Prospecting is how companies find new business—it’s the process of searching for potential buyers for your company. But you’re not looking for just any customer. Prospecting identifies buyers who would be a good fit for your products, which increases the effectiveness of your sales and marketing efforts. This is crucial for any company’s success.
Read on to discover the three key steps to high performance prospecting.
Start by determining your goals for your prospecting efforts. What concrete results do you want to see? Set a quota that you want to reach, and then make a concrete plan detailing how you will reach that quota.
Create a short, 1-2 page GOSPA (Goals > Objectives > Strategies > Plans > Activities) to solidify your plan to reach your prospecting quota. You must directly connect Objectives with Activities using realistic numbers and ratios.
By creating a detailed and concrete prospecting plan, you lay the foundation for your success. This process ensures that your prospecting efforts will deliver demonstrable results.
Now that you have identified your likely buyers, it’s time to catch their attention. This step involves your company’s value proposition, which identifies your unique offering to customers. What do you have to offer? What can you do better than everyone else? What’s your specialization? This is what your value proposition should explain.
Sales calls are one of the most effective ways to intrigue buyers. They’re quick, easy, and they give you the chance to connect with buyers as individuals. Plus, responses to sales calls demonstrate more interest than responses to emails. So, you receive higher quality leads from your sales calls, which is exactly what you want your prospecting strategies to deliver.
You might be wondering, what if they don’t pick up? If your call is sent to voicemail, that’s no problem—just leave your 10-second value proposition as a voicemail. A well-crafted value proposition will generate interest in any format.
Qualifying and Scheduling
All the processes you’ve completed up to this point work toward the ultimate goal of making a sale. Now, you must ensure that your planning and hard work will pay off.
Create a clear qualifying process that prioritizes the most important, must-have criteria for your leads before the nice-to-haves. You want your prospecting strategies to result in highly qualified leads who are motivated to schedule appointments with sales. Keep this goal in mind as you determine your qualifying criteria.
Prospecting: Final Thoughts
Planning, intriguing, qualifying, and scheduling: these are the key ingredients for your high performance prospecting strategy. Throughout each step, remember your ultimate goal of increasing sales—this will substantiate your decision-making as you build your prospecting strategy. When done right, prospecting strategies will increase the efficacy of your marketing campaigns and deliver more qualified leads to your sales reps.
If your marketing and prospecting is working, you will find that a lot of people are opening your emails, clicking on links, downloading papers, and attending your webinars and other events. All that is great. However, not all of these people are qualified to see your most expensive resources—your sales reps.
What you want to do next is pre-qualify these prospects to make sure that your sales reps are meeting with the right people, at the right time. You want to give your sales team the truly Sales Qualified Leads (SQLS).
The objective of the Teleprospecting process is to pre-qualify MQLs and set appointments for the sales team with qualified prospects who are decision makers and ready to meet with a sales rep.
As we mentioned earlier, only a small portion of even your most actively engaged audience will reach out to you asking to be contacted. The vast majority will continue to view your new content and attend many of your events without making a move to buy.
You need actual humans to call them, qualify, and then set appointments with your sales reps for the qualified prospects.
This is far harder said than done:
In today’s B2B world, it takes between 25-40 dials to reach someone, and it may take two rounds to reach the right person. Therefore, it is vital that the target list ONLY contains highly targeted prospects rather than a wide audience.
Once you reach the right person, you have about 20 seconds to get the attention and curiosity of the prospect before she says, “No thanks” and hangs up on you. During that brief moment, your rep must make a compelling value proposition; keep the prospect engaged, and qualify her adequately.
Since your reps have less than a minute or so before the prospects says she has to go, they need to immediately ask your most critical qualifying questions—those that would absolutely qualify the prospect IN or OUT. First, is the pain a pressing issue; next, is this the right person to talk to; after that, are there any disqualifying criteria; and finally, if it’s all a go, schedule the meeting.
Clearly, you want to use highly experienced Business Development Reps (BDRs) for prospecting. They must have at least 5-7 years of experience in B2B prospecting, and preferably have had quota bearing inside or field sales experience as well. Remember that this is your first line team, not a place to try and save a buck or two.
Besides the actual number of appointments set per month per BDR, you want to track how many of these were added to the sales pipeline (conversion rates); how many were attended or rescheduled; and how many were no-shows. You also want to track these numbers not just in the aggregate, but per BDR and sales rep to see if there are anomalies you need to address.
This year Christmas is in the dead smack middle of the week and so is the New Year. On Wednesday, December 25th and Wednesday, January 1st, most corporate offices will be closed for the Holidays. Many prospects will be in a Holiday stupor days before these holidays begin. So what is a Teleprospector to do?
As a 20 year veteran of inside sales and Teleprospecting management, I highly recommend that companies give their Teleprospecting teams a well-deserved break from phone work, starting December 23rd through January 3rd. If you don’t have a great sales funnel from leads, you won’t get one at the end of the year. If you have a very successful Teleprospecting team, who consistently generates a slew of SQLs each month, the leads will sit, untended by sales, because the sales team will be focused on bringing in end-of-year deals. And in general, it will be more difficult to get prospects on the phone, as they too are trying to close deals, close books and shop (online from their desks) for gifts.
So, what should a Manager do with the team during the period between Christmas and New Year’s Day? Here is what I recommend: train, refresh, plan and cleanse:
Train: This is a great time to train teams on sales methodologies, call strategies, new products and new productivity tools. Teleprospectors make over 13000 dials per year (260 work days * 50 dials per day). During all this dialing, skills can take a beating. Use the 6-8 days around the holiday to do role plays, learn new sales methodologies and up the team’s game. You may also consider running a “demo” day, where team members learn how to demo your solution. This is a great way to get the team to grasp what your solution is and how it helps your clients.
Refresh: Use the Holiday down time to refresh the team on your corporate and product message. Over time messaging can get sloppy. If you can, bring in your product marketing expert to run a mini-training to review messaging, updates to your solution and customer stories.
