Does your business go through feast or famine when it comes to sales? If the answer is yes, you're not alone. Many businesses are vulnerable to dramatic swings in sales. Yet often simple changes to the way they manage their sales can reduce or even solve the problem.
"From the time you generate a lead to the moment you close your sale, you have to be rigorous about your sales processes," says Nigel Robertson, BDC's regional training coordinator for Ontario. He shares some pointers on how entrepreneurs can drive more consistent sales.
Be systematic about generating leads
The first step is to ensure that your company systematically generates sufficient leads to keep enough business in the pipeline. "You need to have specific targets for how many prospects should be in the funnel at any given time," Robertson explains. "Too many entrepreneurs get caught up in daily firefighting and ignore the fact that they have to think about where business is coming from down the road."
Much of this is a question of efficient time management, according to Robertson. "Before you start your week, it's a good idea to plan the number of appointments you intend to secure. If you're not always scheduling sales meetings with your clients, then you risk finding yourself in a state of famine. Generating leads is not necessarily the easiest part of your job, but it's a necessity if you want to drive consistent sales."
Know your sales cycle
The type of business you're in will determine your sales cycle, which is the amount of time that elapses between an initial meeting with a client and the closing of a deal. "This can vary greatly from one company to the next. But you need to understand exactly how much time it takes you on average, measured in weeks or months," Robertson advises.
To calculate the length of your sales cycle, Robertson recommends making a list of your 20 most recent closed sales, jotting down how long each took, and then computing the average. Using customer relationship management (CRM) technology can also give business owners a better picture of their sales pipeline, help identify top clients and target specific groups.
But even if CRM technology is not within your budget, you can still apply its underlying principles to this problem. "What's important is that you can see exactly what's speeding up or slowing down the transaction. That allows you to make adjustments and train employees to improve on specific steps of the sales process."
Know your numbers
Every company needs a minimum number of prospects at any given time just to maintain sales. Robertson advises looking at the number of closed transactions you want every month as well as the average sales cycle. Also helpful is knowing what proportion of prospects contacted end up buying. "These figures don't lie," Robertson says. "They will help you set targets for your company."
Take, for example, a business that aims to sell three items a month. One out of every four prospects reached by sales staff in this business eventually buys, meaning it has a close ratio of 25 per cent. It takes an average of four months from first contact with a client to close a sale. Therefore this business should have at least 48 active sales leads in the pipeline at any given time just to maintain current sales levels (three desired closes multiplied by four months per average sell cycle, divided by a close rate of 25 per cent, yielding a total of 48).
In this scenario, notes Robertson, "As long as you maintain 48 active leads at any one point in time, you can be confident you will close 3 transactions per month. It's that simple. If you decide one day to increase your monthly output to four closed transactions, then it follows that you will need to maintain a list of 64 active prospects, and so on."
Armed with this knowledge, entrepreneurs can set specific targets for team members. "It's a fair and productive way of clearly setting your expectations and customizing goals for each employee. Rather than telling people in your company that they simply have to do 'more,' you're able to set real targets based on their performance history," Robertson says.
Actively seek referrals
A rule of thumb for any business is to get referrals from satisfied clients. Robertson, however, believes that entrepreneurs can avoid the "awkward moments of actually asking your clients directly for referrals" and instead broach the subject by encouraging their clients to talk about their customers and suppliers. That, he says, has a snowballing effect.
"Once you identify a potential client during a conversation, you could say 'Would it be all right if I gave Tom a call and mentioned that we spoke?'" Upon reaching that client, Robertson suggests saying something along these lines: "My name is John and I was speaking with Robert who thought it would be a good idea for us to get together. How about next Tuesday?" This subtle name-dropping lends you credibility, he says, and converts what would have otherwise been a cold call into something warmer.
Focus on securing appointments
Although it seems very basic, Robertson believes that entrepreneurs have to focus more on getting appointments when making calls. "If you're calling people, don't do the sales pitch on the phone. Keep it simple and try to secure that necessary meeting first," he suggests. "Focus just on getting the appointment. Prospects are turned off if you take too much time on the telephone, especially on the initial call. Suggest a meeting time and be prompt about it." Equally important, says Robertson, is getting that second meeting once you've met for a first time. "You want that client to have you in their calendar. Always securing a next step advances you ever closer to a closed sale."
Get ready for objections
Robertson strongly recommends that business owners prepare for "common objections, particularly when making cold calls." Typical negative responses include:
- I'm dealing with somebody else.
- I'm too busy.
- This isn't a good time.
- Send me material first and we'll talk later.
If you're not prepared with clear replies, you'll lose the prospect's interest. "Practice exactly what you're going to say in response. It's important to acknowledge their objections and then try to reframe them in a positive light," he stresses. He suggests using the "feel, felt, found" method. For example, if a client says your prices are too high, your response could be, "I understand how you feel. Many of my other clients have felt the same way. But what they eventually found was that my product allowed them to add 10 per cent to their gross margin."
Follow up and listen
Building a strong relationship with clients is crucial to maintaining consistent sales. "You have to show them that they are not just a business transaction," Robertson advises. "Always take a proactive approach in meetings with clients, and take notes," he adds. "A pen and paper are very powerful tools in sales. Prospects will open up when they see that you're taking the time to listen and write down what they are saying."
Finally, he suggests, if your client has concerns about your business performance, always come back with a "solution that will blow them out of the water. It's all about making sure that they will come back."
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.