Often, we encounter clients who continue to sell as they had when they first launched their companies. And while they continue to grow and increase sales, they leave money on the table because they have not examined their data and practices to see what they could do differently to improve sales.
In this case, the client sold a smart, well-organized lead generation tool aimed at the financial services industry. However, the sales team was selling individual licenses and heavily discounting prices to close deals. This gave the sales team the impression that they were hitting their quota and doing great.
No Specific Industry Target
The CEO, however, wasn’t sure they were making money and asked us to help analyze their sales. After asking some questions, examining their data, and building a financial model, it was clear that profit margins were around 18%, well below where they need to be for a SaaS company that sold mostly software.
There were several issues we felt needed to be addressed:
The net result was moderate sales growth, but slow cash growth due to thin margins and high churn rates. The CEO knew the company was not doing as well as it looked on the surface.
What We Did
The CEO asked SOMAmetrics to provide a sales plan with sales projections on how to improve both their sales and profits. We developed a Big, Hairy, Audacious Goal (BHAG) of doubling their sales in three years.
With that target, we changed the sales strategy and plan around the following key rules:
- No more single licenses. The minimum sales would be for a pack of three licenses.
- Price discounts on only quarterly, or annual contracts–no more price discounts on monthly contracts.
- Commissions will be paid only on sales of software the company makes. Sales reps would no longer get commission on sales of products purchased from partners.
These basic rules also changed how the reps sold their products—from a commodity approach of discounting heavily to close deals, to strategically selling game-changing value by demonstrating return on investment.
Lastly, we provided the sales team with SPIN Selling training which enabled them to sell strategically to maximize each selling opportunity by showing ROI and value to the prospect.
Because of these changes we implemented, average new monthly sales increased from around $51,000 to around $81,000 by the fourth month of full implementation—a 59% increase in sales.
Just as importantly, the average profit margin (after cost of sales and support) jumped from around 18% to about 32%—a 78% improvement in margins.
More Case Studies
Get in Touch Today
Address: 1847 Berkeley Way
Berkeley, CA 94703
Business Hours: 8:30a-6:00p M-F