Plan: To ensure that the year starts out right and that your Teleprospectors will meet outlined goals, have them work on their GOSPA or Success plan for the coming year during the Holiday period. Your team will have several days to think about the goals, objectives, strategies, plans and activities which they will implement to meet next year’s quotas and Key Performance Indicators.
Cleanse: The holiday period is the perfect time to cleanse the database. Contacts and companies change a lot during a 365-day period. Which companies and contacts are still valid? Who has moved on to a new company? Which of your prospect companies have been acquired? Which companies should the team target to call over the next few months? Which leads should go back to marketing for nurture? I advocate that companies do a regular database cleanse and this should be the last cleanse for the year. During this period, Teleprospectors will have time to research companies and create their list of “call” tasks that will help them to kick-start the New Year.
Making Teleprospecting calls during the holidays can be frustrating. Your prospects will, for the most part, be in “Holiday” mode. It will be tough to get people on the phone or to engage them during this time. Leads that are generated during this period will probably sit for 2 weeks or longer and will need to be re-qualified.
Teleprospecting during major Holidays can be frustrating. Give your team a well-deserved break from the telephone this Holiday season. Train, refresh, plan and clean. Come January 6th, your team will be ready to pick up the phones.
Mapping the Teleprospecting process into your CRM will help ensure that the process is being used consistently by all parties. You need to build a workflow that manages Marketing Qualified Leads (MQL)-to-Sales Qualified Leads (SQL)-to-the Sales Funnel process which can be easily reviewed and approved by the Teleprospecting Manager and managed effectively by the sales team. Additionally, this process ensures that your field or inside sales teams are following up on SQLs in a timely manner. Finally, you want to see which SQLs are approved by sales and then added to the Sales Funnel as well as which SQLs are rejected and sent back to Teleprospecting (for follow-up) or Marketing (nurture).
If a SQL is rejected, you need to know why. Rejected SQLs can provide important information for marketing and Teleprospecting managers. Teleprospectors whose SQLs are frequently rejected might need training. If training doesn’t help, they need to be removed from the position. Another reason SQLs may be rejected from a particular industry segment might be because your messaging is off for that target. Rejected leads provide valuable information about your employees’ abilities, messaging, sales acceptance, and targets. Make sure that you capture the reasons for rejection and use this information to continuously improve the process and skills of your team.
Capture the Right Data
When you have determined your qualification criteria, add these as fields to your CRM. Companies often have their Teleprospectors and sales teams put information in a notes section. Most CRMs have notes fields, which are unstructured text fields where data is entered randomly by reps. Reporting on this data is extremely difficult, which prevents a company’s ability to effectively gather market intelligence to continuously improve their marketing and messaging. The randomness of information creates frustration for sales teams who need to quickly assess if the SQL is viable. When specific qualification criteria are added as distinct fields:
Management can run reports. For example, if “Key Initiatives” is a drop down field highlighting initiatives that redirect to your solution, managers can get a sense of real key initiatives of prospects. As these may change over time, you are still able to gain insights from this data.
The sales organization can have a template for reviewing all SQLs. Once the sales reps get into the habit of checking the information, they will be able to easily assess the quality of SQLs prior to the first call.
Teleprospectors can follow the information given while using their Call Guide. This way, important qualifiers won’t be missed as they speak to prospects.
The Teleprospector managers can have the information at their fingertips. They can quickly scrutinize SQLs for their compliance with the qualification criteria. If data is missing, the Teleprospector can go back to collect additional details. These details provide an overview of the SQL/Company landscape and are highly coveted by Sales.
If qualification data is crammed into notes, it will be very difficult for managers to validate and quickly understand the quality of each lead. The SQL process slows down and the sales team becomes frustrated as the sales reps are required to read through clusters of unstructured data. Therefore, add the key qualification criteria into your CRM to make this process more efficient. Your CRM will become an easy to manage prospect map that your sales teams will appreciate.
For the most part, my experience has been in the design and implementation of Teleprospecting organizations for companies that sell complex technology solutions. During my years as a consultant and employee, I have developed a set of Best Practices that enable Teleprospecting teams to successfully drive Sales Funnel growth. Essentially, there are 6 Teleprospecting Best Practices that I have found to be the most effective:
Marketing and Sales should be focused on the Sales Funnel. The Sales Funnel is King! Marketing and Sales should both be responsible for building a quality Sales Funnel. These two departments need to work together and agree on the lead qualification criteria and other key metrics that will ensure that a quality Sales Funnel is being built and is consistently growing. Both teams should be responsible for the quality of sales qualified leads (SQLs) since they are the source of a healthy Sales Funnel that produces revenue growth. Therefore, the implementation of a process for tracking the quality of SQLs is a key factor to the growth of the Sales Funnel.
Hire experienced staff. In most cases, the Teleprospecting team is the first contact that prospects will have with your company. It is therefore counter-intuitive to put your most junior people on the front lines. They have neither the experience to navigate the complexities of a complex solution nor the ability to speak with Senior Level Executives. Furthermore, since Teleprospecting has been around for nearly 30 years, “Seniors” are readily available. Hire experienced people and you won’t regret it.
Focus Teleprospectors on one solution. You can’t expect your teams, Juniors or Seniors, to be effective if they have to learn and sell multiple Complex Solutions. From my experience, Teleprospectors are more successful when they are focused on qualifying for a specific solution. If your company sells multiple solutions, divvy out responsibilities and focus each person on a specific solution. This focus enables team members to become experts at qualifying for the specific solution and will result in better leads for your sales teams.
Develop and implement Key Performance Indicators (KPIs), or metrics, to manage your team. Effective KPIs can include metrics such as:
Total Key Conversations with prospects who can move the sales process forward
Size of the Teleprospecting Funnel, which should be at least 3X your monthly SQL quota
Achievement of the monthly SQL quota
Effective KPIs are the metrics that directly impact your ability to meet your stated objectives. Total daily dials are important because dials lead to conversations. Key Conversations are more important than dials, because they help to generate the Teleprospectors’ Funnel growth. Know your KPIs and weigh them based on priority of importance (Key Conversations are more important than Dials). Once the KPIs are established, have the team build plans, outlining how they will achieve their assigned objectives.
