Fives Factors Affecting Revenue Growth (Factor 2): Sales Process is Buyer Process

Factor 2: Sales Process is Buyer Process

Research by McKinsey & Company, Bain & Company, and the sales force training firm The Rain Group all show the same thing: Buyers now prefer to work with sellers who align their process to the Buyer’s process. A seller that does not comply is one that complains about unreturned phone calls and emails—hence increased marketing and sales cost.

The New Buying Process

The studies show  that Buyers prefer to conduct their own research and determine who gets invited to work with them to further refine a possible solution.

The buying process starts internally, typically when some pain becomes no longer acceptable, driving a new initiative to address it. The head of the business or functional unit (the business driver) who is responsible for the resolution of the issue now heads this new initiative. She typically assigns someone on her team to conduct preliminary research and report to her with findings and recommendations.

This is the beginning of the “Buying” process. At this point, no seller is aware that the buying process has started.

The team member assigned to this task now begins the research by entering keywords in her preferred  search engine. She thenreviews the search results and begins tagging the promising ones.

Later, she will go deeper into each result to determine  which will make her final cut. At no point has she called any company—this is all digital content review.

A few days later, she returns to her boss to report and make her recommendations. The business driver then makes the decision of who they will review—in other words, who makes the short list. She then tells her researcher to contact the short list and schedule meetings with the vendors’ representatives.

The New Selling Process

Marketing

Since the buying process starts with research, the first thing that a Seller must do is make sure the seller’s website has deep and relevant content that addresses the issues that its market typically faces.

If the Seller has a focused market as described in Factor 1 above, then not only can it stay abreast with changes in its chosen market, but it can actually be ahead of them with thought leadership. The Seller can anticipate trajectories in regulations, changes in norms, shortages of key supplies, etc.

Because it specifically focuses on a single market and because it has depth, the Seller’s content will surface  among the many sources examined by the Buyer’s researcher. The Seller’s chances of making the short list is pretty high, and it will likely be invited to present.

Lead Generation

In addition to having highly search optimized content that drives inbound leads, if the seller also has outbound lead generation campaigns, then it is virtually guaranteed to make the short list of vendors that get invited. Its emails are likely to be opened as their message is directly relevant and always refreshing its subject matter. Its voicemails are right on and are likely to generate call-backs.

Selling

When invited to meet the business driver, the Seller must recognize that this is a collaborative event and should invite the buyer to fully participate in defining the problem as well as the solution. Read about Factor 3: Sales and Marketing.

This is exactly what buyers today are looking for since their needs are complex and will need customized solutions rather than ready-made ones. . They want Sellers who are willing to work towards customizing a solution that functions perfectly for them.

The Problem with the Old Selling Process

Lets compare the new selling process with the old. The Old Selling process consists of  “blasting” a huge list with irrelevant emails and “dialing for dollars” in hopes that someone picks up. If through sheer persistence, the sales rep gets an appointment, the chances it will get canceled are high.

And if the rep actually gets the meeting, the rep typically will blow it off by forcing a process the buyer does not find useful—first I am going to tell you about me. Then I am going to ask you about you. Then I will show you my product. Then I will send you my proposal…

The old seller driven and seller biased way no longer works. Sellers must understand that Buyers are looking for committed partners.

The Operations and Factors that Lead to Success in B2B Sales

Putting it all Together

 

When assembled, the entire system consists of three very distinct but related processes, each feeding the next with the right kinds of leads.

Marketing’s job is to deliver the necessary number of highly targeted MQLs that the Prospecting team will use as its funnel.

The BDRs will then call, qualify, and schedule appointments, thereby delivering the necessary number of SQLs that the sales team needs to build its sales pipeline.

As we have stated, it takes 25-40 dials to reach someone, and you want to make sure that after all that effort, the person reached is the right person. We can’t emphasize enough the need for a highly targeted campaign.

You will notice that the top of each funnel is slightly bigger than the bottom of the preceding funnel. This suggests that each operation must also “make” its own required qualified lead. Prospecting must find its own MQLs in addition to what Marketing provides, and Sales must find its own SQLs in addition to what the Prospecting team delivers.

Finally, this is a closed loop. Not every appointment will happen, and Sales will ask the Prospecting team to reschedule the prospect (lead). More importantly, Sales may find that a prospect is not quite ready to buy and will place the prospect back into Marketing nurture, with a task for Prospecting to try another appointment— say, in six months. Your systems must be well integrated in order to automate this “send back” to the previous funnel.

