All posts with the tag 'Emerging Businesses'

The Prospect Scorecard – A Simple Way for Salespeople and Businesses to Improve Close Ratios, Forecasting and Communication

Great selling starts with great prospect identification and qualification. Salespeople and businesses need to quantify prospects in such a way that they can improve close ratios and pipeline forecasting accuracy. To accomplish this, you need to use something I call a “Prospect Scorecard”. This Prospect Scorecard, combined with a simple but accurate prospect identification method makes it much easier to quantify your current pipeline and thus improve close rates and forecasting accuracy. It can also be used to gauge the effectiveness of your marketing programs, because you can more readily judge (or score) the quality of incoming leads. This technique will work for essentially any company.

It’s easy to create a prospect scorecard (or virtual prospect scorecard if you’re a virtual company or self employed individual). First, start with your top ten criteria for an ideal, in profile client (if you don’t have ten, you can select 5 or 6). Criteria can include items like industry, revenues, growth, target buyer title, specific technology requirements, total employees, solution needs, and other attributes relevant to your ideal prospect. Once you have identified your top ten (or whatever number you select), you can rate them on your scorecard on a scale of 1 to 10, a 10 being your perfect prospect and a 1 not even worthy of discussion. We currently use a 5 point scale on our own scorecard, and our sales agents consider anyone less than a 3 as an unlikely prospect. If they aren’t a 3 or better, they don’t even make it to the pipeline. The scorecard helps salespeople match their prospect against specific and quantifiable criteria selected for your ideal prospect profile, turning the subjective into the objective. They can also compare their current prospects with prior opportunities which were won and lost, and match their current prospects against this historical information. Prospect scorecards are easy to create and useful for almost any type of company.

Once you have created your scorecard criteria, you can simply add ideal buyer attributes, or to simplify the process, a prospect identification acronym. The acronym we use is “BUD”, which stands for Budget, Urgency and Decision maker. If we are speaking with a principal or CEO, and they understand the pricing paradigm, we have a capital “B” and know that the budget will not be an issue. If we are speaking with a marketing manager and they are uncertain, we have a lower case “b”, and they are a less qualified prospect. The same holds true with urgency and decision maker. If we have all three, and the prospect score is a 3 or better, we know they are very likely to become a client.

BUD can be modified for your company. For example, perhaps your prospect identification acronym will be BUNT (Budget, Urgency, Need, and Timing). What’s an example for “Timing”; a new person or organizational change is causing your prospect to rethink their needs and their service provider, thus the timing is a capital “T”. The prospect identification acronym needs to be short and simple, and should include critical qualification elements of your sales cycle. I remember using the scorecard and BUD at a high tech, high growth company about 10 years ago, as we rapidly ramped up our pipeline and sales volume. Salespeople would frequently walk into my office and say, “I have a BUD-qualified prospect.” Or they might ask for help, “can you come to XYZ Company on Thursday, they are a 9 on the scorecard and BUD qualified.” We were all speaking the same language, having turned subjective terms like “good prospect”, “hot prospect” and “well qualified prospect” into quantifiable terms like “a 9” which is “BUD qualified”.  Make this part of your everyday language and weave it into the fabric of your sales culture.

This is a win for both the salespeople and for management, as this simple process makes it easier to communicate, forecast and close. More information is available on The Prospect Scorecard in Your Virtual Success (Career Press): Available at all major bookstores and Amazon: http://www.amazon.com/Your-Virtual-Success-Finding-Profitability/dp/1601631014/ref=sr_1_1?ie=UTF8&s=books&qid=1275487494&sr=8-1

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The Top of the Sales Funnel – Who Is Responsible?

The theory of an efficient sales funnel (or pipeline) is simple enough; pouring high quality leads into the top of the selling funnel will result in more closes flowing out the bottom of the funnel. One question, seemingly on the minds of many salespeople, revolves around the top of the funnel, and depending upon the industry or company, some refer to this aspect as the marketing funnel. Let’s review a simple sales funnel for a moment, specifically one which might be applicable to many small companies. A simplistic sales funnel often consists of suspects, prospects, presentations (or meetings), proposals, and ultimately closes (new clients). It’s called a sales funnel because the graphic used to describe this is a funnel, wide at the top (suspects), narrowing at the bottom (closes). The top of the funnel is normally filled with suspects, which are hopefully in profile suspects. Let’s say that there are 1,000 suspects at the top of your B2B (Business To Business) sales funnel. If you are selling to “C Level” executives, these suspects might have titles like CEO, CFO, CTO, CSO and CMO, and predicated upon your company or solution, you might be targeting a vertical or horizontal market. Your target companies might be within a designated target revenue range of say $20 Million to $100 Million dollars, and may be in a geographic region, let’s say the Northeastern US. There are of course many other variables, but let’s stop here for the moment and consider the prior description to be an in profile suspect for your sales funnel. These suspects then need to be culled to find prospects which we’ll define as interested, in profile, suspects.

