Effectively managing the sales function

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Successful business leaders with direct salesforces all excel in one key area: effectively managing their sales function.

Managing sales is easier said than done. Most sales reps will miss their targets in any given year; sales leaders will testify to this from experience. And some sales roles are on their way out, regardless of how well-managed the team is. Forrester predicts that approximately one million sales roles will become redundant as AI and other leading technologies place their mark in replacing salespeople in the B2B sales arena. So, how will the sales leader of tomorrow effectively manage the sales function?

B2B Sales has changed

In today’s era, new and upcoming technologies threaten to replace old B2B sales methods. The way people buy products has changed. More decisions are made by millenials, and buyers of all generations are researching online before approaching a sales rep. Marketing is getting more and more involved throughout the B2B buyer journey – in some cases leaving less and less for sales reps to do.

Managing the sales function of tomorrow means preparing a sales team for the following five challenges:

  1. Increased complexity in the buying cycle
    Businesses and their buying processes are becoming increasingly complicated as more people are involved in the decision of the purchase. Research suggests that an average of six people are included in the verdict of the acquisition, meaning B2B sales representatives are dealing with multiple buyers on a single product which can alter decision-making.
  2. Knowledgeable buyers
    Enter the digital world, and the whole buying process changes for individuals. With technology transforming the buying process, B2B sales-people are selling products to savvier and more knowledgeable buyers as online reviews, tutorials and other e-commerce platforms give buyers the authority to decide for themselves if the product is worth purchasing.
  3. Product differentiation
    With the rise of technology and skill, individuals are finding it harder to maintain a distinction between products. Similar products bombard customers. Due to this, it has become essential to make sales interactions notable.
  4. Higher customer expectation
    Customers are shifting their focus away from price and feature lists, and toward customer experience. Studies done by Zendesk showed that 62% of B2B buyers purchased additional items after they received an excellent customer experience, and as many as 66% stopped buying a particular product due to bad customer service.
  5. Technology affects the sales function
    Buyers are becoming increasingly comfortable with purchasing items online. Through the use of AI, chat-boxes and other technologies, customers can navigate their way through the online buying process with ease.

Define the sales process

Effectively managing the sales function means defining and following a sales process. Every sales organisation (even a team as small as two people) needs a process. A good sales process helps businesses demonstrate professionalism, reliability, and consistency with new and potential clients. Poor sales process leaves prospects confused, unsure of next steps, and prevents or slows down new business acquisition. 

A good sales process is one that compliments your business, sales representatives, customers and products. A sales process consists of following a repeatable set of steps which turns a potential prospect into a closed deal. Having the power to gain more conversations, close sales and provide customers with top quality service is the key to maintaining a scalable and successful business. 

There are five critical steps involved in the sales process.

  1. Prospecting
    Prospecting involves sourcing cold new leads that can form part of the sales process. These self-sourced leads are essential to fill the funnel when Marketing is not a cost-efficient source of warm leads. At the time of writing this article, LinkedIn is generally the best starting point for proactive prospecting – combined with Google, company websites, plus lists from industry and government bodies.
  2. Outreach
    This step of the process involves making contact with the leads sourced during the prospecting stage. The action is done to gather information, position the sales rep’s value proposition, and start the qualification process.
  3. Researching
    The researching step is significant in ensuring that your customer has a personalised and tailored experience. Doing background research on your customer and their business allows you the opportunity of creating a long-lasting relationship. It also helps aid the ongoing qualification process of ensuring ‘bad fit’ leads are qualified out before they waste further organisational time.
  4. Presenting
    Before getting to a presentation, sales reps should co-develop a solution with their prospective client – in partnership with whoever is responsible for delivering the solution. For example, a tech sales rep may bring in a senior engineer, solution architect, or other pre-sales resource when building the solution. The sales rep should seek to involve multiple people on the customer side and facilitate consensus-building before delivering a final presentation.
  5. Closing
    As the deal draws to a close, many companies may deliver a quote or a proposal to the prospective client. A close should not be aiming to ‘make a sale’. Rather, it should be a mutually beneficial agreement between the two parties. This approach to closing moves it from one-sided pausing of a sales rep’s agenda to a collaborative process that prioritises customer needs and outcomes.

Establish your sales methodology

Good sales equal good growth. It is as simple as that. These transactions can scale a company to enormous heights driving credibility and recognition. A crucial part of ensuring sales is to secure a sales methodology that represents your product and takes into account the companies’ values, market and goals.

Here is an example of five sales methodologies to consider. None are perfect. As sales organisations mature, they often will build their own methodology which may be a hybrid of some of these four, or different again.