The overall concept is fairly straightforward. However, given the differences in the three operations— as well as the need for different systems to manage each operation and the need to integrate these systems—the execution part is not that easy.

The key to successful execution is in clearly understanding the Critical Success Factors (CSFs) that will make or break these operations. There four CSFs are: Content, Content Distribution, Automation, and List Management. Read about the first CSF here.

The Physics of High Growth

What it takes to send a Rocket to the Moon

Imagine what it would take to safely send three astronauts to the moon

saturn rocket

and back. There is the weight of the astronauts, their life support system, instrumentation, the capsule they are in, and some way to land

on the moon and explore. That comes to around 22,550 lbs. total.

What it takes to get that payload to the moon and back is something totally different. It turns out that the total weight of the rocket that is needed is about 6.5 million lbs.

In other words, 99.65% of the total weight is required to

take that net payload of 22.5K lbs. to and back from earth. As crazy as that sounds, NASA actually came up with an ingenious design to reduce the total weight to that. The Saturn V rocket has three stages, with each stage focused on accomplishing one thing, and then basically being discarded to reduce the remaining payload. Here are some fascinating numbers:

 

Stage 1

  • Weight: 5.1 million lbs. or 78% of the total weight
  • Approximately 72% of the fuel and 78% of the total weight was to carry the payload 5% of the distance.

Stage 2

  • Weight: 1.06 million lbs. or 16% of the total weight
  • Approximately 22% of the total fuel is used in this stage to take the remaining payload 19% of the way

Stage 3

  • Weight: .262 million lbs. or 4% of the total weight
  • Approximately 6% of the total fuel is used in this stage to take the remaining payload 75% of the way

soma-rocket-fuel-consumption

Think about this for a minute:

  • 94% of the entire fuel is used up to take the astronauts only 25% of the way. That’s what it takes to overcome inertia and achieve the necessary escape velocity so as to actually reach the target.
  • But once escape velocity is reached, only 6% of fuel is needed to make 75% of the journey!

 

What this has to do with Revenue Growth

What we saw in the example of the rocket ship is Newton’s first law of motion at work:

“An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.”

In the case of an existing business that is growing at a certain pace a year, it will continue to grow at that pace unless something different happens—“ an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force.”

The First Law of Motion tells that it will take a significant amount of effort to change speed and direction of a business. An “unbalanced force” is necessary to change that. Let’s see how much of new force we need.

The Funnel Math of High Growth

The principle behind the launching of a rocket ship holds true for growing revenue. The calculations are however, different. And fortunately, they are simpler.

SOMAmetrics uses a Four Funnels approach to define the marketing, prospecting, and sales efforts needed to achieve a new level of sales. Some assumptions are made to illustrate the funnel math calculation:

Parameter Value Remarks
Current Revenue ($) 10,000,000
Targeted Revenue ($) 12,000,000
Net growth needed ($) 2,000,000
Average Deal Size ($) 50,000
Avg. No. Won deals needed 40 40 wins @ $50,000 average = $2million net new
Avg. closing ratio 20.0%
Sales Opportunities needed 200 Opportunities needed to close 40 deals
Prospecting conversion ratio 10.0% Number of opportunities converted from calling efforts
Marketing conversion ratio 2.0% Number of opportunities from
Blended conversion ratio 6.0% Average conversion ratio of marketing and calling
Marketing/Prospecting Leads needed 3,333 Total prospects needed to reach target
 Avg. touches per prospect  20  Calls and emails per
Total touches needed 66,667 Total touches needed to reach target

The above chart tells us the effort required to generate $2million in net new revenue.

  • We will need about 40 closed deals, each an average size of about $50,000.
  • At an average closing ratio of 20%, we will need 200 sales opportunities.
  • In order to get those 200 sales opportunities, we will need to touch around 3,333 prospects each about 20 times, or a total of 66,667 touches in a year. That’s a lot of emails and calls.

As in the case of the Saturn V rocket, we need a lot of effort (66,667 calls and emails) to get to some result (produce 200 sales opportunities for the sales team).

However, once we get things going (achieve escape velocity), it takes less effort to gain more revenue. These 40 customers may end up spending $500,000 or more each over their lifetime. They may give us other referrals, and that will come at lower cost and effort than going after a new customer from scratch, and their testimonials and case studies would make it easier to get new customers.

Yes, once we achieve escape velocity, it will take a disproportionately small amount of effort to get larger amounts of revenue (6% of fuel to go the rest of the 75% of the journey).