Develop a Teleprospecting Playbook. A Teleprospecting Playbook is a set of tools that Teleprospectors will use to guide them through the complexities of qualifying for prospect need and interest. The playbook should be written and assembled by people with sufficient knowledge, such as experts from Product Marketing, Marketing, and Sales. It will serve as a consistent source for your Teleprospectors to maintain professionalism while also increasing efficiency.
Build compensation plans that drive desired behavior. Good compensation plans motivate Teleprospectors to excel at their jobs. The role of Teleprospecting is to generate leads that build the Sales Funnel. A good plan will compensate Teleprospectors for meeting a pre-established “approved” lead quota, as well as provide compensation for leads that go into the Sales Funnel. While Teleprospectors aren’t responsible for closing deals, they are responsible for generating quality leads that build a Sales Funnel. Deals that close generate revenue and these deals come from quality leads, therefore Teleprospectors should receive some compensation for their leads that close. When Teleprospectors are paid for the process from the beginning (leads) to the end (closed deals), the quality of leads becomes very important and motivates them to consistently generate viable leads.
Companies that have asked me to turn-around their Teleprospecting teams had initially set up Teleprospecting as an after-thought. None of the companies had these Teleprospecting Best Practices in place. Then, in each of the turn-around situations I implemented these best practices and saw not only the Sales Funnel grow dramatically, but also significant revenue increase.
Teleprospectors are the vital link between Marketing and Sales; they are responsible for transforming Marketing Qualified Leads (MQLs) into Sales Qualified Leads (SQLs). Teleprospectors work with your prospects through the qualification process until they are ready to be handed over to your sales team. Therefore, it is important that their engagement methods, messaging, and targeting is spot on. To ensure this, your company’s marketing and sales experts should provide Teleprospectors with sales tools to help them effectively navigate the lead qualification process. One such tool is a call guide or script.
A call guide or script is used to meet the following objectives:
Provide a quick introduction of your company to prospect (30-second commercial)
Give prospect insights into issues you have solved for your clients (select 1 great client story)
Uncover prospect pain/need and additional qualifiers
Determine if prospect is ready now or within your company’s established timeframe (typically under 6-months)
Generate a first meeting or demo (either on the phone, web or in-person)
Generate a Sales Qualified Lead
The script will have an opening statement, as well as the qualification questions that you want answered. The opening of the call guide is very important. Literally, in 30-60 seconds, the Teleprospector has to share who they are representing and why they are calling.
Call Guide Opening
The Call Guide Opening has the following basic parts: the 30-second commercial, a customer story, and segue into qualification questions. Here’s an example of each of the sections:
30-second Commercial: SOMAmetrics is a sales and marketing consulting practice and we help our clients accelerate growth.
Customer Story: In 2011, we assisted a $50 million dollar Tech company, which had lost half of its revenue and customers. The CEO brought us in to implement our Sales and Marketing Best Practices and as a result, 2012 revenues increased by 57%. The client has been working with us for over 18 months and we expect 2013 revenues to increase by an additional 35-40%.
Segue into Qualifying Questions: Perhaps your company has similar challenges? Is now a good time to ask you a few brief questions, to get an understanding of how we might work together? (If no, get a date/time).
Create distinct call guides and openings for each of your Targets (CXO, VP/Director, and Manager). The Teleprospector will have fewer than 60-seconds to engage the prospect. Consequently, the messaging needs to be spot on to keep prospects interested and to give your Reps the opportunity to share more information about your product or service.
Companies that have complex sales solutions have additional challenges in meeting their revenue targets because it is even harder to predict if a deal will close. Anything can go wrong to delay or even stop the deal from closing. This is a major problem that many of our clients struggle with. SOMAmetrics specializes in helping clients address a number of issues related to complex sales and this article discusses some important points executives should think through.
For discussion purposes, we will define a complex sale as one that typically targets large organizations (fortune 2000 companies and government entities); poses significant risk and cost for the customer; involves at the very least a handful of key stake holders besides the final economic decision maker; many times involves a CEO, CFO, or CIO (a CXO); where decision making process is complex; and is usually the result of a company or division-wide initiative.
To complicate things further, even among similar companies, different tiles may be in charge of the same initiative or drive, making it difficult to determine where to begin the prospecting process. Hence, a complex sale involves significant research time to uncover the many moving parts and weave together a coherent sales opportunity assessment:
What is the driving issue/initiative behind all this?
Who are the key stakeholders that must be involved? What are the key pain points and concerns of each?
Who has the most urgent pain and therefore wants to see this taken care of sooner than later?
From where is the funding going to come for this? Is it all in one place (department or division), or will it be shared, and how?
When all is said and done, who is the final decision maker?
These are only some of the early questions that must be answered to even understand if there is a viable sales opportunity or not.
Using Sales Reps to Prospect is NOT a Good Idea
Often, we find that companies rely on their field sales reps to prospect and find viable opportunities in complex organizations from scratch.
We don’t think this is a good idea. This task is very different from what sales reps are very good at–calling on prospects who have agreed to see the sales rep. It requires making 10-15 dials just to reach John Doe who may or may not even be the right person to start with. Then, John only has time for a quick conversation and suggests the rep call Jane Smith. Another 20 dials later, the rep finally reaches Jane, who adds more to the story and suggests that the rep also give Maggie and Mike a call. And so on.
And this is only the first round of calls. There will be follow up calls to one or more of these stake holders to find out more about one or more issues.
It is not unreasonable to expect that 500 or more dials might be made into a single account to determine whether or not there is a viable opportunity to move forward.
The question here is: who is better at quickly and cost effectively uncovering viable sales opportunities? A field rep that will, on average, make 10-20 dials a day, or a professional Teleprospector who regularly makes 70-80 dials a day?
Our experience repeatedly shows that field sales reps engage in early prospecting ONLY when their pipeline dries up. This in turn makes it very difficult for companies to reliably forecast what their revenues look like more than 3-4 months out. Since the sales cycle for most complex sales products tend to be six months or more, this means that a company cannot reliably predict revenues outside of the current quarter.
