Article summary and TOC
- What is a sales pipeline? What is your sales pipeline?
- SMB (small and medium business) and service industry sales management
- 6 ways to effectively monitor, measure, improve and shorten your sales cycle?
What is the SMB and Service Industry Sales Pipeline?
After five years in business at 3V, we can say with absolute certainty the most common problem that we are challenged with for Small and medium sized businesses (SMB’s) and service based businesses is, SALES. The real problem is usually disguised as a marketing problem but in reality, when we take a deep dive with prospective clients the problem is the bottom line. More often than not, the root cause of the problem is an ineffective sales process and not just a problem isolated to marketing.
My schoolroom education and much of my training is in Chemical Engineering. Chemical engineering (or ChemE) simply stated is all about PROCESS. A simplified description of the process; 1) Introducing raw materials (chemicals, catalysts, etc.), 2) Unit operations, transforming raw materials into final products, either directly or through a series of intermediate steps and 3) Transport, transporting materials throughout the unit operations. With a little bit of thinking outside the box, the sales process is IDENTICAL in theory to the chemical engineering process.
Sales Stoichiometry – Raw Materials, By Products and Finished Products
Stoichiometry, the process of balancing a reaction and calculating the total amount of raw materials, by products and final (desired) products in a chemical reaction. Physical and chemical laws dictate that there is a maximum amount of final product for any given amount of raw material. The limitation of final product is a function of reactants (raw materials), environmental conditions (temperature, pressure, etc.) and physical/chemical laws (i.e. excess raw materials, un-reacted raw materials, by products, etc.). The most important thing to remember is that you will NEVER EVER achieve 100% conversion of raw material to finished products.
Sales Stoichiometry works in very much the same way except the raw materials are not chemicals, they are leads! Marketing and sales professionals are responsible for identifying and procuring these raw materials. The raw materials that are introduced into the sales reaction must be accurate or you will not have any reaction at all or worse yet, you will have a catastrophic reaction with unpredictable or volatile results. The raw materials (or leads) must be targeted, relevant and must be under the correct environmental conditions. Much like temperature and pressure for a chemical reaction, seasonal adjustments, economy and other external factors must be considered.
The Sales Kettle and the Transport Process
Drawing another parallel in the sales and chemical engineering processes, we have defined raw materials (reactants) and the desired reaction (final product) but NOW we need to move, or transfer, the final product. The final product can’t just sit idle. In the chemical engineering world the reactions take place in a “kettle”, if the kettle is full of final products (and by products) there is no opportunity to continue making more product and similarly, in the sales process if all the leads sit in the “sales kettle”, there is limited opportunity to move more leads through the process.
Just like the chemical process, the materials must flow through a series of pipelines under the proper conditions (i.e. temperature, pressure, etc.), the sales process of leads must flow through a series of pipelines under the right conditions. To ensure the most efficient process possible, engineers (chemical and sales engineers alike) are constantly looking for ways to;
- Properly size and spec the pipes to move the required amount of material through the process PER UNIT TIME
- Chemical: It’s important to understand PER UNIT TIME here, chemical and sales processes operate under the assumption you are moving [x] amount of material through a process in [y] unit of time.
- Sales: Understanding conversion rates to understand how many leads must be pushed through the system per unit time.
- Decrease resistance through the pipeline or transport medium
- Chemical: Reduce the number of 90 degree turns
- Sales: Reduce the number of decision points and variable in the process
- Move more material through the process to satisfy the demand of the final product
- Chemical: Occasional peaks in demand require a process to be able to scale up or down to satisfy increased demand.
- Sales: Utilize and leverage marketing lead generation process to be able to scale up or down the sales process to meet company demands.
6 Ways to Effectively Monitor, Measure, Improve and Shorten Your Sales Cycle
The first step in monitoring, measuring, improving and shortening your sales cycles is to understand as best you can the current state of your sales process. If you do not understand your raw materials, final products or transport process you are operating a process under unsafe conditions and will have ZERO reliability or confidence in the sales process. Below are six ways to monitor, measure, improve and shorten your sales cycle using chemical and process engineering principles.
