Every business needs to sell
Every business sells something, and every sale begins with a ‘lead’ or contact. Unless a business handles its contacts correctly and converts them to sales it’s not going to stay in business.
When sourcing contacts, the focus should always be on quality rather than quantity. Unless the sales team is given high-quality contacts to work on it will only generate excessive costs and poor results.
Businesses need a well-designed system for handling contacts. It must accept contacts from any source, record their details, track them as their immediate needs are satisfied, and then channel them into the selling process so they can be converted to sales.
The system is best viewed as a series of steps in which team members interrelate with contacts while supported by a purpose-designed set of procedures.
Every business owner needs to be a salesperson
Because your business depends on the sales it makes, understanding the process of selling is an important part of running a business. Even if you don’t personally do any selling you should know how it works to manage your sales team effectively.
Everyone with a successful business has to be a salesperson to some degree. Selling is all about persuading others to see things as you do. If you’ve ever successfully applied for a business loan you’ve done a good job of selling yourself and have the money to prove it.
Salesmanship isn’t an art form, nor are only a few people born to sell. It’s a developed skill that comes with practice. Think about how many things you’ve bought from others – both for business and personal use. Were they all great salespeople? Probably not, but since they’ve sold you something they’re definitely successful.
If you think you’re too shy to become a salesperson it just means you have to try a bit harder and practice a bit more than someone who appears to be outgoing. Developing a system will give you support in this.
Of course, it’s not all style - be honest when you sell. Most sales are made by people who are trusted by the purchaser - trust is far more important than personality when it comes to the reasons why people buy from a salesperson
Understanding the sales process
There are two broad aspects to selling – the salesperson and the customer. It’s quite interesting to know something about customers in terms of the psychology of buying behaviour. For instance, the price someone will pay is often related more to the perceived value they think they will get for their investment than to what they really want to spend – or, as it has been put - people buy with their emotions, and justify their purchase with logic.
We are going to concentrate on the salesperson side of the process in this article. So let’s begin by analysing just what the steps are in the selling process. The slide illustrates the traditional division of stages. At each one of these, certain things need to happen to keep the contact moving along towards the close of the sale.
We’ll be concentrating on prospecting and the close in this presentation, but keep in mind that to give yourself the best chance of getting to the close it’s necessary to have handled the intermediate ones well.
Preparing to sell
Good front-end preparation is vital when prospecting and it's worthwhile gathering information on things listed on this slide. There are many other things you can usefully check out about your prospect and the market before you try that first contact.
This planning has other advantages as well:
- You will feel more confident in your sales presentation
- You’ll come across as knowledgeable and professional
- You’ll have developed a game plan, or strategy, for the call.
Always remember, you can never take back your first impression
Bringing in the contacts
OK – you’re ready to make contact. There are two distinct types of contact – those that respond to marketing channels such as advertising or the business’s website, and those that are actively obtained through telemarketing or even door-to-door selling.
Contacts hardly ever make the first move. You have to do something to attract them. This is a front-end activity and not part of the selling effort.
A mix of active and passive prospecting optimises the number of contacts your marketing will acquire. Unless you actively seek contacts you’ll be missing out on a large number of sales opportunities that could have been created.
Cold calls require courage but they work
Cold calls are an active way of generating new contacts, although to succeed they require a particular set of skills.
Cold calling is quite simply a sales call on someone who doesn’t know you and isn’t expecting to hear from you. It’s a one-on-one situation that very quickly tells you whether or not the other party is a likely candidate for your list of contacts.
The most common type of cold calling is done over the telephone and that means there’s a chance after you’ve introduced yourself for your contact to hang up or reject you with a fast “no thanks” or “not interested”.
This is likely to be the outcome of the majority of cold calls but don’t take it personally. Be polite and move on to the next call.
If you get past the introduction, you’ve got an opportunity to acquire a new contact. Be helpful and informative, and if you can stimulate interest then commit to provide further information or call by for an appointment.
With cold calls, the rejections happen quickly but the acceptances often result in a sale. The important thing is that all contacts obtained through cold calling are new contacts you would never have otherwise had.