The big question is—where do we get the resources to achieve that escape velocity? Where will the 94% of fuel come to get us started on our cruising speed?

You can acquire a number of automation tools, not to mention hire a dozen new expert and mangers for them. In other words, build your own spacecraft to go to the moon.

Or, you can focus on your core business and leave the rest to a partner that already has made the necessary investments. Buy a ticket for a ride in a rocket moon.

After all, what you really want is to make sure that your sales reps have a full pipeline of high quality leads so they can focus on closing as many as possible. By working with a partner that has already made the investment, you can make your limited resources count for more and begin realizing results much sooner than you would if you had to setup the whole thing yourself.

Please contact me if you have question.

The ABC Gap of High Growth

The ABC Gap Dilemma

Somametrics abc-gapEvery company has some form of an ABC Gap: ‘A’ is where a company is today, ‘C’ is where it wants to be, and ‘B’ is its bridge (what it needs to do) to get from A to C.

The idea is that to the extent that a company is able to chip away at the gap between ‘A’ and ‘C’, then it is likely meeting its growth objectives on a consistent basis. Managing this gap and successfully moving closer to ‘C’ is what all executives spend most of their time doing, especially CEOs.

One important question is: when companies find it difficult to meet their growth objectives, is that because they don’t have a good plan ‘B’, or are they having difficulty executing on ‘B’?

What our research and experience shows is that it is more often the latter. Execution is the key challenge primarily due to resource constraints. Sometimes, a company doesn’t have certain skills it needs to execute the plan. But more often the case is that its people are already busy doing what today demands and don’t have the time to do the work that tomorrow demands.

In other words, when today (‘A’) competed with tomorrow (‘C’) for the same resources, almost always, it is ‘A’ that wins.

The reasons for this are well documented in books such as The Innovator’s Dilemma by Michael Clayton of Columbia University as well as in books by marketing consultant Geoffrey Moore (Dealing with Darwin and Escape Velocity).

We believe, however, that the reasons documented by these noted experts primarily apply to larger companies, and that smaller companies face a different ABC Gap challenge. This article discusses this issue from the perspective of a small company and attempts to provide a practical solution.

The Nature of ABC Gap

soma-generic-bus-mondelRegardless of industry, almost all companies must handle three generic business operations: they must continuously innovate and bring out new products and services, they must take these products and services to market, and they must fulfill the demand they created (manufacturing, delivering, supporting, and so on). While they don’t have to do all three internally (and indeed that is not the best option), they must execute all three better than competitors to achieve high growth.

The assumption here is that a company continues to innovate and bring out new products and services, which it markets/sells, and then delivers and supports.

However, what seems to happen to most companies is that ‘today’ wins over ‘tomorrow’. In other words, the customers of today, who use the products of today, get the lion share of the company’s resources—both in number and talent—first.

Geoffrey Moore, in his book, Dealing with Darwin, outlines this issue—what he calls “Core” vs. “Context”. According to Moore, Core, which is what differentiates a company, must be continually renewed in order to maintain competitive advantage and grow at a high rate. However, most of the company’s key resources are allocated to “Context”—those things that if not done will result in really bad things happening, but doing them well will not increase growth.

While Context work must be done, it confers no competitive advantage. For example, paying taxes or meeting regulatory requirements are necessary in that the consequences of not doing them can be serious. However, neither enables a company to achieve high growth.

Differences in Small and Large Companies

The Large Companies Go-to-Market Dilemma

When it comes to large enterprises, their greatest challenge is that their new innovations do not see the light of day in time before competitors beat them to it.

Most of these large companies have very good labs and innovation centers where they develop many new products. However, the revenues that would come from these new products are so dwarfed by the overall revenues from existing products that they get little or no top management attention.Eventually, they die at birth from lack of attention.

A case in point is Apple’s infamous Newton. When Apple launched its first Macintosh computer, it celebrated the day it passed the million-dollar mark with champagne.

The Newton, however, did not get the same treatment. Although it generated far more dollars than the first Macintosh ever did, it was considered a dismal failure and scrapped. Why? Because by then, Apple was a multi-billion-dollar company and their existing products were generating many tens of millions if not hundreds of millions of dollars in revenues.

For big companies, the challenge is not that they don’t innovate sufficiently, Typically, it is that they never get enough “go-to-market”resources for these innovations to take off and become successful.

Small companies, however, face a different challenge.

The Small Company’s Innovation Dilemma

For smaller companies, the challenge is quite different. Typically, it is finding the resources to build new products. The visionary founders are never short of ideas. However, bringing these ideas to fruition seems to be the challenge.

