How do you increase sales and profits quickly? Are there any secrets our team should consider in our new business development objectives? Yes! …teach your salespeople to disqualify potential poor fitting customers sooner with ideal customer profiles.
I can hear some old sales dogs saying; “what are you talking about Mark? Every sale is a good sale…” but I can assure you this is not true. I have learned the hard way that not every prospective account is an account you should sell.
My client had a major shift in one of their markets and this caused a sales decline of over 40% within 18 months so they brought me in to help fix their sales problem. This company had been serving their various markets for over 40 years and wanted to avoid possible layoffs at any cost. So like many companies they were focused on selling their way out of this problem. Quickly we reviewed our current customers, the industries they served and conducted win loss calls to better understand why they buy and why they do not buy. In addition we mapped the buying process and made a list of all the potential customers in this market. (Typically the customers you serve today only represent 25%-30% of the actual potential market.) The main qualifying filters sales and marketing used included;
- Does this possible customer have a problem we can solve?
- Is the problem painful enough they want to solve it?
- Are they willing to spend money to solve it?
(…and that’s where I blew it, I should have required our salespeople to ask one more question…but that will follow soon)
Lists by sales region were created. A multi touch marketing campaign was launched; funded and new sales tools were created from what we learned in the win loss calls and customer interviews. Very quickly accounts were being qualified and salespeople were buying airplane tickets and having many potential new customer meetings. New accounts were being added to our mix. These are great results right? That’s what every company leader wants and needs right… new customers? Not so much… We engaged and sold some companies we wish we would have never sold. Some had cultures that were in direct competition with how we served our customers and more importantly how we treated our own employees. These new customers resulted in painful (and costly) experiences in service, payment, and became an overall a drain on our recourses that started to negatively impact the accounts we valued most. In a recent post I shared how “fit” is one of the three criteria we should use when evaluating salespeople. I can now say with 100% conviction sales must also qualify possible new customer partners based on fit. The additional question we should have asked was;
- Does this account match the type of customers we value and have proven our capacity to provide exceptional service and profitable relationships with?
As the leader you must answer the above question. How do you know if this “whale” of an account will launch your needed sales velocity…or be an anchor that negatively impacts your teams’ sales and profits?
There are many resources on the internet on how to qualify customers you can search if you wish. However providing your salespeople your ideal customers is critical to winning new business you want and will value.
Some questions to consider as you create your ideal customer characteristics:
Who are your top sales accounts today?
What markets provide over 40% of your sales today?
Why do they buy from you?
What gross profit % do you realize?
What products do they buy?
What is the location of your most valued customers? North America…International…East Coast US…?
What is their service expectation?
What is their quality expectation?
How do they pay their bills? (net 30? net 60? Net 90?)
What is our value proposition for these customers?
How will your partnership be defined? …An informal discussion of expectations or a binding contract?
What is their preferred method for placing orders? Fax, call in, email, EDI, vendor portal?
What buyer persona’s value your brands promise most?
What sales cycle is your team familiar with? short…three to six months…over one year?
Who is your ideal influencer that drives the purchase order? Buyer… Engineer…Owner…CFO… Operations… a team of department leaders?
What is their preferred form of shipment? Delivered or FOB your plant?
Is there a cultural fit in how their employees engage with each other and your team?
Can you serve the new customer today or will the new customer require new investment?
The above is not a complete list and I would encourage you to develop qualifying questions and identify the type of new customers that are ideal for your organization today. Once you create a list of the ideal traits and attributes of a customer for your organization you must map the areas that are non negotiable. For example I have served a number of startups and turn arounds and terms greater than net 60 days were a deal breaker. As our salespeople met with prospective customers the terms question was addressed very early in the relationship. Next create boundaries for other areas. For example; we will invest in the capabilities to receive orders via EDI for sales that exceed $xxxxxx. The more detailed you can be in your ideal customer the faster your new business growth objectives will be achieved and they will have profits that meet your owner’s and investors expectations.
So how about your team…
Does your team need to sell its way out of a sales and profits short fall?
Have you identified potential customers you could sell?
Did you take the extra step to identify the traits and characteristics of customers you want?
Are you convinced the difficult customers make your organization stronger? Or do you agree they can negatively impact your service to all your customers?
The secret to turning around sales with profitable new customers is helping your salespeople understand what your ideal customer looks and feels like. The above questions may feel like extra work and may slow down your sales, but in reality they will improve your sales close rate, create more quick wins, and help your sales team win more profitable customers.