Rating contacts
Have a system that assigns a relative value to each contact as it is acquired. ‘Hot’ contacts are those who are looking to buy, ‘Warm’ contacts are those who might buy, and ‘Cold’ are probably not interested in buying.
Concentrate efforts on ‘Hot’ contacts. Give them priority and convert them to sales as quickly as possible. Never leave a ‘Hot’ contact to give attention to a ‘Cold’ one. Only after all the ‘Hot’ contacts have been processed should the sales team turn its attention to ‘Warm’ ones.
‘Cold’ contacts are hardly ever worth pursuing unless no other contacts can be obtained – and if the only contacts you have aren’t interested in buying from you, you need a new system of lead generation!
These contact values can change with time. A ‘Hot’ prospect can cool off and become ‘War’ or even ‘Cold’. Your contact handling system must allow for this.
Tracking sales leads systematically
Your contact handling system has to perform several key functions. First, it has to identify and sort out the contacts received. This involves recording such details as names and addresses, their rating, and cross-checking to see if they’ve contacted the business (or been contacted by the business) at any time in the past.
It also has to sort contacts by the way they were acquired (advertising, telemarketing, etc.) and by the products or services they’re interested in.
The next function is to transfer all the contact details to the sales team for the next step in the process. The more information available to the sales team the better.
When the contact is handed over to the sales team it becomes a prospect and the selling process proper can begin.
It is essential that before the handover to the sales team, the contact has been provided with any information they have requested – a sales brochure or product order form for example. The system must record what was sent, when it was sent and how it was sent.
It is also important that the system prompts follow-up from appropriate team members until the contact has either become a customer or is deleted from the system.
Stay top of mind with contacts
The conversion of contacts to sales isn’t always fast. Some conversions can take a long time.
One inquiry handling expert estimates that 45% of all leads eventually turn into a sale for someone – though not necessarily you. But only 22%-25% convert within the first six months. That means that 45 out of 100 contacts could become your customers if correctly handled over an extended period.
Another reason for maintaining contact is that competition usually decreases over time as well. The reason is simple – most businesses lose interest in a contact if it doesn’t turn into a sale reasonably quickly.
Patience and ongoing communication will eventually deliver all the conversions you’re going to get, but up to 40% of those won’t convert until months have passed.
This tells us that every contact handling system must accommodate the need to stay in touch with contacts over an extended period. It must prompt the business to communicate with contacts – perhaps by telephone, email or a newsletter – until they either become customers or are finally reclassified as ‘Cold’.
Follow-ups overcome rejections
Every contact offers a potential for rejection. If your team gets a rejection at the first approach it’s not necessarily the end of that contact. Perhaps the timing just wasn’t right, or the contact had other matters to attend to. If you accept defeat from a first-time rejection you’re likely to lose that contact forever. If you accept the challenge of eventually converting that contact to a customer, you’re still in the race.
Always offer to stay in touch with contacts. Promise another call in a period that relates to repurchase cycles or offer to send out an informative newsletter free of charge. It’s amazing how common it is to get an initial rejection from somebody who eventually becomes a customer.
Keep in touch for an appropriate length of time until you’re certain there’s no hope of ever converting that contact to a customer. Remember too that most businesses have competitors, and if you’ve done your prospecting correctly even the people who reject you are somebody else’s customers. They can be yours if you don’t give up.
The four steps in every sale - AIDA
Which sales techniques will be the most effective for your business? This depends largely on the products or services you’re selling. There are at least four steps to every sale and without their happening in this order, the sale isn’t likely to happen either.
The first step is to gain the prospect’s Attention. This can be done by your business’ advertising, by a member of the sales team making a phone call, or even a knock on the door – all are ways of gaining attention.
The next step is to create Interest in what it is your business is selling. Asking the right questions at this point is really effective. “Would you like the convenience of having this in your home?” “Wouldn’t it be good to have this next time you go camping?”
Desire follows from interest. Show or demonstrate the product. Give them a test drive. Let them have a feeling or taste of what it would be like to have it.
Action is the last step. This is the closing moment – a call to action. Ask for the order and if objections are raised, handle them here. The close is the most important part of the process because this is the place where the sale is made.
Closing in...
The closing technique used by your sales team should reflect the nature of your business. The sale of some products and services needs to be closed firmly and quickly; other sales are softer and closed less aggressively.