Our recommendation is to use Teleprospecting to build the sales pipeline for the field sales. This avoids the yo-yo effect and makes revenue target more reliable. In this scenario, a senior Teleprospector will do all of the initial research to gather the coherent sales opportunity story and pass it on as a Sales Qualified Lead. This opportunity story is a synopsis of what the key initiatives are; which departments or divisions are directly involved; who the key stake holders are, which CXO is driving this initiative; what the individual pains, concerns, and desires of the various stake holders are; and what a reasonable timeframe looks like for making a final decision on the solution to this set of challenges.
Choosing the Right Person for a Complex Sales Role
The right type of Teleprospector to successfully perform this would have the following qualities:
Was quota-bearing field or inside sales professional who understand sales and particularly complex sales into enterprise account
Is very comfortable and successful at accessing and selling to CXO’s
Has the right temperament to work alone as well as to enjoy interacting with others
Is an avid learner, always trying to learn more about his/her industry and what the pain-points and new concerns for the targeted CXO’s are
Understands that this is painstaking work that will require hundreds of dials and many dozens of conversations that may or may not lead anywhere, and still enjoys the hunt
And finally, the right senior Teleprospector is results driven and has a strong sense of urgency
This is a specialty area and the right person must be matched to the job.
SOMAmetrics helps clients build quality pipeline for their complex sales by assembling all of the various components necessary to deliver the desired amount and quality of pipeline including: project management; best practices; marketing and sales automation; expert Teleprospecting; and clearly defined metrics against which performance is measured each month.
Alicia Assefa is intimately familiar with building quality sales pipeline for complex sales. As VP of Global Teleprospecting for a global software company, her team of 35 Teleprospectors supported five Business Units: Enterprise Management Solutions (EPM; Workload Automation; Project Portfolio Management Security; and Mainframe). Each Teleprospector carried a SQL to Sales Funnel Quota of $10M and a SQL to Closed Deal Quota of $4M. One division with eight sales reps generated $80M in Sales Funnel and $32M in revenue from the SQLs provided by Alicia’s team. The same resulted for the other business units.
As General Manager of the SOMAmetrics Sales and Inside Sales Practice, Alicia brings her expertise in helping clients design end-to-end solutions for building quality sales pipelines for complex sales.
Over the past 20 years of working with some 100 small and medium sized companies, we have found that the top six reasons why companies miss their revenue targets are:
Not setting Valid Revenue Targets
Poor quality of sales pipeline
Insufficient size of sales pipeline
Bad fit between What you sell and the Sales Team’s skills
Poorly Defined Sales Structure
Misuse of Sales Quotas and Sales Incentives
Slow conversion of Contracts to Revenues
Some of these are quick fixes. Others may take some time to address. We also recommend that companies tackle this issue in the order listed above, as some are interlinked and are prerequisite steps to the next.
1. Not setting Valid Revenue Targets
Yes, this one surprised us too, but many CEO’s and their executives don’t clearly know what revenue targets they want to achieve. When we ask, “What is your revenue target for this year?” some say they don’t know; others answer vaguely; still others give inconsistent numbers from one executive to another within the same company.
Even when companies do set revenue targets, the question is whether these are valid. A valid revenue target is one that has its foundation in data. It is composed of what is possible, but it stretches the company to live up to its full potential.
The first criterion for A Valid Revenue Target is that it is based on data. You must first do the analysis necessary to know what is possible. You should look at the various products you sell, then set different targets for your customer base versus new customers. They add all of these to come up with the total for the company.
2. Poor quality of sales pipeline
The next reason for missed revenue targets is low quality sales pipeline. This means that sales people are engaging prospects that are not likely to buy anytime soon, for a number of reasons. Poor quality of sales pipeline shows itself primarily in two ways:
Deals that don’t close (low closing ratios), and
Deals that don’t close for a long time (long sales cycles)
Both of these are symptoms of poor quality sales pipeline and they typically manifest together. The end result is a Sales Organization that works hard to produce little and is demoralized.
Of these two, the second is a bigger problem. Companies seem to accept the delay as being their “sales cycle”. When we ask our prospects, “What is your average sales cycle?” we get responses such as, “Well, that depends…” or “It varies anywhere from 3 months to 18 months…”, and other similar responses. Such ambiguity regarding sales cycle length tends to indicate poor quality of the sales pipeline, rather than indicating the true sales cycle period.
There are many reasons why a company may have a large but poor quality sales pipeline.
The first is that marketing leads are being passed straight to Sales people without being properly qualified, and the Sales Reps begin working all of them in the order they are received, rather than in quality-prioritized way. So, the Sales organization may be working hard, but it is not producing much.
The second reason is that marketing leads may be qualified by a telemarketing team, but the company thinks that this is an entry level job and hires very junior people to qualify leads. What typically happens in this case is that these junior telemarketers prospect to their own comfort and skill level—i.e. junior level people in the prospective company—rather than to real decision makers. Then they pass these as “qualified” leads to the Sales Team. Sales Reps will find out that these are not the right prospects ONLY after they talk to these “qualified” leads. Again, Sales works hard, but not smart.
Use a Teleprospecting team to further Qualify the Marketing Qualified Leads before passing them on as Sales Qualified Leads (SQLs)
Don’t have your Teleprospecting cold call to find SQLs. This is very slow, very expensive way to prospect. Instead, market continuously to your target market and pass on warmer leads or Marketing Qualified Leads to further qualify.
Have a healthy mix of marketing campaigns designed to interest both decision makers and line managers so you have the business line managers recommending you, and the decision makers finding sufficient business return to make the purchase decision.
Use the Four Quadrants to guide your Marketing and Sales efforts. Marketing and selling to your existing customers is very different from marketing and selling to non-customers. And, even getting existing customers to buy new products requires a different kind of marketing and sales than asking them to buy more of what they already buy from you.
Some Additional Quality Points
Teleprospecting is the Quality Assurance (QA) “department” when it comes to Sales and Marketing. Just as companies would test their products to make sure they are of sufficient quality before bringing them to market, so must companies check the quality of the leads before passing them on to Sales.
