We will have a series of blogs that cover the fundamental questions and exercises that companies need to do in order to get their sales engines moving. There will be a heavy focus on lead sourcing and qualification. There will be a substantial revue of traditional methods (beating the street and cold calling) mixed in with newer concepts of social media outreach while rounding it out with event-based concepts. There will be discussion for both business-to-business and business-to-consumer company focuses.
By the end of this series you should be able to you identify your company type, how to organize for success and what steps you need to take to get there, along with some exercises in between. I don’t claim to be all things to all people, but having worked as a consultant, sales person and owner in the industry of selling, I have had the chance to look at several types of companies. There are real differences in selling to a technical buyer be it a doctor or an IT director versus a senior in high school.
There will be significant differences in selling mattresses (yes, I have sold mattresses) to selling wind turbines to the government. The point here is that these are steps and ideas, however, there are things you inherently need to know about your industry that I simply may not know or could not build up on in one blog edition.
As always I will put a smattering of my own personal experiences in so please feel free to laugh at me when appropriate and always feel free to contact me too.
What do you want to be when you grow up?
The first question I ask companies is what do you want to be?
- What are your business goals?
- What are your one and three year revenue goals with funding and without?
- Are you focused on a customer business need that you have the ability to solve?
These are all simple questions on the surface, but they are also really complex when you dig down into the details. When you ask someone what their business goal is, I’m generally trying to understand if they want to monetize the company in some way, whether it is sell it completely or get capital for growth. The other side of this coin is they want to create a lot of free cash flow so that they can have a lifestyle company. Or it is possible they have specific shareholder or VC goals that must be met.
When it comes to the revenue question, most companies use the finger in the air when it comes to determining revenue goals. They might sit down and say, well we did this much last year, so we should be able to do this much more next year. The reality is that there are several other factors to look at when you have these conversations. Last question: what is the specific problem that you solve?
When you talk to a customer whether a B2B or B2C, how do you engage with them? This is your value proposition and how you can differentiate from your competitors. A lot of times the answer may be we are cheaper or you may have a specific new feature that the people are looking for. What if you are the same, there is no real difference, and you just need to out hustle sell and market? That can be the case and in each one of those scenarios there is a plan for market acquisition.
So why do I always start with these three questions?
They are the foundation for your sales and operations planning. Lets of course focus on the sales part right now. Your business goals and revenue will directly tie into the planning you have for your sales organization by telling you how many reps and when to hire. This will help you with your training and on boarding along with retention. When revenue is done right, it allows you to understand all other decisions needed in your company. You take the revenue and drive back into how to piece it all together.
I usually look at revenue and I divide up traditional quota to come up with how many reps are needed. So simply, if I want to hit 10 million dollars and one rep can do 2 million in sales, you need 5 reps, right? Wrong, this is why you need the 3 year revenue goals, because if you intend on growing you will need to add even more reps toward the end of the year to hit your next year goals. So lets think about this from our one and three year revenue goals:
10 million dollars year 1, 15 million in year two:
This requires that you have 5 reps day one if you expect that reps can do only 2 million. In year two you will need to have 3 more reps totaling 8 reps. The other consideration his how long does it take to ramp a rep?
In my next blog I will go into this more mathematically so you can see how it plays out on a white board.
- Posted by Doug Erb
- On January 19, 2015