Salespeople need to watch for buying signals from their prospects. This can be an expression of interest in what it is that’s being sold, or perhaps a weak objection like “I’d buy one if you could deliver it before the weekend”. This is the time to try a trial close – a preliminary asking for the order that directs the prospect to the conclusion of the process. A genuine prospect will often be so interested that they actually speed up the pace of the sale from this point.
The actual close is not necessarily just one closing move. It can take several different types of close before the sale is finally made. A salesperson who gives up after just one try at closing a sale won’t be a salesperson for long.
Some classic closes
Several closes have become classics in the annals of salesmanship. You’ve probably had all of them used on you at one time or another, and you may wish to instruct your sales team to use particular ones that suit your business.
- Assumptive close – Assumes the prospect will buy and uses wording like “When would you like it delivered?”
- Complimentary close – “That looks really good on you!”
- Yes, Yes, Yes close – Asks the prospect a set of questions, all of which will be answered in the affirmative. This leads to a final question that’s asking for the order.
- Choice close – “Would you like it in red or do you prefer the blue?”
- Summary close – recaps all the benefits the product offers the prospect, then asks for the order
- Urgency close – a pressure technique that tells prospects if they don’t order now they may not be able to get the product at a later time.
- Benjamin Franklin close – Benjamin Franklin, it is said, would use a ledger approach when deciding whether to buy something. He would draw a vertical line on a sheet of paper with the ‘positives’ about the item written on one side and the ‘negatives' on the other. Naturally, the salesperson using this close will have more ‘positives’ than ‘negatives’ for the product.
Prepare for objections while closing
Prospects raise objections for several reasons. They may be afraid of making a wrong decision, or perhaps they just want justification for making a purchase. It is important that your sales team is prepared to handle objections and can overcome them to complete the sale.
The first step is to listen carefully to the objection. They should say nothing until the prospect has had their say and under no circumstances should an objection be treated lightly or dismissively.
Next, the objection should be restated and then answered. Salespeople with genuine skills will seem to do this naturally, but it’s usually the result of experience, sometimes painful!
The final step is to be sure the prospect’s objection has been taken care of. This can be done by asking “Does that take care of your concern?” Then move on to another stage of the closing.
If some members of your sales team seem to be doing well on everything but actually selling, their handling of objections might be the reason. Do a ‘dummy run’ with them and see if they can handle the objections you raise. It’s good practice for them and provides you with a way to assess their competence.
Make the sales team customer-centric
Whether or not you see yourself as the head of a sales team, as the owner of a business that sells something that’s just what you are.
Salespeople tend to be focused on selling something and don’t often step back to see the bigger picture. If you take the time to understand the selling process and develop a sales system then you can spend some time managing the people to ensure the process is customer-centric.
Encourage your team to focus on their prospects, not themselves. If all they think about is making sales and not making the customer happy they’ll miss out and so will you. Have them look for customer needs and wants before they get into the sale. Ask them for feedback from their customers and see if they’re listening to them.
Overselling is a good way to lose customers or drive them to a competitor. Remind your sales team that a customer who is sold into buying features they’ll never use won’t make the same mistake twice – not with your firm anyway.
If your business sells in a business-to-business situation have your sales team look at the customer’s bottom line and find ways to demonstrate how your product will save or make them money. Too often salespeople get stuck on product features and miss out on why the customer’s looking at what they’re selling.
Teach your team to avoid jargon or other language that’s inappropriate for your customers. Salespeople are often too technical, or worse – give their customers the impression that they’re talking down to them.
Know where your products add value
Become a resource for your customers. Support your sales team by being available to handle inquiries about your products and how they should be used. Assist customers in obtaining maximum value from their purchases.
You should be able to define clearly your value proposition and so should your sales team. What do you contribute to your customers and what is its value? It’s not always a matter of just dollars and cents and the more you can articulate what you do for customers the more likely you are to make sales.
Have your team members do some preparation before every sales call. It’s up to you to determine what that preparation is, but whether it’s studying a customer’s business or researching the competition, encourage them to be prepared.