It is also important to understand that Teleprospecting is NOT an entry-level position. It is a business process that requires very skilled and experienced telephone sales professionals who have the competency and confidence to talk to senior level decision makers.
If a company is not using experienced Teleprospectors to qualify the marketing leads before passing them on to Sales, then the company is probably wasting money paying junior level people to do a very difficult and sophisticated work.
Download the diagnostic checklist to see why you may be missing your revenue targets
The next reason why companies fail to achieve their revenue targets is because they don’t have sufficient size of sales pipeline.
If Sales reps do not get sufficient number of Sales Qualified Leads (SQLs), then they tend to start thinking “scarcity” rather than “abundance”. Insufficient Quantity then becomes Poor Quality (Reason #2 above) as Sales Reps start hanging on to opportunities they know will not close, trying to artificially inflate the size of their pipeline.
And almost just as bad, even when reps close any of these leads, they tend to have done so by offering deep discounts, since they cant walk away from tough negotiators.
Any sales rep afraid to lose anything on his or her pipeline exudes that fear and will be quick to either offer or agree to a deep discount. Experienced buyers can smell that fear and wring out price and other concessions before agreeing to sign the contract.
The worst of this is when a shrewd negotiator uses one of your sales reps to provide him with a low price quote, which he then takes to the vendor he had chosen all along to get a better price from that vendor.
The solution is to keep the Sales pipeline stocked with sufficient size of well-qualified sales leads. This process starts with reverse engineering the numbers to arrive at the required size of the pipeline, starting from the sales target.
Let’s say your target is to achieve $25 million in new sales and your average sales price is $25,000. That means you will need to close one thousand (1,000) new deals to achieve this revenue target, on average.
If your average closing ratio is 20%, then you will need five times as much in sales pipeline, or about $125 million in sales pipeline.
Obviously, you have to build that pipeline throughout the year. Without adjusting for seasonality and/or ramp-up period, this assumes that you would need to build roughly $31.2 million in new sales pipeline each quarter, or roughly $10.5 million each month. We highly recommend that you pad this pipeline by another 20% to ensure that you will achieve or exceed your revenue target.
4. Bad Fit between What You Sell and Your Sales Team’s Skills
Assuming that you have set valid sales targets, and that you have provided your Sales team with sufficient size of high-quality sales pipeline, why would you miss your revenue targets?
Often, companies simply grow their sales force by hiring anyone they consider to be a “closer”. After all, that is what a Sales Organization is for—to close deals. So, what could be wrong with hiring more “closers”?
The problem with this is similar to a hospital hiring anyone who is a licensed MD. Sure a hospital needs doctors, but how many doctors of what kind are needed? A heart surgeon is not the optimal substitute for a kidney ailment, and an Optometrist can’t fill in for a podiatrist.
In the same way, a closer is not a closer. A talented sales rep who always blew her numbers selling $200,000 complex enterprise solutions will struggle to sell $500 licenses. A sales rep that is a genius at explaining very complex concepts simply and getting the sale, will struggle selling simple products that don’t need much explanation. The top sales guy at a construction company selling construction projects will flounder selling a consulting service to the construction industry.
Simply because a sales reps resume said she did over $1 million in sales selling for her previous company doesn’t mean she can do it for your company—unless the sales skills required are a match.
The solution is to always hire the right skills for the right job.
The Prospecting Myth – understand and accept that Prospecting and Selling are two different but related phases of making a sale. The work is very different. Prospectors make 60 or more calls a day in the hopes of connecting with maybe 4-5 people a day and hopefully getting one Sales Qualified Lead a day. The Teleprospector is on the phone all day long, never meeting anyone, and hardly leaving her desk except for short breaks here and there.
Sales reps, on the other hand, are great at building rapport and engaging prospects—once they have them in a meeting. Sales reps don’t do well with a 30 second conversation. They are far better at a 30 min to 2-hour conversations.
Far too often, we see companies hiring sales reps to do their own prospecting and justifying this by saying, “That’s what the base salary is for…” It may sound like smart use of money, but it is actually the opposite. It is a waste of money because the end result is a highly frustrated and unproductive sales rep.
The “Selling is Selling” Myth – selling is NOT selling. Selling cars is very different from selling homes. Selling homes is very different from selling enterprise software to the global financial services firms. Selling telephone headsets is different from selling telephone equipment, which is different from selling telephony services.
There are many differences in the sales of each of these. The work ethics is different. Some require lots short, low-priced transactions as in sales of cars. Others require skill in simplifying complex concepts and reducing them into easily provable business benefits. Still others require the ability to talk to very senior people in large global companies, while others require talking to the foreman of a construction project.
Where one skill was the key to success can become useless in another.
Always determine what kind of skill you need for a given role, then how many of that role you need to fill. Don’t start hiring until you do.
Then interview very carefully to make sure you have found the right candidate.
Lastly, put in place the early flags that will tell you whether you have hired the right person or not, much sooner than later.
5. Poorly Defined Sales Structure
Having identified the right sales talents and having hired them, it is critical to place them in the right roles. Too often we see those with very good service instincts required to hunt, and those with very good hunting skills required to nurture and grow accounts. Again, these are very different types of skills and personalities and your company will likely need both. Just make sure you place the right person in the right role.
It will be very difficult for you to achieve your revenue targets if you don’t properly optimize the structure of your Sales Organization to align with the intended prospects.
Quadrant 1 is the domain of the Hunter and the Teleprospector. You need a professional Teleprospector to find the right door into the account, and the Hunter to find a way to get into that door. Don’t waste the Hunter’s talents in finding the door. Assign a skilled Teleprospector for each Hunter—even one Teleprospector 2-3 hunters is a much more cost-effective organizational structure. And don’t look for service-oriented people to do a hunter’s work. In Quadrant 1, impatience is the virtue, and you need professionals that consult and then tell the prospect it is time to make a buy decision.
Quadrant 2 requires light selling and heavy marketing. Therefore, you can use junior level order takers in training to be hunters or account managers. Their job is to assist customers in ordering more.
Quadrant 3 requires significant account management and relationship building skills. Make sure you place a service oriented sales rep who enjoys working with her accounts to determine what they need and when, and gradually increase the size of each of her accounts. In Quadrant 3, Patience is virtue.
