The UK is a leader in starting enterprises but a laggard in keeping them alive – and a lack of sales ability in SMEs has been cited as a key cause. As a parliamentary inquiry tackles the problem, Guy Lloyd, advisory board chair at the Association of Professional Sales, offers advice for building a business that can sell, survive and thrive
The UK is one of the world’s top five nations for producing new businesses, according to the latest OECD figures, yet it doesn’t make the top 10 when it comes to keeping those ventures alive for five years. Given that SMEs employ 60 per cent of the UK’s private-sector workers and generate just over half of its GDP, this is alarming.
A big factor in our high casualty rate is an ineffectual approach to sales. It’s not for the want of trying, of course. The first salesperson in a new venture is likely to be the founder. Their belief in the company and what it offers gives them a unique ability to win business – in effect, the founder is a super salesperson. But, as their ventures grow, too many of them struggle to instil an effective sales process, hire the right salespeople and transfer their passion and energy to these recruits.
A study by RPMG Research Corporation has found that taking a simplistic approach to creating a sales “funnel” – the buying process that potential customers are led through – will result in only two sales for every 100 leads. It’s easy to see how firms get starved of cash in such circumstances.
It’s therefore important to have an effective sales process that doesn’t depend on the founder for its success. The evangelical approach that only they can carry off should not be confused with the structured method that a developing sales team needs to be able to follow.
The Association of Professional Sales (APS), which is leading an all-party parliamentary group to highlight this issue in politics and industry, has written two papers on establishing best practice in sales (see access details at the end of this article). But here are some of the main considerations to help you get started on building a business that will truly realise its sales potential…
1. Get your first sales appointment right
Picture your company as a wheel, with the direction being set by you at its hub and the execution of strategy being made by your team at its rim. The spokes between these represent the levels of delegation, which become more pronounced as your company grows. It’s common for small and growing firms to hire junior salespeople at the rim because this is relatively inexpensive. The key decisions on sales strategy remain with the founder, which is a comfort to them. But this can prove a false economy. Too often, a founder will need to remain deeply involved in sales activities to close deals, giving them little time to focus on their main responsibility: leading the company’s growth.
Crucially, you need to understand that commercial success is about much more than simply closing a series of individual deals. The company must execute several interrelated activities well. The ideal candidate for the crucial first sales job will have a detailed understanding of, and proven talent in, crafting a holistic sales process from scratch. They will use their experience to identify the most fruitful markets and the best ways to approach these. And, when sales are achieved, they will be able to use the right technology and metrics to track customer satisfaction, retain business and identify future opportunities. Their results should include: selling more to existing and new customers; decreasing the length of the sales cycle; increasing the average order size; and increasing the firm’s capacity to process multiple sales concurrently.
If you’re a founder without a sales background, how can you be sure that the salesperson you have appointed is following the right process? Here are some important aspects that you should be focusing on together.
2. Nail your proposition
Ensure that you have a clear plan for elements such as pricing and packaging; how your product or service is acquired by the consumer; how it integrates with, or complements, other aspects of the customer’s environment; lifetime customer value; support requirements; and future revenue options. You must consider these factors carefully to remove the customer’s resistance to making that first investment in your product or service.
3. Choose the right market
This is a profound decision. Targeting the wrong country, industry or demographic, for example, will set you up to struggle. Mistakes can be as simple as picking the market the CEO knows best and missing a much richer adjacent one.
4. Target the right firms
There will be subsets of any market that are much more willing than others to buy your offering. Choosing the right ones will dramatically shorten your sales cycle.
5. Complete the sale or move on
Know when to walk away from a prospect if a sale is not progressing as needed. This will enable you to devote more valuable time to those that are more likely to buy.
6. Understand your customers
Feedback is the very foundation of growth. Gauge customers’ opinions of your offering, especially the reasons for any changes in sentiment. Know your customer churn rate and what’s behind it. Refine your product or service. Acquiring customers can be vastly more costly then retaining them.
7. Remember that selling is a process
Knowing all the elements that contribute to a successful sales process enables you to improve each and scale up by replicating the process across more resources. Adding sales resource without the understanding is a bit like rolling the dice: sometimes you’ll get lucky; most times you won’t.
Contribute to the parliamentary inquiry by filling in the survey at surveymonkey.co.uk/r/smeselling.
To access the APS’s papers and other guidance on establishing best practice in sales, visit associationofprofessionalsales.com/insight/sme
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