The reason for this is pretty much the same as for large companies. All available resources are used to support the existing products and the existing customers that use them. In fact, their best engineers often work to fix issues for important customers, rather than working on new products.

And since support people are usually less expensive than engineers, they tend to have very large support organizations compared to their engineering department. It is common to have a ratio close to as much as ten support people for each engineer they have. As more support people are hired, there is less money to hire engineers, requiring more support people to patch together products, etc.

Every CEO of a small company knows this problem too well. But where to find a practical solution that takes care of today as well as tomorrow?

Outsource what’s Context

There is one strategy that small companies can use effectively to free up scarce capital so they can close their ABC gap:

Hire for Core and outsource as much context as possible.

This strategy enables a company to get two benefits in one fell swoop: free capital for Core and improve the quality of Context work, both at the same time.

Outsourcing Benefit 1: Focus

The problem with Context is that it tends to take over and create a distraction. Employees are human beings with lives, and lives are complex. The more employees a manager has reported to her, the more time she spends dealing with “people” problems separate from the functional or business problem over which she has responsibility.

By definition, context is work that must be done since not doing it will create very bad problems. However, doing context work in no way improves the competitiveness of a company.

Think of it context as a bad headache. You can’t ignore it when you have one. But not having a headache does not mean you don’t have any other problems. It just makes it harder to solve other problems with a bad headache.

Outsourcing context work is essentially outsourcing the headache so you can focus on solving the real problems you need to solve without the distraction of the headache.

Outsourcing Benefit 2: Flexible Spending

Another important benefit of outsourcing Context is enabling a company to pay for what it needs when it needs it and at a higher level of expertise, instead of committing to “bulk purchase” of resources it can’t fully utilize.

For example, a typical B2B marketing operation may consist of the following tasks: building and managing campaign lists; developing new content; maintaining the company website and its social media properties; managing outbound and inbound campaigns, and more.

Each of these tasks is a specialty area with its own best practices. Hiring a specialist for each task is usually overkill for a small company. So, what typically happens is that smaller companies hire a couple of people in their marketing department and have them basically divide the tasks.

Since each marketing staffer cannot reasonably master more than one area, he or she will end up learning just enough to complete the task, but not enough to do it exceptionally well. That is all he or she can do given the amount of learning required and the limited time they have to master each area.

Compare that with an agency that has several specialists, each focused on a single area of expertise. Because each is an expert, whatever work they do is done at a higher level of effectiveness. At the same time, the client company only pays for what it needs when it needs it.

This enables the company to utilize a small portion of its available resources for Context work, and have it done even more efficiently and at a higher level of competency than it would internally.

How to Decide what to Outsource

The chart below provides a short analysis for making a decision to hire versus to outsource.

Function Category / Decision Analysis
Sales Core/Hire Sales needs to partner with buyers in order to effectively sell products and services. The more complex the solution, the more strategic the relationship and the more it needs to be in-house. Winning a deal greatly depends on the sales rep’s ability to forge trust and build partnership with the buyer.
Business Development Context / Outsource This is a very high-volume short-relationship engagement. Potential buyers will remember if this goes bad, but will not remember if it goes well. No company wins customers because the person who first called them and set an appointment with a sales rep impressed them.
Marketing Context / Outsource While the development of a marketing strategy should never be outsourced—it is what the top level management does—the execution of the marketing strategy is largely context and confers no competitive advantage to the company.

Most often, companies mistake strategy and execution. Execution on the strategy requires expertise that most companies do not need to develop—content creation, messaging, list management, campaign management, etc. There are many firms that have both the expertise and the advanced systems to do this work more efficiently than any company could or should internally.

Innovation / Development Core/Hire For most product companies, this is where their competitive advantage lies. While there are aspects of product development that are context (quality assurance, release management, etc.), the actual design and development of products should be an in-house operation.

We should make the distinction between a product company developing in-house versus say a financial firm outsourcing the development of an App to an independent agency.

Customer Support Context / Outsource Many companies can get away with outsourcing their customer support operations. The key is to make sure that the company to which they outsource would provide at least the same level of support to customers as they would.

In reality, however, many companies do not feel comfortable outsourcing this operation and tend to hire in-house.