Quadrant 4 is pure New Business Development. You need someone with an entrepreneurial spirit, someone who likes to go where no one has gone before (at least in your company). The challenge here is to find the first key customers that don’t mind being the first to use your products in quite that way. And each of these have to be total success so you can obtain the reference-able customers necessary to get more. At some point, you will start adding your Hunter-Teleprospector team from Quadrant 3 so as to get more customers, and this new market will need to be segmented into three other quadrants.
The Four Quadrants of High Growth provide a highly effective way of segmenting markets enabling you to create the right territory assignments that are a fit for the appropriate sales roles and talents.
6. Misuse of Sales Quotas and Sales Incentives
One of the worst understood and often misused sales management tools is a sales quota. The first and worst offender is having different sales quotas for different sales people, not because they sell different products and/or to different customers, but because they just bring in different levels of sales.
As an example, one company we work with set their target for new incremental revenue to be $10 million. While we couldn’t see how they arrived at that number, other than a straight increase over the previous year’s $9million, that was not the real issue
The real issue is how they decided to allocate “quota” to the team. The company has six sales people. Management first announces the incremental revenue target and then announces the “quotas” for each rep.
Their top producer was to bring in $4.8 million of the $10 all by herself—or 45% the new revenue
Three other reps had their quotas set to $1.5 million (15% each)
The last two were assigned half a million each, or 5% of the revenue.
When we asked if these six reps sell different products or to different customers, the answer was “No, they all sell the same thing…”
The reason the first sales rep was expected to sell nine times as much as two others was only because she was good. So, she was being punished for being a great sales rep by having her quota raised, yet once again.
Using quotas in this way is punitive to your best people, possibly forcing them to look for less stressful position in another company, while allowing your worst performers to continue to perform at a low rate with no repercussion. Obviously this is not what you want.
The Right Approach to Setting Quota
The appropriate use of Sales quota is to establish the floor or minimum of what a sales rep must bring in to justify the expense of keeping that sales rep on the payroll. In the example above, since the company would never let go of their top sales rep, then the continual raising of the quota would only drive this rep away due to the intense stress that creates.
The right approach would have been to set a quota of, say $400,000 which means that if any has trouble meeting this number, then it is not cost-effective for the company to keep this rep and should let her go.
Also, quotas should be exactly the same for all reps who sell the same thing in equivalent markets or sales territories. Otherwise, you can expect a sales rep to think it unfair if his or her quota is higher than others who are selling the same product(s) in an equivalent territory. The above-mentioned Four Quadrants provide a systematic methodology for assigning selling territories for a given sales role.
The right Way to Incentivize Reps
Quotas should never be used to incentivize sales reps to produce more.
The right way to incentivize sales reps to produce more is to give them financial incentives to do so. Now that you have set quotas for the minimum productivity you need to justify the cost of keeping a sales rep on the payroll, the rest is to provide a combination of commissions, short-term rewards, and recognition to drive productivity.
Rather than having a straight commission rate no matter how much a sales rep sells, provide a variable one that increases every time a sales rep achieves a new sales production level.
Lets illustrate these two improvements over the bad practice of misusing quotas to try and increase sales productivity.
Scenario 1- Misused Quotas
In this scenario, a company pays a straight 7.5% commission on sales. The company also has also awarded different quotas to their sales reps as indicated above, with the top rep struggling to make $4.5 million in sales. The two least productive sales reps each are told to achieve $500,000—which they may or may not achieve, and it is not clear what would happen to them. In fact, these two sales reps typically bring in around $300,000.
Scenario 2 – Proper Use of Quotas and Variable Commission rates
In this case, the company has the same quota for all sales reps selling the same products in equivalent territories—say $300,000. If any sales rep brings less than that, then the sales manager will have to seriously consider letting this sales rep go and look for a better-suited sales professional.
Commission rates are 5% for achieving quota ($300,000); then 6% for sales of $301,000 to $400,000; then 7% for sales of 401,000 to $500,000; then 8% for sales of $501,000 to $700,000; then 9% for sales of $701,000 – $900,000; and 10% for sales over $900,000 to $1.2 million; and so on.
Let’s see the effect of this variable commission rates on those two least productive sales reps.
Under the old model, if the sales rep sold $300,000 she would make. The increase in commission to get this rep to sell $301,000 is another $75 only.
Under the second model, this rep will see a jump in commission of $3,060 for selling one more $1,000 because of the 1% increase in commission on ALL $301,000.
For sales level of $401,000:
Under the first scenario, sales rep will earn $7,575 in additional commission compared to sales on $300,000
Under the second scenario, the sale rep will earn $13,070 more (because of the 2% increase in commission over the entire $401,000).
What we have done differently is that both our stick and our carrot are stronger and clearer in the second scenario. Sales people could lose their job if they produce under $300,000 and the upside for them for continually increasing their productivity is significantly higher under the second scenario. Both are hard to ignore for any sales rep.
The key is to first determine how much of revenue you are willing to allocate to compensating your sales force, and then designing the commissions to incentivize increased sales productivity.
7. Slow conversion of Contracts to Revenues
If your company cannot invoice a customer until certain conditions are met, and you have significant time lags in meeting these conditions, then you will likely miss your revenue targets, even if the “booked” revenue is equal to or exceeds your revenue target.
For publicly traded companies, this is a legal requirement that must be met to recognize revenue within the specified accounting period. However, even for a private company, pretending a deal is closed when the signing of the contract is contingent upon the deliver of conditions within a specified time frame is a recipe for missed revenue targets.
At best, the customer simply will not pay until all conditions are satisfied—and though you will receive the funds at some point, this puts significant cash-flow strains on your company.
Even worse, the customer will get out of the contract if you don’t satisfy the conditions and you will have wasted significant resources to get a contract without receiving any funds in return.
Far worse would be if that customer was upset enough to give your company bad reviews. Then future prospects might be skeptical about signing up with you.
The first step is to monetize this issue so you know how much money you are not collecting as a result of the time lag between signing a contract and delivering what is expected so you can invoice the customer.