  1. SPIN Selling
    Understanding what your customer wants and why they want it is an effective way to ensure a sale. Knowing a customer’s Situation, Problem, Implication, and Need-Payoff (SPIN) creates the foundation needed to understand the buyers end goal.
  2. The Challenger Sale
    A customer will be likely to buy what you are selling if you make them aware of the pitfalls of their business as they will want help to fix these drawbacks. With the challenger sale method, sellers go into five different categories, namely, Lone Wolves, Hard Workers, Relationship Builders, Reactive Problem Solvers, and Challengers. So instead of focusing on the needs and demands of the buyer, the challenger sales rep works with the customer, building consensus on why they need the product.
  3. Solution Selling
    In this technique, salespeople are focused on offering solutions to customers (rather than products). Through providing insight to mature buyers, sellers can convince informed buyers of the benefits of a particular product and why it is needed.
  4.  Customer-Centric Selling
    Customer-Centric Selling involves turning your sales personnel into trusted advisors for customers. The method focuses on finding a solution to customers pain points instead of building a relationship.

Ensure high performance

High-performing sales reps all share one common trait: consistency. Anyone can happen across a big deal, and appear to be a performer for a short period of time. True high performance depends on consistency.

The second characteristic of all high-performing sales professionals is how they create value. The key to high-profit business is focusing on building value, rather than attempting to cut costs and lower the price. Many sales professionals find value selling challenging, especially in the following three scenarios:

  1. The customer is well-educated and informed, knows precisely what they want, and is price-shopping multiple providers
  2. A decision-maker has been given a precise, limited budget to work with – and the solution must fit inside budget for them to proceed
  3. The buyer is unwilling to collaborate and share information: they simply want to see a proposal or solution presentation. 

Our first scenario is the most dangerous. Junior sales reps and sales professionals running behind target will try to bring these customers on by offering a discount. These are usually educated, seasoned buyers who know how to strike a great deal…which ultimately leaves the provider locked into a low-profit or even a loss-leading contract.

For the second case, defined budgets are not always a bad thing, provided the service provider can scale down their offering in a way that preserves their price/value equation. For many B2B service providers, trying to scale down a service offering to fit a price bracket may lead to low customer satisfaction and reputational damage. It is also a dangerous path when long-term contracts are involved.

Lastly, buyers who refuse to engage and co-build a solution should be avoided entirely. Either they are not serious and simply looking for free consulting and advice, or they are price-shopping whilst keeping their cards close to their chest. A sales professional cannot navigate a sales cycle blindly: they must politely but firmly qualify out in this situation.

Be results-driven

There is one thing even more critical to salespeople than closing a deal, and that is if they achieved the result they wanted: did I hit my number? The incredibly important business metric is what concerns management and executive leadership. However, it is a lagging indicator meaning it takes weeks or even years before results are visible. Fortunately, leading indicators can assist in determining future revenue. Let’s examine the critical components of the new revenue. A simple equation can give insight into your performance.

Forecasting Revenue

The big equation for revenue is:

Revenue = (# of Opportunities) x (Average Sale Price) x (Win Rate)
Our short form is Rev = Opps x ASP x WR.

For example…if a sales rep has 12 qualified opportunities in their funnel ready to close in a given quarter, their average transaction is $60,000, and their win rate is 1 in 3, then the equation is

Revenue = (12) x ($60,000) x (1/3) = $240,000 of closed business for the quarter.

On a sales funnel, revenue is at the bottom with opportunities at the top. ASP and win rate form the funnel itself. These metrics have a direct impact on aspects of your sales motion.

Number of Opportunities, derives from Prospecting and Outreach being at a consistently high volume. Sales process, how well a rep qualifies opportunities, solution building expertise, and their ability to navigate problem buyers will affect win rate. The level of decision maker you are marketing to, the initial quote, and whether a discount comes into play determines ASP.

The formula above gives insight about vital metrics that lead to new bookings.

Calculating Sales Velocity

If you have longer sales cycles, Average Sales Cycle (how long it takes to sign a new customer), will have to be added to the equation. This forms a longer equation for determining Sales Velocity:

Sales Velocity = (# of Opportunities) x (Average Sale Price) x (Win Rate) / Sales Cycle Length
or in short form, SV = Opps x ASP x WR / SCL.

The sales velocity equation is useful as it illustrates how many deals a sales rep can manage at a certain time.  Breaking down the revenue number into its parts enables you to identify an individual rep’s unique style and establish why they are performing in a certain way. Examining Opportunities, Win Rate, and ASP lets you see where issues may lie.

If Opportunities are behind, concentrate on outbound techniques, and if ASP is an issue, focus on negotiation techniques and value selling. Problems with Win Rate means sales reps require more coaching on active deals.

If you establish that the Win Rate, Opportunities, and ASP metrics are performing well, then it’s likely an issue with your Sales Cycle, in which case you need to adjust your sales model. Improving the sales model guarantees creating early opportunities giving reps adequate ramp times.

So, the essential takeaway message: team members must memorise these metrics to enable them to forecast future earnings while establishing where the sales funnel needs attention.

How effectively are you managing your sales function? We would love to talk to you further about any of the topics in the above blog, and which areas your sales organisation could improve in. Contact us for a free consultation on how to effectively manage the sales function.

RK is the CEO & Co-Founder of Resonate.

RK is Resonate’s chief strategist, thought leader, and IT industry veteran. Our clients depend on RK to advise on their business strategy, channel strategy, and sales strategy. 

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