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Business Growth and Generation for 2015.

Business Growth and Generation for 2015

As the global business market progresses further into Q4 and reflections begin upon performance over the course of the year, top-end management is beginning to map out corporate strategy and re-align budgets ahead of the coming New Year. Despite some notable exceptions (including Tesco’s 91.9% profit reduction for the first half of 2014), the UK economy is arguably on the course of recovery: focus is shifting from damage control to the active pursuit of expansion and growth. The overriding objective for a large proportion of businesses is now focused around generating more business, more revenue and greater return. For most, the top resolution is to move forward.

The challenge with New Year’s resolutions, however, lies in the logistics. Across the globe, individuals make change statements each January 1st, vowing to perhaps lose weight, pay off the credit card or leave the job that makes them unhappy. In each instance, these resolutions remain more of a vision, ignoring the underlying tactics that make them achievable.

When it comes to business growth, the risks associated with a lack of tactical planning can be extensive. What works for one industry sector or organisation won’t necessarily work for the next. Choosing to emulate the growth strategy of a successful competitor could in fact prove a financial sink hole, if not aligned with the individual processes, culture or resources of the business.

In order to identify and pursue the right path for business growth, it is essential to go right down to the fundamentals. Look at where in the business structure, sales cycle or supply chain it is possible to add value, before putting in place the right steps to achieve growth.

The sales cycle: one size fits all?

In order to generate more revenue, we need to make more sales - or increase margin on existing sales made. The power to influence comes down to two core concepts; the people we employ and the activity they do as part of the larger business sales cycle.

However, across an increasingly complex business market, no two sales cycles are the same. Where one business will enjoy a simplistic supplier-customer dyad in which relationship and service marketing is paramount,

another may focus on utilising non-market networks or relying on brand and identity to attract and close business. When the comparison is made between a niche cloud-based technology services provider and a global giant such as Apple, it is clear a change in tactic and approach is essential. So how can a business organisation determine the “right diet” for its own unique profile?

If the business is a transactional-focused, short-cycle FMCG organisation with a high volume of single-purchase consumers, it stands to reason that an investment into account management training isn’t a legitimate allocation of budget or resource. Perhaps quantity is the focus and change agents will look instead to bring in more bodies to make more calls, more sales and more profit. However, the answer isn’t necessarily as simple as it may seem. Mapping out not only the stages of the business sales cycle but also the conversion rate at each individual stage is often the key eye-opener when it comes to determining growth strategy.

The first step must be to map out the specific sales cycle distinctive to that business, exploring the key steps undertaken between the prospect entering the sales funnel through to the close and beyond. Does the customer come to the business with a clear definition of their challenge or sales need, or is a “needs analysis” a key part of the process? Is there a consultative period in which fact-finding and proposals feature, or do sellers need to go straight to presenting the solution? Is the process relationship-focused, or transactional?

Consider the two different sales cycles below:

Particularly in larger organisations, where a diverse sales force is charged with selling across a varied portfolio, it can become all-too-easy to lose sight of those fundamental steps required to reach the end goal. Specifically if one salesperson has a preference towards a collaborative ‘partnership’ approach, where another may be focused on single-purchase, high volume sales in order to deliver on their targets. Some steps may be fulfilled to an insufficient level, others may be overlooked altogether. Without a framework for the sales cycle, there is no evidence-based blueprint for determining where to invest.

While there is an argument against the creation of a robot-style team of machines who operate to an exact science, the establishment of expected standards in line with company ethos, brand and long-term objectives is essential to benchmark performance and ensure these vital steps are not overlooked. Considering the conversion rate from meetings attended to sales made will mean little if members of the team are focused on closing one-off, lower-value opportunities over the phone, for example. And if this is the focus of several team members, it may have a considerable impact upon the organisation’s ability to form long-term relationships with customers, leaking potential profit further down the line.

When all team members have a framework for approaching the sales cycle, and management can be confident that each prospect is being called, met, pitched to or followed up according to the unique process of that business, it becomes easier to determine areas of strength – or weakness. Evaluate the figures, and it becomes clearer where the organisation needs to spend money in order to make money.

Setting a Standard: The sales cycle framework.

Increased profit or sales is usually dependent upon either a higher quantity or higher quality at an individual point of the cycle. Perhaps this is a higher volume of leads qualified and cold called. Alternatively, it may be higher quality cold calling of leads to boost conversion rates and the subsequent number of meetings attended. Further down the sales funnel, it may be a higher volume of repeat purchases through effective account management; or perhaps higher value sales through effective needs analysis and cross-selling through the company product portfolio.

Having evaluated the typical sales cycle for the organisation and benchmarking the performance and conversion at each stage, it’s time to progress to the tactics. Let’s take the prospecting stage as the weak link in the chain. You have a great product and a strong conversion rate of 50% from each client met closing. However, the number of meetings booked is low; you simply aren’t getting your sales people in front of those key decision makers.

