Sales - understanding the process.
Top performers know how to engage procurement in provocative dialogues and how to control the sales-and-negotiation process.
Increase revenue and margins through price increases:
According to McKinsey and Company, pricing right is the fastest and most effective way to increase profits. A price increase of 1% typically generates an 8% increase in operating profits and impact that is 50% greater than the impact of a 1% fall in variable costs. Understanding the process and having the skills to engage customers in a provocative dialogue that expands buying criteria and creates value for both higher prices and a more robust solution is key to achieving high levels of profitability.
Improve close rates
A 2015 Ovidion report states that 42% of sales opportunities are not lost to competitors, they are lost to “no decision,” and only 41% of forecasted-to-win deals are actually closed successfully. The key to success in increase-more-business and more-profitable deals is to take the best practices of the highest performers, those who close more than anyone else, and make them common practices across the sales organization. These highest performers know how to control the sales process, engage the customer in a more provocative dialogue, add value with every interaction, and truly differentiate themselves, their solution, and their company. They know that the ongoing sales dialogue that adds value with every interaction is critical because only 2% of sales are made on the first contact, and that 80% of sales are made on the fifth to twelfth contact (according to the National Sales Executive Association.)
Raise retention rates
According to research at the Harvard Business School and backed up by Gartner Group, increasing customer retention by 5% increases profits by 25% to 95%. The challenge is customers don’t complain, they just leave, and 68% of those who leave existing relationships do so because they are dissatisfied with the service they receive. Since it is five to seven times more expensive to acquire a new customer than to keep an existing one, successful organizations know how to create ongoing dialogue with their customers. They are not afraid of the tension in tough conversations and work through issues before they become problems that cause customers to leave existing relationships. Sales people need the courage – both the skills and confidence – to have these tough but important conversations throughout the customer relationship.
Maximize deal size and mix
92.1% of companies are raising their quotas on an annual basis, with an average increase of 16.4%. However, over 50% of sales leaders feel their people won’t reach their quotas this year, according to research completed by Insight Sales and Marketing. To win bigger and more-profitable deals with a depth and breadth of product and service solutions, sales people have quickly to set expectations, be the experts, build trust, and take a proactive approach to customer service. What a sales person expects, is determined, to an enormous extent, by what he/she is able to close, so planning, confidence, and skills are all key to expanding the buying criteria, uncovering and gaining agreement on unknown, underappreciated and unrecognized needs and offering a full solution with the greatest ROI to the customer and the supplier.
57% of the typical sales decision is made before a sales person is contacted, according to the Corporate Executive Board. In many organizations, procurement has moved from a transactional processing role to a strategic business partner role and is involved very early in the decision-making process.
Professional buyers are pressured to:
- Deliver year-over-year savings.
- Meet best-available total-cost objectives.
- Achieve quality-and-availability requirements.
Understanding this is key to fully engaging with professional buyers, which is better than hoping to avoid them as long as possible.
Top performers know how to engage procurement in provocative dialogues and how to control the sales-and-negotiation process (especially when the buyer may insist it is about value and ROI) and how to avoid higher discounts, more giveaways, and damaged relationships.