Where to Focus your Scarce Resources - 2

Important: What follows are a number of possibilities to work on. Several of them may be attractive directions to take. However do not try to do several at the same time - it will take much longer to get results since your scarce resources would be forced to multitask and thus lose effectiveness.

Is Sales and Marketing or the Market your Limiting Factor? (1)

Could sales and marketing (or the market is not buying enough to fill your operation’s capacity) be blocking more profit and higher profitability? If management and especially operations are pressuring the sales and marketing organisation for more sales and work then it is likely that a lack of demand is hurting profits and profitability. The sales and marketing organisation is your constraint or limiting factor.

Assume your products are about equal to those of all of your competitors. If this is the case (in many markets this is the case) you need to decide how best to exploit your sales forces capacity. Things to think about include:

• A sales person’s responsibility is to sell as much of the available time as possible. Ideally he is in front of his client 100% of the time. Recent studies show that the actual number is around 30% of a sales person’s time is at the customer. How can you change the organisation and sales process so that 30% becomes 40%, then 50% then even more? An increase from 30 to 40% is a 33% increase and implies a 33% increase in opportunities and sales (assuming your sales people do not stay unnecessarily long at clients – simply boring them).
  
  What is just a 10% increase in sales worth? Based on the table below such a suggested effort is very worthwhile.

 

 

 

 

 

 

 

             How much of their time do your sales people actually spend selling at their clients?

 

 

 

 

• Your sales people are well trained in the art of selling – that beginning a sales appointment by talking about the product is not the way they start. Your sales people start sales appointments by seeking to understand the client’s problems and their consequences (the damage or cost of the problems). Your sales people understand the features and benefits (in relation to their clients) very well and are in a position to help the client (whatever his function) to think about his issues in new ways. The relationship your sales people have with their clients is one of causing the client to reframe how he thinks about his business; is one in which the salesman speaks in relation to the clients business. Your sales person brings value to the client – through his knowledge, expertise and business insights he has.
  
  How do your clients perceive your sales people? Are they seen as simple order takers and information conduits or real partners with the customers’ managers?

 

 

 

 

• Not only do you want many client appointments; you want to focus on those potential clients with the greatest opportunity – in terms of sales and the chance of making the sale. Sales and marketing need to focus efforts on opportunities with which the chances for success are the greatest. A current hit rate of 10% means a sales person must work on 10 opportunities to make one sale. Through proper focus our “hit-rate” should increase significantly – with a constant number of customer appointments and a 50% increase in your hit rate sales will increase accordingly.
  
  How good is your hit rate today? If we don’t already measure it, how should we measure hit-rate?

 

 

 

• Your sales funnel is the sales process that transforms potential clients into new (and hopefully lasting) business. There can be quite a number of steps in the funnel before a client actually buys. Along the way your sales organisation will potential clients that have decided, for one reason or another, that your competition is the better option. Where you lose the majority of potential clients should be your focal point in this process – why do we lose potential business at this point (and consequently waste our expensive and scarce sales resources time)?
   
  The process of the sales funnel usually involves more than just the sales organisation. Potential clients evaluate your performance in terms of responsiveness, reliability, speed, quality and, of course, price. If the rest of your organisation is slow to respond (qualification orders are often small and costly) then your hit rate and business growth will suffer. All of your company and not just sales are equally responsible for ensuring growth.
  
  Do you know where in your sales funnel new business is lost? Do you no why this business is lost? What are you doing about it? How well are you managing your sales funnel?

 

 

 

 

More to come!!!!