Startup 101: The importance of knowing your sales process
I had an interesting day a little while ago. I spoke with three different friends and all of the conversations ended up going into the sales process that they use for their individual companies. I found this interesting in that each had fundamentally different businesses: a high tech SaaS based product, a service provided to attorneys and a personalized consumer product business. Yet in each case none of them really had a sale process defined and that ended up becoming the topic of discussion. Two of the businesses were just getting started and one was already pretty mature but didn't really have a formal sales process in place.
Regardless of the type of business you have I think it's really important to understand in a reproducible way how to sell your product or service. This becomes critical if you have any desire to grow your company by adding sales staff, large numbers of customers or different channels. Because I'm really an engineer more than anything else I look at the sales process as an old fashioned flow chart: at one end is a raw lead and at the other is either a paying customer or someone that you may get to become a customer in the future. In between are the various decision points and attributes that must be collected in order to move that lead into the next stage.
By breaking down the sales process into stages you can begin to understand what it will take to move prospects through those stages. What is preventing them from moving forward? How many prospects can you expect to see go from one stage to the next? This is where the ability to capture the data in a consistent way becomes critical. If you are regularly capturing what happens to your leads at each stage of sales process you can begin to see trends and start really forecasting your sales efforts. You can see which of your sales activities is paying off and which doesn't have the impact you think it should.
If you own a small business that depends on more than a handful of customers coming in the door every month you owe it to yourself to set up a well documented and managed sales process. There are lots of books and articles on how to do this but my view is very basic and can be distilled down to four pointers:
- Keep it simple! You know your business - break down why you are successful selling your product or service today, create some metrics so you can measure it and then experiment. Each of your steps in the sales process should have a measurable outcome that can be recorded.
- Document it! You need to put pen to paper (or bits to disk) and keep track of your sales process. It's a living document that should always be current and becomes the fundamental guide for your sales people as your company grows.
- Track your metrics! It's hard to know what to do next if you don't have a stable base to draw from. Compile data regularly and consistently on your sales. Over time you will begin to see trends that may have not been obvious. At a minimum the data will present you with confirmation about your gut feel on why you are successful or not selling.
- Be patient! If you want to improve you need to see the impact your changes are causing. Don't jump to conclusions because a change you made isn't having the immediate impact you think it should be having. Continue to monitor your metrics and adjust things at a reasonable pace. This may feel like it runs counter to popular thinking that decisions should be made based on gut instinct and in the blink of an eye.
I'm not a sales expert - I'm an entrepreneur. I have always tried to keep everything as simple as possible and the advice I'm providing is about as simple as it gets. If you're not using a well defined sales process now, at a minimum following the steps I have outlined above will give you a great start in getting it under control.
I'll share with you the model that best worked for us (and we tried many): We tied key incentives and paired up our sales people together - a sales pro and a person we called a "groomer". We paid the sales pro a higher base to offset the commission loss that came from them spending time to help their apprentice.
My feeling is the process is more important than any one sales person and here's why: You take those top performing sales people, the ones that far exceed what others are doing, yet no one else seems to be able to repeat that, and think about what happens when they decide to leave one day. You have a giant hole in your revenue that cannot easily be filled.
It's hard to balance the short term need for sales with the long term need for growth. If you can get your sales team, especially your top sales people, to buy in then it becomes a lot easier.