Finance, Accounting, HR, IT Context / Outsource Generally, these areas of operation can safely be outsourced. The key is to have a very senior and strategic head with a very thin in-house operation managing by results the efforts of the outsourced team.
Legal / compliance Context / Outsource For companies that are in a highly regulated industry, the consequence of getting on the wrong side of the law can be very grave. Therefore, although this is clearly context, it is so mission critical that most companies will have a hard time outsourcing this function. The key is to really understand the risk and manage it in the least costly way for the firm.

 

Predictable Revenue Model

A Predictable Revenue Model enables a company to become a market leader by unleashing its full revenue potential so it can consistently achieve a high growth rate, year after year.

Why High Growth Rate Matters

Companies that grow at a high rate tend to be market leaders. Market leadership is important because brings with it strong financial rewards, such as high valuation and high profitability.

  • Customers generally prefer to buy from market leader, as they feel it is less risky to do so. This naturally reduces the cost of marketing and selling for the market leader. Furthermore, customers expect to pay a premium for buying from the market leader. Higher prices at lower marketing and sales costs translate into higher margins.
  • Vendors as well prefer to work with market leaders and are willing to give favorable pricing and terms to gain their business. This further enables the market leader to keep input costs low while charging premium prices for its products and services.
  • Finally, market leaders have less recruiting and hiring costs compared to their competitors, while still attracting the best talent.

More profits and better talent will eventually result in greater competitive barriers being erected, enabling the market leader to become dominant for possibly a long time.

Clearly, high growth rate matters. The real question might be how does one achieve it. And how much should that rate be? And how much will this expensive initiative cost?

A Predictable Revenue Model attempts to provide answers to these critical questions.

Structure Predictable Revenue Model

A Predictable Revenue Model (PRM) has three main phases: plan; execute, and learn. Each has its own role to play, but all three have to work together to deliver the true power of PRM.

  • Plan
    • Targets
    • Metrics/KPIs
    • Resources
    • Execution Plan
    • Budget
  • Execute
    • Setup
    • Nail
    • Scale
  • Learn
    • Measure
    • Analyze
    • Adjust
    • Document

These are the components of a Predictable Revenue Model, whose purpose is to enable a company to become a market leader by unleashing its full revenue potential so it can consistently achieve a high growth rate, year after year. It is agile, constantly renewable and repeatable, and it should work in any company.

Unleashing Untapped Revenue Potential for Sustained High Growth

What is Untapped Revenue Potential?

Untapped Revenue Potential  (URP) exists in every company.  It is the difference between the revenues that a company is capable of generating, were it to take full advantage of the opportunities available, and what it is actually generating.

This delta is inversely proportional to a company’s rate of growth. The faster a company is growing year to year, the smaller the delta, and vice versa. In other words, companies growing under 20% year to year are far more likely to have significant Untapped Revenue Potential.

Amazon’s S3 cloud storage business (where customers rent online storage space) provides an excellent example of how a more vigilant company sees URP and acts to unleash it. When Jeff Bezos launched Amazon.com as an online bookseller in 1995 with the vision of some day building it into the largest online retail store, he could not have anticipated the Cloud Storage business. So, why get into that business and compete against well-established data centers?

Well, because it made sense. As a natural outcome of its relentless pursuit of becoming the largest online retailer, Amazon developed the necessary expertise and infrastructure to build and run one of the largest data centers in the world. It seemed logical for Amazon to simply build excess capacity and sell the excess to customers that needed the service. In doing so, Amazon not only increased its overall revenue, but it now has double the reason for constantly improving and upgrading its data centers. The need to be competitive on the cloud storage business end enables it to have the fastest, most secure, and most reliable online store, increasing the distance between itself and its online store competitors.

This is the most important definition of a true Untapped Revenue Potential (URP). Unleashing a true URP not only will bring incremental revenue from that new source, but it will also increase revenues you earn from the rest of your business.

Why Untapped Revenue Potential (URP) Exists

Imagine if you had a ten-room house, but you were using only 4 or 5 of these rooms. It could be because you didn’t even know you had the extra rooms. More likely it would be because you didn’t have the resources necessary to make the rest of the rooms fully livable.

And so it appears to be the case with URP. URP exists for a variety of reasons—partly because it gets created without anyone really knowing it, and partly because companies do not pursue what they already know exists.

One important source of URP is the huge amount of features and capabilities that get into very mature products and services as a natural outcome of being in business for several years. As a company grows and begins to handle a variety of types and sizes of customers, it starts building “hidden” products and services for which it never thinks of charging money. The more a company works to accommodate and satisfy an increasing size and variety of customers, the more it creates new sources of revenues that were not available to it before.