1) Analyze and Better Understand Historic Sales Data and Performance – PROBLEM STATEMENT: Each and every client I work with, I make a conscious effort to ask if they are using a CRM (customer relationship management system) or have any structured software or process for managing the sales process. 9 times out of 10, the answer for a small business or service provider is NO, we do not use a CRM or have a process. It is imperative to have a sound understanding of, at the very least, the following data.
- Number of Leads Per Unit Time, i.e. [x] number of leads per month, [y] number of leads per year, etc.
- Lead-to-Conversion Window, what is the average time from lead-to-conversion.
RECOMMENDED SOLUTION: Use a CRM, customer database or even a spreadsheet to capture information about EVERY lead. Important data points to capture are; 1) Date of Lead, 2) Win/Loss and 3) Date of Sale/Sales Conversion. If you can capture this information for old leads and sales, GREAT, if not then start to capture this information ASAP. Within 3-6 months of implementing this simple data capture, you will be able to calculate sales conversion rates and the lead-to-sales time window.
2) Understand the Buying Motives of your Leads and Prospects – PROBLEM STATEMENT: First, can we all be in agreement that not all prospects, leads, customers and clients are created equally? Assuming we all accept the previous statement, it is absolutely imperative to understand the buying motives for each an every lead. Our time is finite and valuable, it is impractical and inefficient to spend countless hours nurturing every lead. The problem is how to identify quality leads, categorize leads into quality-type and create a process to prioritize your time.
RECOMMENDED SOLUTION: Create a simple form (or ask prospect/lead information directly and enter into a spreadsheet) to track and capture lead information at the BEGINNING of the process. In the lead capture process, ask direct and pointed questions relative to your products or service that will help you identify quality leads and categorize those leads into “quality category”. ALWAYS ask the question, “when are you planning on making a purchasing decision?”. Other questions that can help identify quality leads;
- Are you the decision maker? If not, who is the ultimate decision maker?
- Which options describes your buying motives, answer all that apply? 1) Increase revenue, 2) Decrease costs, 3) Save time, 4) Peace of mind, 5) Convenience, 5) Be different. NOTE: in our industry, these options are listed in order of urgency given our historic data, meaning that leads who contact us with a motive of INCREASING REVENUE are more likely to act quickly vs. someone with a motive to DECREASE COST and far more likely to act quickly vs. someone that is simply looking to do something different (i.e. a new website because their existing website is old).
3) Understand the Urgency and Priority of your Leads and Prospects – PROBLEM STATEMENT: The problem here is getting an understanding of; 1) the urgency of why they contacted you in the first place? 2) What problem are you being asked to help solve? 3) What other project or purchasing decisions are related to or pre-requisite to this purchase? A great example of this within our business is a client that agreed to sign on to our social media sales funnel service in late April 2016. They were ready to start the effort the following week however once the following week was upon us, the client made the decision to defer the start of the project until two other projects were complete; 1) video assets from a 3rd party are produced and published AND 2) wait until they finish moving into their new facility. Despite being well aware of these other two projects, no where in our process did we identify that these projects were related or dependent on each other. The risk of this project is we are in an eternal delay to get our project started based upon setbacks in other projects.
RECOMMENDED SOLUTION: Mitigate this risk by implementing additional questions into your intake form. Be direct and ask questions; 1) What other projects do you have that could impact your purchasing decision and/or require adjustments to your schedule? Be VERY cautious of seasonal changes to supply and demand in the client industry, i.e. if an HVAC (heating and cooling) prospect/lead calls you in early-mid May for a quote, that industry is right at the border of getting into a business season and you better act fast or risk losing the opportunity all together.
4) Ask the Right Questions – PROBLEM STATEMENT: At first glance, this point may see like we are reiterating what was already said in points 2 and 3. To some extent they are however this point we will focus more on YOUR goods or services vs. the demands and the requirements the prospect or lead. The problem or challenge here is to ask questions to make sure your product(s) or service(s) are a fit for the actual request. There is no worse of a feeling in sales than investing a lot of time into an opportunity only to lose out to a competitor because your product/service only partially meets the needs and requirements. A great case study and example in our world was a potential project we submitted a proposal for in 2014 for logistics company, we pitched our service offering of; Web Design, SEO and Social Media Marketing without mention of Email Marketing. Ultimately we lost out because it was not communicated in the requirements the need for email marketing. Our competitor won the project because their service offering natively packaged email marketing. Had we asked the question or knew of the requirements, we certainly would have included it!
