The Sales Process (part 1)

Do you want to close more sales? How about improve your sales forecasts? Have a better handle on you sales force’s productivity?

I can’t think of too many companies that would answer “no” to these questions. One of the simplest ways to move the needle on sales for your business is to implement an effective sales process. There is a lot of information on the web about designing sales incentives and how to sell, but there is a surprising lack of information on how to design and manage the process.

The basic sales process is really quite simple. The goal is to transform your company’s leads into paying customers. However this is not a one-step process. Have you heard the adage that the average sale requires ten contacts with a customer? On the journey from lead to customer there are a number of steps that you and your customers most go through. The key to being successful is to define, measure, and continuously improve these steps.

Let’s first define the 3 basic objects in the sales process:

1. Leads are potential customers (and their contact information) that you don’t know much about and don’t have a relationship with. Leads can come from business cards dropped off at a trade show, people who signed up for a demo on your website, of even listings in a phone book.
2. Opportunities are the sales deals that have not yet closed, i.e. the opportunities that you company has to make a sale. Opportunities are the core piece of the sales process.
3. Sales – you know what sales are!

At the highest level, the sales process consists of the following steps:

1. Generate Leads: Find potential customers. Leads can be generated in any number of way. Common examples are incoming sales queries (via phone or internet), contacts made at trade shows, or purchased lists of companies.
2. Qualifying Leads: Many leads aren’t potential customers for your business. They might be outside of the geography that you serve, the wrong type of company (if you only sell to a certain industry for example), or unwilling to speak with your firm. Because of this you must determine which leads are genuine opportunities to sell your service, and which should be ignored. A qualifieds leads is an opportunity.
3. Selling: This is where the rubber meets the road! Your sales agents explain the value of your service to prospective customers (i.e. opportunities), and convince them to purchase something. The most important thing to understand about this step is that it actually consists of many smaller steps. These might include finding the decision maker, explaining your offering, quoting services, or negotiating price.

If you don’t already think about and manage these three steps separately, start doing so. If your entire team is performing each step, then you need to determine how they allocate their team between each step. For larger teams, you may have different people perform each step.

Mathematically speaking, the number of sales your company makes will be:

# Leads contacted  x % Leads Qualified  x % Opportunities that Purchase  x Average Sale Amount  = Total Sales

Now that we’ve broken down the top level process, we can start to improve it. Start measuring each component in the equation above. Use your best managerial skills to figure out how you can improve them. Measuring these will also help you  with your forecasting.

In my next post I’ll go into the details of tracking your selling opportunities. Stay tuned.