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Under the Moonlight |
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Welcome to SMe-news, monthly articles by experts giving you advice to help make a success of your business. The challenges of maintaining that early business growth As we all know, businesses rarely stand still, so the priority is to focus on sustainable growth. Therein lies the challenge for many companies in the early years of their existence. With success comes greater demand on everyone’s time. This can affect every facet of the business but it is often most evident in one of the pre-requisites for continued growth – business development. In the start-up phase this role is often the task of the MD / owner. As the business grows, however, he / she is increasingly distracted by all the other tasks that go with running a successful business. So paradoxically, just when more effort is required, less time is available for this key task. So you’ve reached the point at which you need to add additional sales capacity. Let’s assume you are clear about your value proposition to your prospective clients, i.e. the value of your products or services to prospective clients, why they would buy from you and what differentiates you from your competition, together with an understanding of what a good prospect looks like. After all, at the very least, you will have to articulate all of this to whomever you choose to sell on your behalf. Let’s also assume that you understand and are happy with your channel strategy, i.e. the way in which you put your products and services in front of prospects and convert them into clients. You may well be using or be considering using several different approaches to discrete and identifiable market segments. For instance, is a direct or indirect sales model better? (In this context, direct covers those situations where the contract is signed between you and the prospective client; indirect is where the contract is between a third-party and the end client.) For instance, if your products or services are high-value, with a limited number of prospective clients, you may wish to continue selling directly to your client base. It may be that you offer a niche solution that fits well with the offerings of one or more larger organisations that already have strong relationships in certain segments of your potential market. In this instance, it makes sense to investigate how you might work with them. Alternatively, it may be that what you are selling is highly commoditised, lending itself to selling via the web. Also, could you extend your prospective market significantly by identifying and using resellers with good contacts? The Traditional Approach The traditional approach has been to recruit one or more in-house sales specialists. Whilst this gives clear control over the sales activity and customer relationships, this also often brings significant management headaches with it. First of all the recruitment process, whatever the role, is a time-consuming and lengthy process. Recruitment costs can be up to 30% of the annual salary package, plus other up-front costs including equipment and company car. Apart from the costs involved, recruitment, in general, is seen as difficult by small businesses, with sales recruitment widely regarded as the most difficult. The impact of recruiting the wrong person into any role is damaging, even more so for a small business, which is why it takes time. The challenge with sales is the possibility of losing customers and destroying reputations. Having found the right candidate(s), effort needs to be expended to ensure that they understand what is expected from them and that they feel part of the team. They will then need to be managed to make sure that they understand your proposition(s) and approach. You will also need to decide how you are going to keep track of prospects, their stage in the sales cycle, any customisation needed and what needs to be done to move each opportunity forward – clients buy a solution to their problems and the business must be comfortable that the agreed solution is deliverable before taking their order, for instance. Finally, don’t forget to ensure that their knowledge, experience and skills are kept up to speed. Oh, and by the way, you now have the challenge of retaining them and maintaining their motivation! The bad news is that all this takes up more of your precious time! Alternatives In addition to the traditional approach of recruiting your own sales specialists there are a number of increasingly popular alternatives that look to take some of the cost, risk and uncertainty away by outsourcing some or all of the sales function. Buying in expertise can be an extremely cost-effective means of quickly increasing your sales effort as it can be set up on a full or part-time basis without the need to commit to a long-term relationship at the outset. Choosing the right partner(s) will take away many of the day-to-day management headaches. Let’s look at the major steps in the sales process to examine alternatives to the traditional ‘do-it-all in-house’ approach. These are:
Taking each of them in turn: Lead generation / Prospecting The first step is identifying potential prospects. Based upon your perception of what makes a good prospect, you need to identify a group of target accounts and decide the best way to approach them. This can be done in a number of ways and many organisations employ specialists who have experience in this vital area. They are well versed in the arts of engaging prospective clients in a dialogue with the key objective of organising meetings with them. If you do consider such an approach ensure, however, that the specialist provider is incentivised to focus on delivering quality rather than quantity. After all, what’s the point of going along to a series of sales calls simply to discover that the prospect has no interest in your products or services? If this ultimately comes down to cold calling, this requires specific skills and finding people who are comfortable doing this on a regular basis is difficult; many extremely good sales people hate this aspect of the role and will look for all sorts of reasons to avoid it. However, provided