Who should be responsible to fill the top of the funnel, culling the suspects and finding prospects? Some companies

The theory is simple: Pouring High Quality Suspects into the Top - Results in More Closes at the Bottom

call for that to be done by their salespeople, particularly small companies or bootstrapped companies. This happens at many other types of companies too, particularly those organizations reticent to add marketing dollars to their current sales funding allocation.  Many companies expect their sales team to cold call, network, attend business functions, industry events and community events and send personalized emails to build their own pipeline, and fill the top of the funnel. Most often, this is a probable path to failure, as these new sales people are often unprepared to tackle the changing world of lead generation as it migrates away from cold calling and face to face networking toward eMarketing, Web Marketing, Social Media Marketing, Blogging, SEO and Web Seminar Marketing, to mention just a few of the new tools being utilized today. In other words, sales people often have good sales skills (working the lower portion of the sales funnel), but insufficient skills (or time) to work the top of the sales funnel.

Many salespeople lament that filling the top of their funnel can be an arduous and challenging process. That’s why so many new salespeople fail; they are not savvy marketers and fail to fill up the top of their funnel with good quality suspects, then culling the suspects to identify high quality prospects. Insufficient qualified prospects at the top, invariably means inadequate results at the bottom. Why don’t emerging or small companies invest more in marketing, and why do so many of them resort to traditional cold calling methods? I think there are a few reasons.

  1. If a small company hires a sales representative at a base salary of say $75,000 and is contributing to health benefits, overhead and certain expenses, they are already nearing an investment of $100,000 per year. Adding say $20,000 in marketing lead generation services to this investment seems like it is simply overhead, overkill.
  2. Some “C Level” executives in smaller firms simply don’t believe in marketing. In many segments, particularly laggard industries, many still look at cold calling and personal networking as a pipeline panacea.
  3. Many old school marketing plans and dollars simply focus on local events, traditional seminars and perhaps improving the look and feel of their web site. Web marketing lead generation is something they may not understand or simply don’t want to invest in yet.
  4. Many small companies lack a formal marketing department, have inadequate internal resources or knowledge and are not comfortable outsourcing their marketing. This dearth of expertise creates a marketing void.

There are likely a myriad of other reasons, but the net results are the same, salespeople that don’t have quality leads flowing into the top of the funnel, won’t have sufficient sales flowing from the bottom. The results are easy to predict in that case, with large sales expenses and a lower company return on their sales investment. Remember, if one of three salespeople you hire fails, the overall costs would be much higher that an incremental and supportive lead generation program. The best advice for smaller companies when it comes to hiring new salespeople is as follows. If you’re going to invest in three new salespeople, but not invest in marketing and lead generation services, consider investing in two new salespeople use the savings toward a marketing support, lead generation program specifically for those new salespeople. And what if the budget is only sufficient to hire one new salesperson with nothing left over? Try to convince the new sales hire to consider a lower salary while guaranteeing a lead generation program to “insure” their success – perhaps you could offer increased backend commissions as you both succeed with this new program. Hiring a new salesperson without a lead generation program is like buying a new car, without sufficient funds to pay for gas. You just can’t go very far with that formula.

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Small Business Judo – Turning Your Competitor’s Greatest Strengths Into Clearly Defined Weaknesses

Judo is a method of turning an opponent’s strength into a weakness and overcoming their physical advantage by skill rather than sheer strength. You can use something I call Small Business Judo (I sometimes refer to this as Virtual Business Judo) to compete against large and established companies by turning their greatest strengths into clearly defined weaknesses. Don’t try to show greater depth of resources or feign an ability which is not at your command. Don’t try to convince someone that you have a broader product line than an established billion dollar competitor if you only employ five people. But you can easily convince someone that you have great expertise in a focused area or that you’ll be much more responsive than a multibillion dollar corporation.

If you were to take a 40 foot cabin cruiser and place it in the middle of the Atlantic Ocean, nobody would notice it, and even if you were searching for it, it is unlikely to be found. Yet if we were to take the same 40 foot boat and place it in the middle of a small two acre pond, it would be almost impossible to overlook. Small companies should consider this perspective when seeking market share for their emerging business. Some years ago, while leading the sales and marketing efforts of a small software startup, I decided to focus our sales and marketing efforts on a very small and specific target market, small medical offices with one to four physicians, in New England. We touted our local presence, ease of use and superior support, jabbed at competitors’ large, lumbering size, and critiqued their large scale platforms.