Another source of URP is less hidden. Companies actually have products for which they charge money, but they don’t have a systematic program of making sure that their customers are aware of them and buy them. Why? Because the companies typically don’t know which customer has which product and therefore, can’t do targeted marketing and sales.

In our experience, both these reasons tend to coexist, increasing the size of URP. Sometimes our clients indeed were aware that certain sources of revenues were available to them, but they lacked the skills and resources necessary to develop them into moneymakers.  And there were still other sources of potential revenues that our clients didn’t even know existed.

Ten Examples of Untapped Revenue Potential (URP)

If you don’t think your company has URP, take a look at the examples below. Any company that:

  1. Continues to add features into its products and services, as new and bigger customers ask for them, and doesn’t do anything to break the product into several versions, charging more for those that have more capabilities has URP.
  2. Makes complex products and does not have a Maintenance Service Program where its customers purchase assurance that their expensive equipment will be routinely maintained so as to eliminate the risk of costly downtime has URP.
  3. Has customers that are sourcing what it sells from multiple vendors and doesn’t know how much that is, and hasn’t done much to win this additional business has URP.
  4. Does not know the delta between the number of licenses it has sold into an account and the number of potential seats available in that account has URP.
  5. Discounts deeply to win business over cheaper alternatives without explaining to its customers why they are actually saving money by paying its higher prices has URP.
  6. Sells several products and doesn’t know how many of its products are with which customer has URP
  7. Has lower closing ratios and/or longer selling cycles than its competitors has URP
  8. Does not receive sales leads from its customer support organization has URP
  9. Has not built at least 25% of its customers into raving fans that will bring it new customers on their own has URP
  10. Has NOT integrated its accounting/billing system with its marketing systems such that marketing information automatically go out to existing customers based on what they have purchased, when, and how much has URP.

There are many more examples of URP. The question is not “Does URP exist in our company?” Rather it is, “How much URP do we have at our company?”

Identifying Untapped Revenue Potential

The Four Quadrants of High Growth is a the most effective and systematic approach to identifying the URP available to a company by breaking up the total addressable market available to a company into four quadrants. Quadrants 1 and 2 are of existing customers while Quadrants 3 and 4 are of non-customers.

The model helps companies identify the sources of information that reveal the URP in each Quadrant. Once you know the URP in each Quadrant, you can add them up to arrive at the total URP, which then enables you to define and build a Predictable Revenue Model™ for your company.

Quadrant 1

If a given customer purchases say 100 units of a product that you sell, but they buy only 47 units from you, then they are getting the rest (53 units) from other vendors. There is URP of 53 units from this customer. If you then determined similarly for all your customers, then you can come up with the total URP in Quadrant 1 for just that product.  The next question how much of this URP can you tap into in the current fiscal year?

There is another form of URP in Quadrant 1, which is perhaps even more difficult to determine than the above example. Let’s say you sell 47 units to the company and that is all the company is buying—in other words, it has given you all of its business. However, although it has not given its business to anyone else, it still has need for 100 units, since there are other needs in the company that your product could have addressed—a need is latent and unexplored. It is up to you to identify this new need and bring this latent need to the front so that your customer is aware that purchasing more units from you can address this previously unmet need.

Quadrant 2

If you sell more than one product, then your Quadrant 2 URP falls into one of the following categories:

  • Add-ons: These are additional services or components that customers typically need when they purchase another stand-alone product. A Maintenance Service Program or product warranty is a type of add-on that makes sense to sell along with an expensive or complex product
  • If you have two-or more levels of a product or service—for example you have a professional and enterprise edition—then every customer who is on the lower, less expensive version, is a candidate for an upgrade. This gap is part of your URP.
  • If you sell two or more standalone products that nevertheless could be designed to work together such that buying both actually returns higher value than the sum of the cost of each, and you haven’t either done that or are not selling the package, then you have URP left on the table.

Unleashing Quadrant 2 URP requires looking into the design of your products and services such that you can easily add and sell them as packages, as well as making it easy for your customers to upgrade to a higher level of product or service. The more automated these are the faster and easier you can unleash Quadrant 2 URP.

Quadrant 3

Quadrant 3 is what, typically, companies think of when they think of growing revenue—getting new customers. However, this is far more expensive way of generating more revenue when compared to Quadrants 1 and 2, partly because these are non-customers who see you as high risk since they have never done business with you yet, and partly because they already have some way of addressing the need that you want to take care of for them. For them, the devil they know is better than the devil they don’t know.