If your business model is a recurring revenue model where customers pay a certain amount each month, each month that you have not yet delivered is what you are forgoing.
As an example, let’s say you charge $5,000 a month and it takes you roughly 60 days to get a new customer to be ready to be invoiced. That means that you have foregone $10,000 due to this delay. Let’s say on average you close five such deals a month. That means, on average each month, you are losing about $50,000 in opportunity costs (money you could have earned that you are not).
Next, let’s say you figured out a way for cutting the time from 60 days to 30 days. That means you are now saving $25,000. Therefore, you can spend up to $25,000 each month to reduce this to 30 days and it would be a wash from a cash-flow perspective.
However, the real gain comes with increased new customer satisfaction—customers want to start seeing the benefits of their purchases as soon as possible. After all, that was the reason they decided to buy. Therefore, speeding up the process of realizing the benefits would significantly increase customer satisfaction.
If you can get customers to write great reviews, agree to be references, and in other ways provide you with positive testimonials, then this will go a long way in enabling your sales people to close more deals in shorter time.
Your company may not have all of these issues. However, if you are having difficult meeting your revenue objectives, it his highly likely you have at least one of the above seven challenges.
Having worked with over 100 companies, SOMAmetrics has developed the tools, resources, and expertise to help your company overcome the challenges that prevent you from consistently achieving your revenue targets.
The first step is to conduct an Assessment of your company to determine which of the above challenges you may be facing, and what the root causes are. The next step would be to look at some options of how to address these challenges and begin to consistently achieve your revenue objectives.
SOMAmetrics provides a one-week assessment service that enables you to quickly identify where the bottlenecks are in achieving your revenue targets and develop viable options to address this.
Please contact us today to determine how we may be able to help.
You have hired a team of junior folks, whom you have trained.
Their base pay is in the $25K-$45K range and your company throws in a few bucks, when a lead is accepted by Field or Inside Sales
You have provided the scripts and CRM for the Teleprospectors to use
The team has been given additional sales tools, such as objection management documents, which they can use if a conversation goes south
They have been assigned daily/weekly/monthly metrics, such as 50-70 dials, per day, 5-10 Key Contacts, per day, etc.
Why Your Teleprospecting Team Isn’t Making the Cut
Your Teleprospecting team is well armed and ready to make calls. The problem is that if and when they get Sr. Executives on the phone, they are not able to translate these calls into viable leads. More times than not, Teleprospectors crumble at the first objection and end their calls. Or they call lower-level titles, in the prospect organization. Non-decision makers tend to be accessible and easy to speak with. However, leads from non-decision makers are not viable and tend to be rejected by Field or Inside Sales.
Companies see Teleprospecting as a junior-level position. I believe that this is the wrong way to think about Teleprospecting. Let’s consider that the Teleprospector is probably the first person from your company that your prospect will engage with. The Teleprospector, therefore, needs to be seasoned and experienced to handle the nuances of a first call. The argument that I have heard, many times, is that Teleprospectors aren’t closing business. They are qualifying prospects for interest. I beg to differ. Every communication with a prospect is an opportunity to close. There are many closes to consider: to close for the next meeting; to close on getting to a viable decision maker; to close for a trial or demo. Companies need to hire people who can close at any stage of the cycle. This is another reason why they should consider hiring seasoned professionals for this role.
Seasoned people have the experience to understand business drivers and what drives the people who make business decisions. Junior level people don’t have the experience or understanding of these concepts. It takes a lot of time, many, many, many phone calls and trial and error to understand these concepts.
Many years ago, I was asked to set up a Teleprospecting Organization for a SaaS company whose product significantly reduced energy spend for the manufacturing and utilities industries. Our prospects were CIO’s at Fortune 500/1000 companies. It was a complex solution with a long sales cycle (9-18 months). I knew that I needed to hire the most skilled people to ensure that we could navigate the issues prospects might throw at us, each day.
The team that we hired received a base salary of $70K with their total compensation reaching $125K, at plan. At first, the CEO was concerned that we were paying this team too much. However, after he saw the results of his pipeline (it was rapidly increasing) he changed his mind.
Real Life Example
Below is a real call that one of my Teleprospecting Reps had with the CIO of a Multi-National Food Manufacturer
Dave Teleprospector: Hi Mike, This is Dave, with XYZ Company. Our solution enables companies like yours to reduce energy spend by 50%, year over year. Our clients include _,_ and_. The purpose of my call is to understand your needs and to determine if we might have a solution for your company.
Mike Prospect: Dave I received your company’s email blast and I am not interested.
Dave Teleprospector: Mike, so what you are telling me is that you are not interested in reducing your company’s energy spend? Mike, I recently read an article in XJournal, where the research showed that most CIO’s stay in their positions for under 18 months because CIO’s are perceived as being ineffective. I’ll be happy to send you that article. The reason why I mention the article is because our solution can help you reduce your company’s energy spend by 50% or greater, which could help to make you highly effective.
Mike Prospect: Dave, that is very interesting. Yes, it would help me to find out how we might reduce our energy spend. Currently our energy spend is a significant part of our operating budget.
Dave was able to qualify this account and pass it on as a highly qualified lead for his Sales Rep. This lead went to the sales funnel, after the Field Rep had his first meeting with the prospect.
This Teleprospector was highly qualified to speak to any C-Level Executive because of his Experience
Dave knew that C-Level Execs are easier to reach in the early AM or later PM.
He managed his weekly schedule so that he would be making his dials to his significant prospects, during these times.
Dave did his research.
He was constantly sourcing information about the industry, his company’s technology and trends that might of interest to his prospects. He knew that C-Level Exec’s would be interested in information that would be of help to them or their company. He was always learning, in order to be prepared for any call. He could discuss the significant business drivers that would interest his prospects, at any time during his calls.
His conversations were never scripted
(He used a guide with key messages and questions) and his messages were targeted to the titles he was planning to call. He had a message for CIO’s, CEO’s, COO’s, each somewhat different, however, each addressed the interests of the specific title he was calling.