There’s no monopoly on good ideas. If you tap into the collective talents of the people who are out there selling you’ll be surprised at what comes out. Ways of making more sales, improving products, saving operating expenses or raising morale are just some of the ideas that can arise when the sales team are encouraged to speak up. Start an ‘ideas’ committee and see what happens.
Talk to your customers too. It’s something every proprietor should do, and as often as possible. Unless you know how your customers see your business you’re operating in the dark. You’ll get good ideas from customers just like you will from your team.
Salespeople – Order-Takers And Developers
Now that you know a bit more about the sales process you’ll have a better idea of how to choose and reward the members of your sales team. Always remember that your customers will judge your business based on the members of your team that they deal with. Every salesperson makes an impression on your customers and you want it to be favourable.
There are two types of salespeople and it’s useful to have both types.
The first type we can call order-takers. They’re good at maintaining existing customers – a vital function in any business. They have personal characteristics like reliability and honesty and are always in touch with your customer base.
The order-takers are well known by their customers and to a great degree become the personal representatives of your business to the customers’ team.
The other type of sales team member develops new sales – that’s why they’re called the developers. Their forte is converting contacts to sales, and their characteristics are based on loving a challenge.
Developers are good at selling to people, getting others to agree with their perspective and quickly reaching the closing stage of a sale.
The two types overlap in one important respect - they’re both good with people. They’re both effective at selling goods and services, and most marketing organisations have some of each type in their sales teams.
The order-takers generally prefer a steady income while the developers appreciate the opportunity for a commission to earn bigger incomes. It’s important when selecting members of your sales team to keep these two types in mind and reward them appropriately.
Losing touch means losing sales
Part of selling is being available to prospects. That ‘buy’ decision can come at any time and you want to make sure your sales team can respond to make a sale.
If a customer has done what most customers do, they know there’s more than one source that will have what they want. Fortunately, modern technology makes it possible for you and your customers to keep in touch with your team regardless of location or time of day.
- The Mobile Phone – No salesperson should be without one. Be sure to put mobile phone numbers on your company’s business cards so customers can get in touch when they’re ready.
- The Laptop – The portable PC lets salespeople carry a product catalogue, customer information, mailing list and sales presentations with them at all times. It also lets them send and receive emails that can include photos – all very useful for sales personnel who work away from the office.
- The Tablet – A bit like the laptop only a lot smaller. Not as powerful or with as much memory as a PC but very useful as a tool for keeping organised and in touch.
Keep updated on the latest technology and don’t be afraid to make an investment that will improve communications between yourself, your sales team, and your customers. Losing touch means losing sales.
Measuring sales - conversion rates
When you convert someone, you’re getting them to do what you want them to do. What we want is for our contacts – prospective purchasers - to be converted to customers and start buying from us.
This leads to creating a measurable statistic we can use to assess the performance of our selling system.
A broad definition of ‘sales conversion rate’ is the percentage of contacts that become customers and make a purchase. If you have twenty active contacts and twelve of those convert to customers your conversion rate is 12/20 or 60%.
It’s expressed as a percentage and although simple is a very useful tool in sales management. You can apply this in several ways because this simple calculation relates to so many elements of your sales system. Before we look at that let’s see how you can track them.
Tracking conversion rates
Conversion rates can be tracked in several ways. There will be differences as to what information you can gather depending on how individualised the sale is, but here’s a simple example that makes the points you need to consider.
You must track the number of contacts, such as incoming calls or inquiries or whatever, and then the number of sales made from there, using anything from a simple tally sheet to a computer programme.
These calls or inquiries could then be broken down further into the source of the call, or marketing channel use – such as direct mail, advertisement, or phone directory ad. You can get this information when the situation allows you to ask the customer how they heard about you. So, you have a conversion rate tracking system AND a marketing tracking system all in one simple process or form.
What Conversion Rates Can Tell You
Conversion rate can be useful for several reasons.
Firstly, if each team member of your sales team kept their individual tally you’ll get to know how successful they are at converting contacts to sales. This makes it easier for you to identify your top performers – and the ones who could use some training.
You can also apply this to the type or quality of contact your firm acquires. For example, if you have thirty-five active contacts – ten ‘Hot’, twenty ‘Warm’ and five ‘Cold’ - you’d expect your conversion rates to be highest on the ‘Hot’ contacts, next highest on the ‘Warm’ contacts, and not too exciting on the ‘Cold’ contacts. If that’s not happening then maybe you’re misjudging how to identify a ‘Hot’ lead.
