellers who drive revenue have huge salaries and some do not.   In sports, the salary (expense) does not necessarily correlate to how well the athlete performs.  In business, the total expense associated with the revenue production must make sense.

2. Margin: A week after Q4 ends, most management teams can see what the net effect of last minute discounting when the reps buckle to pressure to close year end business. The exercise to protect margins should be built into a coaching formula that includes opportunity review. Once this is embedded, the mechanism should allow managers to know the profit that reps can obtain in closing situations.

3.  Product (and Service) Mix: Product mix will show if the sales person is selling the right products to the correct customers.  Let’s say a sales person consistently sells low on a medical device but the consumables for the device are sold at full price.  It will take twice the volume in consumables to make up for a discounted sale of the device.  These numbers tell a story and will point dramatically to drags to the bottom line.

After watching Moneyball,   the movie that documented the notion that winning in baseball boils down to how many players get on base during a game, you would think there is a scientific formula that could provide the answers to controlling selling expenses.  The good news is, for our customers that mechanism is in place.

Once fully implemented, a well created sales process can provide managers with a lens to look at these, and the related qualitative measurements, to determine if they should invest more time in developing sales people. In this capacity, “Cheaper to Keep Her” means continuously developing the skills with the seller to bring their performance up to speed in relation to the 3 areas mentioned above. Otherwise, it may be time to part ways with that employee, and begin the arduous task of replacing them with new talent.

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3 Tactics Top Sellers Use to Sell Value

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One definition of selling is “the ability to move others to exchange what they have for what we have “(Dan Pink, To Sell is Human).  A seller can help to facilitate that exchange in ways that are based on value and not just around the product he sells.  When a client engages me to help their sales staff, I ask to interview their top performers.    My purpose is to decode their selling DNA and identify the markers that make them so successful.    These people help others to meet their objectives by selling business value.  There are 3 tactics these top sellers employ:

  1. Get to the cost of the problem today.  Buyers will face any number of problems.  Great sales people help buyers define in totality all the costs those problems bring.  The cost may be non-monetary like low morale or frustration, but costs that strike the bottom line are numbers that are heard by every person involved in making the buying decision.   We worked with a company whose industry is becoming saturated with competitive products, driving down the prices.  When you are the high priced product in the market place it seems every buyer asks about prices first.   Great sellers can shape and frame conversations around the costs of buyer’s problems, not on the price of their solution.   These early conversations around costs helped them sell more and maintain margins in the end.
  2. Tell stories. Stories help the buyers discover for themselves the problems they are facing or the solutions that are needed.  Great sales people have several stories, personal experiences that they share depending on the situation or desired outcome.  They share stories when the conversation lulls and the buyer is unable to articulate problems.  Stories have purpose and you begin them by framing who they are about, their problem, a turning point and a resolution.  We worked with sales people from an internet company who were experiencing problems with buyers who were unable to articulate clearly the problems they were facing.  Sales people began sharing what other buyers in their industry have problems with.   They found that by opening up and sharing some successes and failures of peers that it gave voice to the buyers and they were able to begin sharing.  Stories not only get to problems, they can be used to describe how others use and derive business value from your products.  Stories help people understand.  Great sales people use them and use them in many ways.
  3.  Summarize the conversation in writing. This is a point that all sellers will tell me that they do, but few do it well.  I sell my services to many companies in different industries.  I am constantly referring to the emails I’ve written as follow up after our conversations.  These emails summarize the problems they are facing the costs these problems are causing, the solutions we discussed and value of those solutions, and, of course, the next steps as discussed.  This helps the customer and me keep the focus on the problems we are trying to solve.  Great sales people don’t rely on memory they simplify, write it down, share it with the customer, and allow the customer to give feedback.

These are three techniques that great sales people practice that help them sell on the business value their products will bring.

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On Cycles: In Life, Sales and At The Zoo

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On a recent field trip to the San Diego Zoo with my daughter Hannah (on my knee in the photo), the students, parent-chaperones and teachers went through an introductory one hour interactive session called the “Life Cycles Program”. We were all entertained by a great speaker who took us through the Four Steps in the Life Cycle ( birth, growth, maturity and decline), and the children were then allowed to pet a blue skink lizard that was shedding his skin as part of the phase 2 growth step that he was going through.

Shortly after this, we went on with our excursion through the magnificent park, and happened upon one of the displays where the giraffes live. Several of the zoo employees were corralling us to the side to let us know that an amazing event was unfolding: a mother giraffe was in the midst of giving birth to her calf! Alas, the first step of the Life Cycle was upon us. We were all excited, and asked to keep as quiet as possible as to not disturb this process (good luck on that with a group of 36 eight year olds!).

Cycles are also prevalent in business. There’s the product cycle, the sales cycle, buying cycle, etc. One of the most rewarding components in my career is watching a sales person, Manager, VP of Sales or Executive “get it” when I am bringing a new perspective to them and their team. With the “birth” of a new idea, many see an enhanced way of representing their organization to prospects and existing customers, and the results do follow.  And the primary vantage point that we strive to help our customers to adopt is one from the perspective of their customers. It is not, and never has been about the seller and/or his product, service or organization. It is about the customer, and if you do not understand what motivates them to want to use what you are selling, very little will ultimately happen.

We discuss the importance of matching your sales process with your customer’s buying cycle, as many leaders of Sales organizations confuse the term sales cycle with the important steps they go through during opportunity development. Be careful; it’s not about you as mentioned above! It is important to take the step back and identify if your customer or prospect is in the Solution Development, Evaluation or Commitment phase of their buying cycle. Only then can you determine how to match up your sales process to facilitate the buying process.

The skink sheds his skin as a natural part of its growth phase. How have you and your sales team adapted to the ever changing landscape between buyers and sellers? Mother Nature will move us along in the Life Cycle, whether we like it or not. Be sure to make sure that your buyer’s cycle is one that you are a part of, not one that you are on the outside looking in. Oh, and yes, the mother giraffe gave birth to a healthy calf, and both are doing well. Some of the questions by the 2nd graders on the bus ride back to school still have me perplexed, but that’s alright.

Flannery Sales Systems – We help you drive revenue through sales process.

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