Developing a Sales Strategy
In this lesson, you’re expected to learn:
– how to create an effective sales strategy
– the main components of a sales strategy
– how to develop a measurement plan and the key metrics that you need to know
Jumping into selling your product or service without planning how you will go about it is likely to yield poorer results than if you adopt a strategic approach to your sales.
To make the most of your sales activities, develop and use your sales strategy as part of your business plan.
What is a Sales Strategy?
A sales strategy sets out, in detail, how you will get your product or service in front of people who need it. Looking at it strategically will give you a comprehensive, methodical approach to ensuring you’re marketing your business correctly, and you are approaching the right clients.
A sales strategy can be based on your business and marketing plans. It looks at how you will deliver objectives set out in your marketing plan, as well as how you have chosen to segment your target market and how you will fund your marketing activities.
Difference between a Marketing & Sales Strategy
A sales strategy is not the same as a marketing strategy. While marketing is about getting your name out there and tempting new customers or rekindling interest in your business, a sales strategy is more about how you close the deal.
In order to build a comprehensive strategy for your entire business, you will need to come up with a different sales strategy for each of your product lines. While they may all end up looking very similar, it’s important to be aware of subtle differences between your products and the customers who pay for them.
According to Mike Moorman, Managing Principal at ZS Associates, a global sales and marketing consulting firm, your sales strategy should address three basic questions:
1) Who is the salesforce going to sell to?
2) What are they going to sell to them
3) How are they going to sell to them?
In other words, sales strategy is defined as the customer segments that a company targets, its value propositions for each segment, its sales force structure, and its associated selling processes.
Businesses employ one of two basic types of sales strategies in their overall plan: direct or indirect.
1) With the direct sales strategy, sales people attack the competition head on when talking to the customer. They talk about each feature of the competition’s product and compare it to theirs. The term “negative selling” refers to the direct sales approach.
2) Indirect sales approaches apply more subtle techniques by demonstrating features and benefits not available with the competition’s products or services without ever mentioning them by name. This more sophisticated, positive sales strategy requires research and analysis of the competition.
a) market knowledge
b) awareness of competitor activities
c) awareness of current trends
d) detailed business analysis
Small business owners wanting to create and implement a sales strategy for the first time may want to hire a professional business consultant to help guide the process.
Defining an ideal customer profile and focusing your efforts on prospects that fit the criteria is the first step to ensuring consistent Sales performance. Marketing often identifies a broader definition of a target audience and puts forward a more generic criteria for the ideal customer fit.
For example, it can look something like this:
Position: Finance Manager
Perhaps looking at your past closed sales you notice that the client was an expat or had several job changes in the past year making him more prone to embracing change. Which could work in your favor if you are selling an innovative product or service, for example, and you can use such clues to close more sales in less amount of time.
USP, also known as unique selling proposition, is your core offering differentiator and simply answers the question:
“Why would someone buy from you instead of your competition?”
To target your sales efforts successfully you need to know your USP and to be able to communicate it in an articulate way.
USP is a marriage between what your customers want and how your business is unique. A powerful USP consists of only one sentence, but delivers a message that says much more. If you don’t have a well-defined USP yet, challenge yourself to come up with one, in only one sentence.
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Analyzing competitors is an important exercise that can help fine-tune your messaging and develop a great strategy for handling client objections, especially as you get close to bringing in a sale.
When analyzing competition, pay heed to how they are communicating their product/service in their website copy and marketing/sales material. If you are very close in what you offer compared to your competition, think if there’s some nuance of your product/service not yet mentioned or if there’s an untapped market for your offering that your competitors haven’t moved on yet.
For example, they may be asking what industry your business is in, or how much revenue prospective clients make. Here’s a sample:
Remember before going into any deep discussions with your prospects that knowing your competitors’ sales pitch and pricing structure can give you an edge. So be sure to explore competitor websites and maybe even do an undercover inquiry on their site to get pitched and learn from their practices.
Exploring questions below will help you position your products/services better and can help in discovering new avenues to sell.
– How does your competitor find customers?
– Who are their customers and flagship accounts?
– What’s their sales pitch?
– What’s their pricing structure?
– What do customers like and dislike about them?
– Where do they allocate marketing spend?
– Which markets are untapped?
– Which markets are most crowded?
The book explains how to turn any business into a sales machine with the best practices of Salesforce.com.
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The author suggests that Marketing should focus their efforts on a target audience with a few short sentences and send long emails to senior executives / decision maker types asking for a referral.
He claims a 7-10% response rate on these emails and then expects SDRs to work those warmer leads into opportunities to then be closed by Sales / Account Managers.
If you’d like to watch this video later, you can find the link in the Additional Material section.
Link to the video: https://www.youtube.com/watch?v=xY4GxR8as9A
a) Salespeople are a valuable resource, prospecting takes forever and specializing your salesforce is a key to building an efficient sales systems.
b) Cold calling is a hard and time-consuming practice. It can produce results but you can boost the effect of this old sales technique if you cold call or cold email asking for referrals instead of just pitching.
c) Develop businesspeople who can sell rather than salespeople.
Link to the video: https://www.youtube.com/watch?v=u7heOSVnuEQ
Many companies are unfortunately stuck tracking ‘vanity metrics’.
There are many Sales KPIs you could measure and the most important rule whenever you chose the metrics you’d be tracking is to measure results not activity.
Measuring activity (dials per hour, open activities, number of leads per quarter etc.) is what’s called ‘vanity metrics’ and that doesn’t help you boost your sales performance.
1) Number of Open Opportunities in total and per rep:
Measure the total number of open opportunities each rep is working on at any given time, and understand how many total new opportunities they should be getting per month.
What to do with it: Your reps should get a sufficient inflow of new opportunities to have a steady number to work in their pipeline, giving them enough opportunities to hit their number. A common number for a SaaS rep doing low-five-figure deals to juggle is 25-30 opportunities.
Measure total opportunities closed including both closed-won and closed-lost opportunities.
3) Deal Size
Measure the average value of your closed-won deals.
What to do with it: Knowing this metric will make it easy for you to spot opportunities that fall outside the normal deal size (say 3x greater than average) and flag them for special attention. Also, if the trend shows an increase in smaller deals won, perhaps some reps are focusing on small prospects.
Measure the number of closed opportunities, in a specific closing period, that you won. Win Rate represents the ratio of deals won to the total number of deals
Win Rate = (Closed-Won Opportunities) / (Total Opportunities)