We then practiced Small Business Judo to help convey our competitive advantages. Don’t try to be what you are not. If you’re a small software company, don’t try to look like SAP. If you’re a niche integration firm, don’t try to act like IBM. Instead of fighting an uphill battle attempting to show you are superior in every way to an established competitor, take a boutique approach, leveraging their perceived strengths against them, and turning their superior size and marketing muscle into a weakness. Convey a responsive, flexible, expertise-oriented image by saying for example:

• We’re a much more responsive company because of our size
• Because we are a boutique, everyone who works here is an expert
• Your account will be working with our most senior people; there are no junior people at our firm.
• Our product is newer, taking advantage of current tools and technologies
• We don’t outsource your support calls offshore, when you call for support you deal directly with us
• We’re better because we specialize in this one specific area
• You’ll have direct access to our senior most executives
• It is much easier for us to accommodate your suggestions because we’re not trying to service 5,000 clients
• We’ll make you feel like our number one client

These types of statements attack your competitor’s strengths by turning them into weaknesses. You can leverage your modest size and resources as an advantage. Words like flexible, responsive, important, expert, focus, boutique, current and leading edge can make your startup sound like a winner. Imagine the small, swift ship that can change course at the slightest touch of the rudder, while the competitor’s battleship sails on another mile before beginning her turn. Think about the maneuverability of a Ferrari when compared to an eighteen-wheeler, or a jet ski compared to a yacht. Another great example of Small Business Judo can be used when you are competing with a firm that has a large account base and has been around a long time. Let’s say their solution has 1,000 customers installed and yours only has ten, and their solution has been in use for over a decade, whereas yours has only been in use for two years. You could say:

• Our system was written from the ground up two years ago and takes advantage of all the newer technologies
• Because our system is more recently developed it is more compatible than the older systems
• Our code is newer and more efficient than the competition
• We’re more focused than the older traditional companies because of our size and expertise in your specific market
• We’re more responsive because we’re not trying to service 5,000 clients
• We’ll make you feel like you’re our number one client (say it twice!)

With some practice and a good understanding of both your competitive advantages and your competitor’s weaknesses, you can leverage Small Business Judo to outmaneuver, out position and outsell much larger and more established companies. Today, the size of the company is not the most important factor; it’s the stability, viability and capability of delivering quality results at a great value. If someone is trying to leverage their size against your small or virtual business, just remember to mention Enron, General Motors, Washington Mutual, WorldCom, Conseco and Lehman Brothers, all monster size organizations that filed for bankruptcy. Today, small is good, and virtual is even better.

For more information read Your Virtual Success, Finding Profitability in an Online World: http://www.yourvirtualsuccess.net/

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It’s more than the cost of gas – virtual vs. on site appointments

GoToMeeting (or comparable web meeting products) is the backbone of any Virtual Business (and most certainly mine). When comparing the cost and efficacy of an on-site meeting located 60 miles away versus a virtual meeting there are many factors to take into consideration:

1. Lost time to be in appearance ready condition
2. Lost travel time going
3. Lost waiting time
4. Automobile costs (not just gas – add wear and tear)
5. Parking and Tolls when applicable
6. Lost travel time returning
7. Lost time to transition back to productivity after return

So let’s calculate this example in a more precise (and compelling way):

1. One HR: Lose an hour to shower, dress for success, get directions to your appointment, pack your laptop, park and walk to lobby (as opposed to a virtual t-shirt and slippers wardrobe)
2. One HR: Lost travel time to drive to appointment
3. 15 minutes: Lost waiting time ensuring you are early and ready for your appointment
4. Auto Costs $66: It’s not just the gas, cars are expensive to operate (120 miles @ .55 mile)
5. Parking: $20 for parking and tolls on average (free in the suburbs and more expensive in the city)
6. One HR: Lost travel time returning
7. 15 minutes: Unpack laptop, reconnect to network, change (who wants to work virtually in a suit), move back into production mode
8. Bonus Loss: Appointments that cancel on-site, doesn’t happen often, but when it does, it’s a productivity killer

In the example above, an on-site meeting costs $66 (assuming no tolls or parking) plus 3.5 hours of lost productivity. Assuming you earn $100,000 per year ($50 per hour), the lost productivity costs $175. Total loss for the meeting is $241 compared to almost $0 for a GoToMeeting virtual meeting. The most insidious of these losses is moving in and out of production mode. When I’m waiting for my clients or prospects virtually, GoToMeeting is ready, up and running and I’m working in the background. My clients and prospects prefer on-line meetings because they are faster, more efficient and more flexible. If they have to cancel (or I do) production is not impacted. So when calculating “The Cost of Driving to a Business Meeting”, make sure you use the 55 cents per mile metric, not just gas. And build in the lost transition time on top of the lost driving time. You’ll be surprised at the difference in efficiency. At StartUpSelling, 99% of our meetings are done via GoToMeeting (or GoToWebinar) for clients, prospects and our virtual contractor work force. It makes us much more efficient and responsive. After all, when an email or call comes in – we’re at our virtual office and ready to respond.

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