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Cracking the sales code

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Cracking the Sales Code is an article that talks about the B2B Sales Process in detail. This covers Customer Identification, Customer Categorisation, Sales Funnel, Sales Planning, etc. This article......

Cracking the Sales Code is an article that talks about the B2B Sales Process in detail. This covers Customer Identification, Customer Categorisation, Sales Funnel, Sales Planning, etc. This article has been published in MBA Skool 2013

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  • 1.       Cracking  the  Sales   Code!                Siddharth  Ravishankar            
  • 2. CRACKING THE SALES CODE!Mary Kay Ash, an inspirational business leader and entrepreneur who founded Mary Kay Cosmetics Inc. once said, “Pretend that every single person you meet has a sign around his or her neck that says, ‘Make me feel important’. Not onlywill you succeed in sales, you will succeed in life.” The ‘make me feel important’ tag in sales lingo is called managingcustomer relationships. It is the foundation on which all business deals happen in a Business-to-Business (B2B)environment. Also, along the line a sales person needs to deal with various other key parameters such as identifying new,potential customers, retaining existing customers, mapping organizations, tracking existing leads, etc.The Sales ProcessFirst, lets look at the sales process. The sales process can be  defined as a 4-stage process that begins from prospecting you Keep  customer to eventually keeping or retaining your customer. Letslook at every stage: Acquire  Prospect: This stage involves making initial contact with acustomer through cold callings and appointments to understand Engage  their business requirementsEngage: This stage deals with engaging the customer through a Prospect  series of interactions to attract his trust and faith in yourcapabilities.Acquire: This stage sees the real action in terms of negotiating and closing deals. This is the stage where a sales personwould like to see most of his time spent. This stage is often the most critical as it is the deciding phase of the activitiesdone before.Keep: This stage deals with all post purchase or post sales action in terms of being able to retain a customer through goodservice and after sales support.Customer IdentificationEvery sales person should aim to gracefully persuade his or her customerinto a win-win situation and not try to manipulate his or her thinking. Also,I couldn’t agree more with Mr. W Clement Stone in his belief that thosesales are contingent upon the attitude of the salesman and not the attitudeof the prospect. Even in B2B sales, it is not an organization that buys fromanother organization, but rather individuals that buy from individuals and
  • 3. it is here that the skill and attitude of a sales person that come to the fore.To better understand how to satisfy the needs of our customer and to able to match our capabilities to the prevailingopportunities it is important o understand first who my potential customer is.We can identify our customers as follows:Existing Customer: To get a new deal closed from anexisting customer, we have focus more on the after sale Compe-tors  service and the bundling aspects of the solution. Here Customer  the benchmark is our own old product and since wealready have an existing relation with the customer, and Exis-ng   New   Customer   Customer  in all possibility an existing solution or offering it isthis fact that helps create a preference in the minds ofthe customer. This is also called ‘sticky solutions’wherein the shifting cost is generally more of a Customers  hindrance to the customer. This ensures that wegenerally get the ‘last right of refusal’ on a deal.Competitor’s Customer: Competitor’s customer or competitor’s account are generally the most difficult accounts tobreak into. These are customers who already have a preference to a competitor or a competitor’s solution offering. Since,the benchmark over here is generally the competitors offering, price is a critical factor to breakthrough. Strategic pricingis generally used by a sales person to get a foot in the door in such an account. One needs to have a clear picture of thecompetitor pricing and history of their acceptance and satisfaction in the eyes of the customer.New Customer: These customers are the ones that have no previous history of using a similar solution from either you oryour competitors. For these customers, it is very important to focus on the “value” to be delivered. Value could be eitherthrough cost savings, competitive advantage or both. If you are able to push through the value perspective, then pricingbecomes far less of a constraint.Customer CategorizationThe next step would be categorizing customers to be able to Key  Accounts  track and treat them separately. We can categorize them as keyaccounts, accounts of strategic importance and other accounts Strategic  Accounts  that need to be catered to make up the numbersKey Accounts: These are accounts that contribute the maximum Other  Accounts  to your sales. One could employ the 80:20 rule here to filter the
  • 4. Top 20% customers that contribute the most. However, this list needs to be looked into on an annual basis as customerspending and investment changes every year. A customer identified as a key account this year may not be one next year.You should concentrate your resources on these accounts and ensure a strong relation with them.Strategic Accounts: These are the customers that may not contribute significantly to your sales, but it is imperative tofollow and track these accounts due to their strategic nature. These could be accounts that have huge growth potential inthe years to come or may be a competitor’s account that you have managed to break into. Improving relations with themwill only ensure your long-term growth and sustainability.Other Accounts: These are the customers that help you make up your sales numbers. They may not give you business ona frequent basis or the business may not be of large value, but they help you attain your targets, what we call ‘book andbill’ accounts. Business that you are able to book and bill (invoice) within the same quarter, half or year. These should notend up using too many resources.Finally, lets look at how does one go about setting a sales target. This needs to be done very accurately and with somedegree of estimation, as it is very difficult to get a clear idea of the business inflow at the very beginning of the year. Wemay have a clear picture of the potential business inflow up to the 2nd quarter; however, things beyond the 2nd quarteroften are hazy and unclear. Many a times, it is forecasting of this number that puts sales people into trouble.The Sales FunnelThe sales funnel is the most important concept whenit comes to forecasting sales. As shown in theadjoining figure, depending on your hit rate orconversion rate, it is advisable to have a funnelconsisting of sufficient leads or enquiries. Forexample, if you have a conversion ratio of 20%,meaning you convert every fifth lead into asuccessful deal; you would require leads that at leastadd up to 5 times your sales target. There are alsoinstances when deals get shelved at the last minute orget shelved due to unforeseen circumstances.Sometimes deals also get shifted to the next quarter, half or year for that matter. Hence, having a substantial prospectpipeline is important. Once, you have a sufficient prospect funnel you then go about filtering the relevant ones andconcentrate on those engaging resources to the deals you believe you have a better chance of cracking. This also ensuresan optimum utilization of resources.
  • 5. It should not come as a surprise to note that although you may have more prospects, these could belong to fewercustomers; as in a customer could be giving business through multiple deals or projects. This is also another way torevalidate that it is the key accounts that are giving most of the business.Sales PlanningThis is the final step that goes into how you plan your business. Sales needs to be divided across all 4 quarters keeping inmind the resources, invoicing and also the larger picture, i.e. the Income statement. Planning your sales throughout theyear will ensure steady cash inflow. For example, we can plan the sales as follows: Time Frame Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales as a % of the overall Sales 15% 30% 35% 20% TargetThis distribution is a random allocation based on the below assumptions: a. Q1 sales will be less because company budgets are generally drafted in this period. b. Also, Q1 also sees invoicing done from the order backlog of the previous year. c. Sales people generally tend to go on vacation in Q1 after a hectic and busy Q4/ year ending. d. Q2 and Q3 sales are generally considered to be higher, based on invoicing plans and general trends in the industry. e. Q4 sales are generally kept lower as a majority of sales done in this quarter are not billable and hence shift to the next year resulting in an order backlog. This kind of planning comes with a certain degree of experience, industry knowledge and forecasting skills.  
  • 6. About the Author:Siddharth Ravishankar is a student of SP Jain School of Global Management majoring in Master of BusinessAdministration, specializing in Contemporary Marketing Management. He comes with a rich background of B2B Salesserving one of India’s premier engineering companies in Larsen & Toubro Limited.Email id: sidd.ravishankar@gmail.com