you are prepared to work closely with a good telesales specialist, results can be very good, although don’t expect miracles – 1-2 qualified leads per 100 calls is often seen as a reasonable return from a well-briefed and experienced telesales operation. It may also be useful to identify a number of third parties, such as independent consultants who may well come across good prospects for your products or services if you can find a way of incentivising them sufficiently for providing you with leads. Qualifying Having generated a number of leads someone the next step is to re-establish contact to qualify the opportunity further. This is about gaining an understanding of the prospect’s issues and how your product or service can address that situation. (Given the cost of acquiring new clients, having gained access to a prospective client it is normally well worth working hard to find something that they need that you can supply. After all, having converted a prospect into a client gives you the chance to demonstrate your ability to deliver a good service and to develop a relationship that allows you to extend the range of products and services that you supply.) Again, there are organisations that specialise, as we do, in providing professional sales resource and who have the experience to explore the potential opportunity and recognise how to maximise the value of that opportunity to the benefit of both the client and the company they are representing. They can be used to either increase your sales capacity on a short or long term basis. Bidding & Proposing Most sales situations will, at some stage, require the creation of a proposal that lays out your understanding of the requirement, how your product or service addresses that requirement and what differentiates your offering from your competitors. Again, understanding how to position your offering in the best possible light takes experience, particularly where the potential client is in the Public Sector where there is a regimented bidding process to be followed. Negotiating & Closing Having gained the client’s commitment to your solution through your proposal, the next phase is negotiating the details of the contract to reach a mutually acceptable conclusion, resulting in a contract signed by all parties. Time to celebrate! As you will be aware from your experience to date, this is a minefield and can have a significant impact on not only the profitability of the contract but also your opportunity to forge a much stronger relationship with your new client. To maximise the benefit you must plan carefully for this phase, particularly if your product or service is a high value bespoke solution. As before, having access to highly skilled and experienced negotiators can make a significant difference to the profitability of your business. Order fulfilment The sales specialist will normally stay involved with an order until it has been delivered. After all, who best understands the client’s requirement and the commitments agreed through the sales process? Again, using a specialist from outside your organisation allows you to benefit from their expertise in a range of scenarios and they can often spot potential problems before they arise. Account management It is a commonly held belief that the cost of winning business from a new client can be as much as five times the cost of obtaining further orders from an existing client, so having done the hard work of winning a new client, it makes sense to ensure that clients are happy with the service they receive and that contact is maintained on a regular basis. They’re also one of the best sources of new leads. Let me, at this point, pose a question – why is it that so many people say they value the sales function and then insist that the only way they would be prepared to pay a third party to sell on their behalf is on a commission-only basis? Which other role would be motivated by receiving their income in this manner? Now I recognise that many people thinking of using third parties to increase their sales capacity immediately look for a commission-only arrangement as a way of reducing the risk of paying something for nothing and of creating an environment whereby the sales channel is focused on results. Let’s look at this from the sales professional’s point of view for one moment. Given that their business is selling, they above anyone else will recognise the cost and effort of winning a new client. So having just convinced you that they can help you to increase the profitability of your business, what sense is there in them simply taking the money and not making every effort to deliver the required result? As we all know, bad news travels very fast. At the very least, they will want to use you as a reference, at some point in time. Ideally, they will be looking to obtain repeat business from you. Looking at this from another angle, working on a commission-only basis gives you very little control over your sales order pipeline. After all, the sales professional is unlikely to be prepared to work solely for you on this basis and will look for the easiest possible sale in each instance. So unless your product is of immediate and obvious value to his contacts whilst offering, what the sales specialist sees as a good return, they are unlikely to spend too much time trying to uncover and develop business opportunities on your behalf. In summary, there are a wide variety of ways in which a small business can increase its sales capacity and there is no one-size-fits-all solution, but I would recommend that everyone examines the relative merits of both buying in expertise, possibly on a part-time basis, and employing your own sales staff. Stewart Benger |
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Next Article TBC |
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Past Articles Getting return on investment from your marketing Sales Promotion - A cutting edge marketing tool The Direct Marketing The 3 D's of the successful startup |
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All contents © 2007 Moonlighting (UK) Limited. All rights reserved. Technical Problems contact enquiries@e-Moonlighting.co.uk |
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