« The Outsourcing Business - Is It Right For You? |
Main
| Taking Hoops Out of the Buying Process »
January 25, 2005
The Bottom Line in Growing Top Line
by Sridhar Ramanathan
My enterprise software clients often complain about how brutal this economy is for closing deals, or why the sales process is torturously more difficult these days. The list of selling challenges grows longer ever day—decision-makers who really aren't, risk aversion causing paralysis, too many vendors chasing too few prospects, merger/acquisition activity has people focused on job preservation not ROI for the business, etc. There's one immutable reality in sales. Sales is a veritable "funnel." The more you put in, the more you get out. Even a small improvement in some key ratios will make a direct, immediate impact on sales. Let's look at three parameters in particular:
More qualified leads: I just completed a project with a web services company where we generated an additional one hundred inquiries (or unqualified leads) per week. If only 2% convert that produces an additional 8-10 sales opportunities per month. Couple this with more inside sales activities to drive leads and you can use the numbers game to increase sales. Get your Marketing focused on Sales rather than branding.
Pursue fewer, better deals: What's better – pursuing ten deals and closing two or pursuing eight deals and closing two? Either way you get two deals but the second assumes a 25% close rate versus 20%, which is really a 20% improvement in the win ratio. Seasoned sales managers know that it's qualify, qualify, and qualify. Why? Because you'd rather have more energy behind deals that will likely close than fall out of the funnel. Obvious truth but not many sales managers really manage this ratio.
Shave cycle time: Most sales managers will agree that the average sales cycle has grown by 20% or more in the last year. Why? The reasons cited are above. But I encourage my clients to delve deeper into the root causes. Are proofs-of-concepts taking longer? Are sales reps selling too low? Are you trying to sell an intergalactic, corporate solution versus land/expand in a business unit? Is the ROI not compelling enough? I've found in my practice that the troublesome spots tend to be: insufficient work upfront to establish the ROI, poor executive sponsorship/interest, and pursuing the wrong deals. Whatever the reason, do the homework. It's worth it.
You might already be executing these process improvements. But I challenge you to ask your Sales VP two questions to satisfy yourself that your team is doing the right things to drive top line growth: 1) what ratios do you monitor, and 2) what are you doing to improve these ratios? I promise you that if you ask your Sales VP this on a monthly basis, you'll see top line growth in one quarter.
Posted January 25, 2005 | Permalink
Posted to Leadership
, Marketing Management
, Sales Effectiveness