A look to the process of prospecting, and there are questions to be asked: are we generating sufficient leads? What is the quality of those leads? If the answer to both is in the affirmative, we can remove marketing from the equation. What are the call volumes amongst current staff? Are there sufficient numbers of staff to process all the leads? What are the conversion rates for existing staff? Mapping out the fundamentals will typically point to one of two potential solutions: either bringing on additional staff or improving the performance of existing staff.

Quantity or Quality? Deploying the right tactic.

From the starting point or governing objective in trying to achieve business growth, mapping out and standardising the sales process will determine the strategy. In this instance, improve the prospecting stage of the sales cycle and the tactics to be deployed in order to achieve this, for example, cold calling training in order to improve conversion rates.

In much the same way, that individual looking to “lose weight” in the New Year should consider breaking down their objective: with a strategy to increase calories burned, for example, and the tactic being to join the local 5-a-side team and play twice a week. With those in place, the resolution moves away from being a far-off “nice to achieve”, and becomes a tangible reality.

Cont’d...

In the world of sales, it’s all about the numbers. Any proposal for change, in order to gain management backing, must be able to demonstrate a tangible return on the upfront investment to make it a viable strategy. No decision-maker will throw away funds on the off-chance of improvement.

Calculating a return on investment may not be an exact science, but breaking down the numbers can indicate whether the tactic of choice is the right way for the business, and make it justifiable to management when pitching that New Year’s resolution. The example below considers the potential value and return for investing in training.

What’s it worth?

Av. Number of appointments booked (per sales person/month): 20 Av. Appointment conversion rate: 25% (or 5 in 20)Av. Order value: £5,000= Av. Monthly revenue = 5 x £5,000 = £25,000

If that individual is now booked onto training to enhance presentation skills that will perhaps improve their ability to pitch and close, resulting in an average uplift in conversion rate of perhaps 25%. The potential return will look something along the lines of:

Av. Number of appointments booked: 20 Av. Appointment conversion rate: 50% (or 10 in 20)Av. Order value: £5,000= Av. Monthly revenue = 10 x £5,000 = £50,000Offset the cost of training, and you have a predicted estimated return.

Putting forward the proposal for any investment into sales team development or growth should be approached much like any business proposal. Walking into the boardroom and asking for a £30,000 investment for a new recruit becomes much more attractive when you’re able to demonstrate that individual will generate a potential revenue figure of £300,000/annum. Break it down in terms of the meetings booked, attended, average value, typical conversion rate and back with the evidence that this is the “weak link” in the sales chain in light of the business objective to achieve growth. You will have an evidence-based package that makes the case for investment almost indisputable.

Cont’d...

Initiating a New Year’s resolution after the last effects of the hangover have faded away already sets that individual behind. In much the same way, implementing the strategy and tactics required to drive change in Q1 when business opens doors in the New Year will place that organisation behind the competition — significantly increasing the risk of failure. Putting in place the groundwork during Q4 is paramount to ensure sales hit the ground running and bring in the numbers from the word-go.

Industry reports testify that the aftermath of Christmas leads to the trough in staff morale in the New Year. This is the most likely period for competitors to poach staff and can frequently see a decrease in activity levels, particularly for those who feel newly increased targets are unachievable, or within those

industry sectors where traditional ‘belt-tightening’ in the New Year makes prospective customer markets more difficult to penetrate. Training in Q4 will equip staff with the tools required to manage the more challenging New Year period, thus boosting morale and retention levels in those who feel their progression and development has been invested in.

If recruiting new staff is the tactic deployed, allowing for on-boarding processes and initial training to bring those individuals up to speed on the culture, product and industry particulars of the organisation also calls for action ahead of the New Year. While this approach may not necessarily bring all new members up to the required level for

January 2nd, it ensures all new recruits are on the way to revenue generation as new business objectives come into play. To make an impact on business growth, it’s vital to start as you mean to go on.

Plan Now: Putting tactics in place

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Investment into growth strategy can take many forms, and tactics will vary according to the specific objectives of the business. However, the possibilities are extensive. Investment in training enables sales teams to:

• Generate more leads;• Improve conversion rates;• Win more pitches;• Negotiate more effectively;• Retain for repeat business and• Lead more effectively to motivate and drive teams (in the case of

management training)

All of which will contribute to business growth and profit gain in the long-term. Meanwhile, recruiting more heads onto the sales floor will increase activity levels and positively impact on all areas of the sales cycle. Even considering the initial investment, the long-term gain to be made justifies the original cost. Add into the equation additional gains such as greater retention, higher morale or home-grown talent who are developed in the image of the business, and the case for embedding a tactical approach to business growth for 2015 becomes an essential piece of the management toolkit. It may even see more resolutions kept this coming year.

2015: A year for success.

Putting forward the proposal for any investment into sales team development or growth should be approached much like any business proposal. Walking into the boardroom and asking for a £30,000 investment for a new recruit becomes much more attractive when you’re able to demonstrate that individual will generate a potential revenue figure of £300,000/annum.