RECOMMENDED SOLUTION: Experience trumps all for this recommendation. You and only you know your capabilities and demands of your clients. The recommended solution for this problem is making sure that you probe your leads and prospects for information or needs that may not be part of the project at a high level but could be a make-or-break decision component in the process. Some typical questions we have learned to ask;
- Would you be interested in a payment plan or credit?
- Would you be interested in an expedited project plan? For an additional fee, we can deliver your product and service in 2-3 weeks vs. 4-5 weeks.
- Are you interested in on-going managed website or social media marketing services? We do offer those services as needed.
5) Prioritize and Balance Your Time – PROBLEM STATEMENT: As mentioned above, not all prospects, leads, customers and clients are created equal. There is only 24 hours in a day and (for some people) only 8 hours in a work day. Allocating your time to tasks that provide the largest return is one of the most undervalued skills in salesmanship. The problem here is how to prioritize and balance your time such that all leads and prospects are getting the attention they deserve while “quality leads” or “hot leads” are ensured to receive a higher level of focus.
RECOMMENDED SOLUTION: Obviously, cherry picking where, how and with who you dedicate your time is a slippery slope but there is a reality to this recommended that, if ignored, you can risk spending too much time with a client that is not paying for your time or not enough time with a client that is paying a premium for your time. Both of these scenarios are risks that MUST be mitigated. Our recommendation here is back to the CRM or spreadsheet solution with one additional twist. The twist is a simple one; 1) For all leads, set a minimum amount of time in between “touches” or communication, i.e. every 2 weeks; 2) For “quality leads” or “hot leads”, set an amount of time between touches or communication that best fits the person and opportunity, whether it’s daily or weekly, whatever it is make certain that the person understands THEY ARE A PRIORITY IN YOUR BUSINESS.
6) Implementing your 30 Second Sales Commercial – PROBLEM STATEMENT: A frequent conversation and challenge with our potential clients (and existing clients) is increasing the quality of leads. One other conversation that really frustrates me is when a business owner approaches me and claims they are being shopped around. This frustrates me because if you are a business owner or salesperson and you have not learned by now that people shop around before making a purchasing decision, you really should not be in business. The problem here is how to (as best you can) avoid low quality leads or people with less intent on purchasing?
RECOMMENDED SOLUTION: Okay, I will be frank in this conversation. In my world, a phone call from someone with a lesser intent (or no intent) on purchasing is NOT A BAD THING. Any opportunity to meet and make an impression on any consumer in my world is an opportunity. First of all, you never know when someone with less purchasing intent will have a current or future purchasing decision to make and secondly, you never know the complete network of connections that person may have. With all that said, I do understand the frustration from “window shoppers”. My recommendation here is simple; Make sure your literature, sales pitch, website and social media clearly speak to the following;
- What products and services do you offer?
- What value does your products or services offer?
- What differentiates your products and services from competitors?
Generally speaking, your 30 second sales commercial (otherwise known as elevator pitch), should speak clearly speak to your capabilities, value and why people should do business with you. It’s generally accepted that price or cost should not enter the conversation at this point BUT a crisp clear call-to-action should be included. Here is a sample of my current 30 second sales commercial.
Do you struggle with identifying new opportunities and maximizing your sales and marketing exposure among your target consumers? Hello, I am Michael Lucy of 3V Business Solutions. 3V is a digital sales and marketing service provider with a proven history of enhancing lead generation and digital sales capabilities of SMB’s and local service providers. Our unique strategy includes an integrated web, internet, search and social media lead generation process with a focus on ROI and your bottom line vs. traditional marketing success metrics and reporting. Are you ready to learn how to capture more leads and revenue, save on costly digital marketing and sales initiatives and allocate more of your time to growing your business? Call today, 717.420.0972, to learn more about how 3V can give you the peace of mind knowing your digital marketing, advertising and sales investments are being spent with ROI, return-on-investment, as the primary focus.