Farquharson/Tedesco on Business Development: How to Build Sales Pipelines
What's the lifeblood of any salesperson, sales team or company? Ummm, sales? Sure, but let's be more specific. New client sales? Yep, that's the answer. It's what hunters do. Harvesting (upselling, cross-selling and maintaining current business) is important, but that's what farmers do. New client sales is your future, the reason why companies even have salespeople.
How do you manage sales results? We don't even like this question, because we've never met anyone who can manage a team's or even their own sales results. You can only manage the sales process. So what do hunters and hunting organizations do? As a "slightly more famous Bill than the one co-writing this column would probably say, "It's the pipeline, stupid."
On to the six steps...
Step 1: Trust the Process
You have two choices. Change your processes and do better or don't change and get the same results. The concepts around managing your pipeline isn't hard—it just takes knowledge and lots of personal discipline. It's truly that simple.
Step 2: Identify Your Goal
This one's easy as well. How much do you realistically want to sell in the next 12 months? Cough up a number that's somewhere between achievable and unlikely. Give yourself a stretch goal, but one that's reasonably attainable given where you are in your career.
Step 3: Fish in the Right-Sized Ponds
Adhere to the 3x rule: Fish in ponds at least 3x the size of your sales goal. So what does this mean? For example, if your goal is to sell $3mm, the total amount of what all your customers and qualified prospects buy on an annual basis should be at least $9mm. Logically, this makes sense. You're not going to win every opportunity, so give yourself a reasonable chance at hitting your goal by fishing in large enough ponds. 3x has worked for your authors over the years so, that's why we recommend it.
To determine the size of your current fishing pond, open a new spreadsheet and, in column A, write the name of every customer and qualified prospect on your list. Include top 10 customers, repeating customers, trial customers, quoting prospects and qualified prospects. For now, leave off any unqualified suspects.
In column B, write your expected sales volume over the next 12 months.
In column C, write the total account potential for the type of work you do. (Ignore web jobs if you don't have a web press, skip direct mail if you don't do direct mail, letterhead and business cards if you don't do those, etc.)
Once this is done, total up columns B and C. Calculate the difference between your goal and the total of column C. Many farmer-type sales reps fall significantly short of the 3x goal, which means they're fishing in ponds too small, which means, they've signed onto the "get lucky" plan, which isn't much of a strategy!
4. Pour More "Suspects" into the Top of Your Funnel
If your numbers don't work, at least you know it. Now that the cold reality of fishing in too small a pond is splashing you in the face, do something about it—and fast. Continuing with the example above, if you've only identified $6mm of total potential revenue in your existing territory, what now? Add new fishing ponds, of course! Dig out whatever database resources your company has. Hoovers, SalesGenie, Book of Lists, association databases and many more sources can help you identify suspects that, once qualified, can be added into your pipeline.
Build on the domain expertise you currently have. If you do well with widget manufacturers, look up the primary SIC codes and other attributes of your widget customers and search your database for companies with the same or similar SIC codes. Don't forget other similar attributes such as number of employees, total revenue, distance from your ZIP code, world headquarters designation, etc.
5. Qualify, Qualify, Qualify
Once you've added enough "suspects" into the top of your funnel, are you done? Hardly. Suspects are really truly only names on a page. Qualified prospects are the main prize. Quickly qualify each suspect for fit with the services and products you sell. Once you've done this, add these companies and total account potential to Column C and total up the column again. If you're not at $9mm yet, go back to your database resources and add more suspects and start qualifying again until you hit your 3x number.
6. Create an Activity Plan that Makes Sense for Your Situation
Now that you've identified a pool of qualified prospects, you now need to nurture them through the remaining four stages of the sales funnel. Get them to:
- Start quoting
- Become a trial customer
- Convert into a repeating customer
- Develop into a top 10 client
This is where the numbers game aspect to the sales process comes into play. Not every qualified prospect will start quoting with you. Not every quoting prospect will give you a first job. Not every trial customer will develop into a repeating customer and not every repeating customer will become a top 10 account. Therefore, you need a large enough pool of "suspects" at the top of the funnel to allow for all the weeding out that occurs at each of the lower stages.
Our advice is to start at the bottom of the funnel and determine how many companies at each stage are required to attain your sales goal. Next, we highly recommend setting numerical targets for number of dialings, telephone calls and sales visits. Sounds old school, because...it is!
Beware of sales charlatans who preach that cold calling is dead. The only thing dead is the sales career of a person who foolishly listens to this horrific advice. Sure, we'd love to exclusively live off of referrals and only manage the accounts we currently service. But then we'd be farmers, not hunters.
A hunting mindset is a crucial element for managing the sales process. A hunter controls his or her day and carves out significant time for new customer development. Hunters develop numbers-oriented processes to support their hunting activities and are disciplined enough to follow the process through.
Happy hunting, from your old-school friends, Bill and T.J. PI
About the Authors
T.J. Tedesco is team leader of Grow Sales Inc., a marketing and PR services company that has served the sales growth needs of graphic arts companies since 1996. He wrote "Win Top-of-Mind Positioning" and eight other books. Contact Tedesco at (301) 294-9900 or firstname.lastname@example.org. Bill Farquharson is a vice president at NAPL. Farquharson can help drive your sales. Visitwww.aspirefor.com or call him at (781) 934-7036.