Dave would regularly call his assigned Field Reps to ask them about their worst sales calls and best sales calls, each week.
He would ask them what they could have done or said, differently. He used this information to tailor his messaging and up his game.
Dave had over 5 years of Sales experience, before I hired him. He was not trained, per se, to do the above. Out of his experience and good instincts, he was able to develop a set of skills that helped him to generate extremely valuable leads for his sales team members.
Example Call between a Junior Teleprospector and a C-Level Executive
Junior Teleprospector: Hi Mike, This is Junior, with XYZ Company. Our solution enables companies like yours to reduce energy spend by 50%, year over year. Our clients include _,_ and_. The purpose of my call is to understand your needs and to determine if we might have a solution for your company.
Mike Prospect: Junior, I received your company’s email blast and I am not interested.
Junior Teleprospector: Mike, can you tell me why you are not interested?
Mike Prospect: I actually am pretty busy right now. Why don’t you send me some literature and if I think there is a need, I will give you a call.
Junior Teleprospector: Mike, sure thing. I’ll send you our brochure and if I don’t hear back from you in say 2-3 months, would it be ok to give you a call to see if your situation has changed.
Mike Prospect: Sure, that will be fine.
The call with the Junior Rep has kept this Fortune 500 Multi-National Food Manufacturing Company from being included in the sales funnel for a while, if not forever. It might take hundreds of calls, like this, before a Junior Teleprospector has enough confidence and experience to effectively manage their prospect conversations.
Although the Junior Rep call is not based on a real call, the gist of it is based on my experience with managing many Junior-Level people, at over 50 companies. A call center Manager can provide some guidance, but they can’t sit in on every call, made by every Rep in their center. And, it is illegal to record calls, in many states, now. So a lot of trial and error goes on, at your company’s expense. The end result is a frustrated sales team, a sales funnel that is full of junk or no sales funnel at all. In short, a lot of frustration and missed opportunities happen when junior level people do prospecting.
How to Make Teleprospecting the Best Part of your Sales Organization
Give the role a different title.
There is something negative about Titles that start with Tele (Telly). Many of the Sales VP’s that I have worked with said Tele-Marketing or Tele-prospecting in a very disparaging way. Just because the meetings are via the telephone (Telly-Phone) it doesn’t follow that these meetings are not important. Like I said earlier, the first contact with your prospect is often via the phone and could be very important to your company. Change the title to Corporate Sales Rep, New Business Development Rep, Funnel Development Rep, Pipeline Builder or Sr. Hunter, for example. A title, such as these, will immediately elevate the position and credibility of the team member.
Find people who have at least 5+ years of experience selling complex solutions, either over the phone or in the Field.
The bad news is that many people lost their jobs, during the great recession of 2008-2009. The good news is that these ex-Field/Inside Sales Reps want to get back to work and are happy to do prospecting. I know this because these are the types of people we hire at SOMAmetrics. It is better if your Sr. Hunters have had to carry a quota, in the past. They get the concept of a qualified lead, pipeline and revenue, while a junior person, and might not. During the interview process you can find out if the candidate likes phone work and if he/she has carried a quota. Email me at firstname.lastname@example.org, if you’d like to receive my effective and proven Inside Sales/Teleprospecting interview questions.
Highly qualified leads that are with decision makers are priceless. They increase the productivity of your Sales Reps and build pipeline faster and more efficiently than leads from lower level titles. In the long run, if you hire skilled Sr. Hunters, you will increase the quality of your leads and the productivity of your sales team. Every company, I know, wants a productive sales team.
Keep hours flexible.
While it is important for your Sr. Hunters to meet their metrics, let them work a more flexible schedule. C-Level Execs are available in the early AM or later PM. As long as your Sr. Hunters are meeting their daily/weekly/monthly metrics, they don’t need to start at the same time, each day (7-4 or 8-5, for example). They may want to start as early at 5 AM, one day (especially if they reside in Western States) or come in as late as 10 AM and stay until 7 PM, for example.
In short, treat this position as you treat your Field or Inside Sales Teams; as very important contributing members of the sales team. Hire people with experience and pay well. You will reap the benefit of their experience and ability to uncover real need from real decision makers. Your pipeline will build faster and your close ratios will improve. All good!
Why do people work? Do people work only to earn money, pay bills, and live in some comfort? Or might they also work for a more inherent reason?
We all need money to live in comfort and to support our families. However, I believe that most human beings thrive in environments that provide recognition for their accomplishments. While you can assist your roommates or family members at home, whether or not they will notice and appreciate your efforts is often a crapshoot.
On the other hand, I believe that a place in which we can be recognized consistently is at work. When we are at work, we are measured for our contributions toward revenue growth, or for our efforts that increase net profits. Revenue growth and net profits can be measured, and their increases are easy to appreciate because increases in these areas impress investors.
It is important that all individual employees be given a set of metrics or Key Performance Indicators (KPIs) that they can be measured on. If everyone is held accountable for their jobs and measured accordingly, they have a framework by which they can be recognized.
Once you have created the metrics and KPIs, you have the framework to build a consistent recognition process for every contributing member of the company which can be implemented across the organization. As I mentioned earlier, I believe that people thrive on recognition. To help your employees thrive, your company should consider building a continuous recognition program.
A continuous recognition program may recognize those individuals who consistently meet their objectives. This is an easy place to start. To get your entire organization to flourish, however, your company might consider recognizing employees who have made incremental improvements. You may want to recognize people who contribute to the greater community, for example. The continuous recognition program can be run as often as you’d like — monthly, quarterly, semi-annually, etc.
Give Managers the opportunity to do “spot” recognition, on the fly and in front of their teams. This type of recognition will prevent complacency. Imagine how you might feel if, out-of-the-blue, your manager recognized you and gave you the rest of the day off because of your contribution to the company.
The method of recognition can take many forms. As a company, decide if you will give days off, gift cards, cash, etc. However, don’t let these be the only forms used for recognizing your team members. A nice letter, on company letterhead, or a note of thanks can go a long way in motivating your team and building a “thriving” organizational culture.
Once you design a continuous recognition program and implement it, you will watch your team members and organization prosper