However, broadening the customer base is still critical to growth since that is the enabler for Quadrant 1 and 2 sales in future. There is a more effective way to go after non-customers in your current market space. Our Four Funnels Framework is an excellent methodology for leading customers from a very low state of buyer readiness in Funnel 1 to a much higher state of readiness to buy in Funnel Four.

The Funnel Math is a precise tool for calculating what you need to do to tap into Quadrant 3 URP. In fact it is the only reliable way you can see the level of investment needed to achieve your desired revenue growth in Quadrant 3 and budget for it appropriately.

Quadrant 4

Working in Quadrant 4 is like space exploration—expensive and risky, but with a lot of upside if done correctly—or think of a home run. It is basically an attempt to answer the question, “What other market segment(s) is/are there that can use our products and services, where our success stories in our current segment are still relevant enough to convince those customers we can help them, and we can do so with moderate amount of customization to our products and services?”

This requires a systematic search of another market sector for you to develop cost effectively—a sector that has a compelling need for a solution that you can bring to market quickly, where competition is not too entrenched, where the customers can afford your solution, and are accessible to your marketing and sales efforts.

Unleashing Untapped revenue Potential (URP)

So, how do you unleash your company’s Untapped Revenue Potential?

There are five key steps to unleashing URP:

  1. Discover all possible sources of URP by systematically working through each of the Four Quadrants—basically doing what we call a Corporate GAP Audit
  2. Determine the investment required (proforma P&L) to tap into each potential source of revenue
  3. Prioritize according to the amount of URP and cost/risk of unleashing each URP source
  4. Define the project plans for the top candidates
  5. Implement the necessary projects to unleash URP

None of these five steps is particularly difficult to do. So why do so many companies leave so much URP? It turns out that the companies that have significant URP never even get past step #1, for a variety of reasons. It seems that that the hardest part for most companies is actually finishing the Discovery phase–perhaps because they don’t have the time or expertise to do that in-house.

This is where outside expertise and resources can make a big difference in getting an initiative off the ground quickly and cost-effectively.

How SOMAmetrics can Help

SOMAmetrics helps companies to identify and take full advantage of their untapped revenue potential so that they can consistently grow 20% or more each year.

SOMAmetrics has developed proven methodologies and best practices for unleashing URP, honed while working at and with over 100 companies with a variety of sizes, maturity, complexity, and belonging to a wide range of industry segments.

Unlike other consulting firms that simply diagnose and prescribe a solution plan, SOMAmetrics goes much further to provide the necessary implementation expertise, project management skills, and resources our clients need to unleash their full revenue potential.

Contact us today to discover and unleash your Untapped Revenue Potential for sustained high growth.

The Front End to a Viable Sales Funnel

planning

The key to a healthy, viable sales funnel begins at Teleprospecting. Determine the number of Marketing Qualified Leads for each Teleprospecting team (I recommend at least 150 leads per person). Then, verify their access to these leads.  Lastly, apply the Teleprospecting Best Practices recommend in my blogs.

Be sure to keep these 6 points in mind, as you establish and expand your teleprospecting team.

  1. The Sales Funnel is King! Instill collaboration between Sales & Marketing to ensure a quality sales funnel. These departments must develop and agree on qualification criteria and other key metrics, to ensure consistent sales funnel growth. Revenue growth will cease without quality Sales Qualified Leads (SQL) and a healthy Sales Funnel.
  1. Hire experienced staff. The Teleprospecting team is most often the first contact a prospect will contact, within a company. Therefore, it is counter-productive to assign entry-level employees to these positions. They lack experience in selling complex solutions and communicating with senior-level executives. With a history of nearly 30 years, experienced professionals are readily available to hire. This is one decision your company will not regret.
  1. Focus Teleprospectors on one Solution. Efficiency begins to decrease as telemarketing teams become responsible to sell & learn multiple products or solutions, especially if they are complex. Focus delivers a quality sales funnel.
  1. Develop and implement Kay Performance Indicators (KPIs), or metrics, to manage a team. Once the KPIs have been established, assign each team to create a plan that outlines a process to reach their goals. This empowers team members to carry out each task and take responsibility to meet their objectives. Managers may work alongside the Teleprospecting teams to ensure the practicality of these plans. These plans also provide a blueprint to manage activities and measure results, for the Manager, as well as the Teleprospector. (See my blog for details here).
  1. Develop a Teleprospecting Playbook. A Teleprospecting Playbook is a set of tools that guide Teleprospectors through the qualification process for Complex Solutions. This playbook must be written and assembled by individuals with sufficient knowledge, such as expert from Product Marketing or Sales.
  1. Build compensation plans that drive desired behavior. A satisfying compensation plan motivates Teleprospectors to excel at their duties. Create compensation plans that focus on the Sales Funnel and generate revenue growth.