Going further, you can also apply conversion rates to the source of contacts. If you have a conversion rate of 70% for contacts acquired via the website and only 5% for contacts acquired from your advertising you might need to consider your relative expenditures or the creative theme of your advertising.
Is there an ideal conversion rate?
What’s the ideal conversion rate? You may be tempted to think it’s 100% - every contact becomes a customer. But this might only be pointing out that your system is generating an inadequate number of contacts for the sales team...or that your prices are too low!
Do the analysis first – calculate the overall conversion rate, then your conversion rates by type and source of contacts, by sales team member, and by any other factor in your business that’s likely to be relevant (size of transaction, for example). Study these conversion rates and patterns will begin to emerge. Then and only then can you start to work out what your ideal conversion rates could be.
Analysing team member effectiveness
If you haven’t already applied conversion rates to your sales team you may well be in for a surprise. Those you consider to be your ‘top performers’ might be doing well in dollar terms but not converting as many contacts to sales as some of your lower-volume team members.
This isn’t necessarily bad, but it can highlight that even in top salespeople there’s often room for improvement. You might find for example that some salespeople do much better than others with ‘Warm’ contacts, or that contacts acquired from the website should go to a salesperson that has an amazingly high conversion rate for that type of contact.
Dollar sales volume alone as a measure doesn’t tell you nearly as much as you need to know. Some sales team members will have much greater sales-related expenses – travel, entertainment, telephone costs - and unless they’re really covering these higher costs in extra sales it might be better to keep them closer to the office.
When you take everything into account - conversion rates, total sales, selling expenses, salaries, ability to handle lower value contacts - you may well discover that your real ‘top performers’ haven’t been given enough attention and need some extra recognition.
Where are you missing sales?
Every business misses some potential sales. The best businesses know why it’s happening and even how much it costs them.
If your mechanisms for attracting contacts – advertising, telemarketing, business website and so on, aren’t optimised you’ll miss out on contacts and the sales process will suffer as a result. Start at the top of your contact acquisition system and make sure your allocation of expenditures is correct. Conversion rates can point you in the right direction.
The next place to look is in the sales function. How effective is your sales team at converting contacts to customers? You may find that sales are being missed because the team is focusing on the wrong type of contact, or perhaps not devoting enough sales attention to ‘Warm’ contacts and going only for the ‘Hot’ ones.
Finally, look at your repeat businesses. How many customers come back for more? Since it costs something like five times as much to get a customer as it does to keep one, you’d better be sure to keep the ones you win. If your repeat purchases tell you that customers don’t stay around, then you’re badly in need of a customer retention strategy.
Keeping customers buying
Smart business owners find out all they can about their customers and stay in touch to encourage repeat visits.
They do this by having a system that tracks customers and their purchases, just as contacts were tracked from acquisition until they became a customer. The system generates reminders of events as the basis for a valuable marketing effort.
The secret here is personalised communications. A regular email or newsletter personally addressed to them with information about your products and services, forthcoming sales, or perhaps events in your community. Every contact reminds them of your business and keeps it top-of-mind.
Each year a personalised Christmas card or birthday greeting increases the value of your relationship one step further. If it’s a big-ticket purchase give them a follow-up phone call to make sure the item is satisfying the need for which it was purchased.
There is a cost to all this but it’s insignificant when you consider how much good it can do your business. Customers who are satisfied with their purchases and given professional after-sales treatment will come back the next time they’re in the market for your offerings.
Conclusion
We said at the start that every business needs to sell something and every sale begins with a contact, or lead. Once that contact is acquired, the selling process begins.
The point where a contact becomes a customer is when a sale takes place. The contact has been converted to a sale. However, this isn’t the end of anything. The contact now moves to a higher level of importance and, as a customer, requires a new type of care that’s intended to retain the customer and stimulate repeat business.
The whole process is a steady flow from the time a contact is acquired to the point where an established customer makes repeat purchases. Your contact-generating, selling and customer relationship processes need to be seamlessly and effectively integrated to make the most of your sales opportunities.