These 6 points will allow you to create a strong front-end for your sales funnel. By applying these best practices, your team will produce a healthy, robust sales funnel, providing for an increase in revenue growth.

 

Alicia Assefa has been managing Teleprospecting and Inside Sales teams for the past 15 years. She is the author of the bestselling eBook “Teleprospecting for Executives Who Sell Complex Solutions”, which is available on Amazon here.

3 Questions to Ask when Interviewing Potential Hires

In this job market, when companies have open Teleprospecting positions (or any open positions, for that matter) they tend to receive a large number of resumes.  The position is open for a reason and any delay in filling it may delay sales funnel growth.  That is why companies feel compelled to get the hiring done fast. In an effort to fill the position quickly, some resume screening occurs and viable candidates are brought in for in-person interviews.  Several key people are asked to interview each candidate to review their skills and to see if they would be a fit for the company.  These interviews happen within the same day. I call this the “Interview Shuffle”.

During the interview shuffle, Teleprospecting candidates meet with several people from marketing and sales.  In some cases, candidates will have a final interview with the CMO, CSO and even the CEO.  Depending on the number of people required to do the interviews, the actual time each member of the interview team spends per candidate may be only 30-45 minutes, at the most.

These are the 3 reasons why I advise my clients against using this method to interview candidates:

1. Who is this person?

In 30-45 minutes it is difficult to determine if the candidate is a good fit for the position or the company.  A series of questions are asked and people who are good at interviewing may wow each interviewer.  When a decision is based on this first series of interviews, I have seen that the hiring manager regrets their decision within the first 3-6 months because the candidate isn’t performing as well as was hoped. Bring the candidate in at least 2-3 times.  Ask the candidate a few of the same questions that were asked during the first interview.  Are their answers generally the same?  Or are their answers significantly different?  Plan the questions that the interview team will ask each candidate.  Make sure that the bulk of the questions are “situational” questions.  Ask questions that require specifics for how the candidate performs their job.  For example:

Question: Give me an example of a typical day at your current job.

Good answer: “I get into the office around 7 am and take a quick look at my activities that I have set up for the day. If there is a company that I need to research, I will take a moment and Google the company before I make the call.”

Bad answer: “Well, in this job, I guess most people start early after they get their coffee and then they start making calls.”

Situational interviewing takes time.  It is the best interview format to uncover if the candidate knows their stuff.  This interview process might take 90 minutes or more for each interview team member to complete.  The time will be well spent because the information uncovered will help you to make a more informed decision.

2. What is the commitment level?

When a candidate is interviewed by the interview team on the same day, there is no way to tell how committed the candidate is to the position or the company.  When candidates are asked to return for additional interviews, the hiring manager has an opportunity to verify continued interest.  Determining commitment level is another reason why the candidate should come back to the office 2-3 times. By doing this, you will see how committed the candidate is and it gives you more than one day to determine if they are the best candidate for the job.  Are they professional and appropriately dressed each time? Do they exhibit a continued level of enthusiasm?  Do they ask additional and interesting questions about your company with each subsequent interview?  If not, the candidate may not be right for the job or your company.

3. What does the interview team think?

There is a Chinese proverb that says “Don’t be over self-confident with your first impressions of people”.   There are many people who are very good at interviewing.  Sometimes these people are great on the job and sometimes they aren’t.  I do believe that managers should trust their gut if they don’t feel good about a candidate.  However, I think that a hiring manager should give themselves some time to see if their first “good” impression sticks.  This can’t be done in 1 day. Bring the candidate back.  Circle back to the interview team to see if they too continue to feel good about the candidate.

The Interview Shuffle enables companies to get their open positions filled quickly.  From my experience, however, this hiring method costs companies time, wastes resources and inhibits a company from meeting objectives.  Too often the wrong candidates are selected and the position is open again within a few months.

I recommend that you have the hiring manager conduct the first interview; taking time to ask situational questions to determine fit. Candidates who pass this first interview should be asked to meet with the interview team and the hiring manager a few more times and over a period of 8-10 days.  This will give everyone time to get a good sense of the person.  If you rush the hiring process you might regret your choice later on. Take a few weeks to get a sense of the person so that you will not have to repeat the interview process again in a few months.