Salespeople must create revenue opportunities; here’s one avenue
By Jerry Stapleton and Nancy McKeon, for SBT
Among the more common questions we’re asked by client executives is: "What must my sales force do to contribute value to MY company?" One way is that they must create revenue opportunities. Here’s how they do it – or how they should be doing it if they’re not.
Those same executives often suspect that "there’s a lot more business we could be getting from our existing customer base." Their suspicion is right. Like most things in life, the answer to the challenge of creating revenue opportunities lies in salespeople’s own back yards — their current customer base.
Estimate the value
Let’s start by trying to quantify that missed opportunity for your own company. First, estimate how many customers have untapped potential — and how much potential. Think about that potential in three buckets:
1. The opportunity to displace competitors who co-exist with you in some accounts
2. The opportunity to do more things that customers are doing in-house
3. The opportunity to do things that aren’t being done at all
Next, estimate how much more profitable this incremental revenue is likely to be, compared with revenue garnered from new customers. New customer revenue is, typically, less profitable because of the risk factor that companies associate with buying from a first-time supplier. That risk almost always takes the form of price scrutiny on the customer’s part.
Third, estimate how much a sales campaign costs to win a new customer (more selling time, demos, proposals, pre-sales support of all kinds) versus the cost of selling to established accounts. It’s well known that the cost of sales to existing customers is considerably lower than it is for new ones.
Fourth, you must also factor in the reality that you are going to pay closer attention to any customers that become larger, more profitable accounts. The effort you put into harvesting their untapped potential will also translate into fewer customer defections. Try to put some number to this as well.
There are other variables that apply universally — to say nothing of those that may apply in your own business, but I think you get the picture. Now, multiply this number by some period of time. I like 10 years. Pretty staggering, isn’t it?
Why haven’t we done this already? Fear!
Now that we’ve established the value that lies in our current customer base, let’s talk about how to harvest it. Better yet, let’s back up and ask why it hasn’t been harvested in the first place.
The overriding answer is fear. Salespeople tend to be afraid of appearing to be trying to go over or around their existing contacts, looking greedy or engaging the competition.
It’s an I-just-want-to-leave-well-enough-alone thing.
As a result, salespeople mostly wait for competitors to screw up or for their contacts to approach them with a new opportunity. Neither happens with enough frequency to be worth talking about let alone counting on.
There’s also the unspoken fear of, "Exactly what do I say to my current contacts to start the investigation?" Salespeople have learned that Sales 101 questions such as, "Do you have any other needs?" or "What else do you have going on?" don’t yield much fruit. That’s why the starting point in this process is not about looking for needs. It’s about better understanding the customer’s business. After all, where do customer needs come from but customer business issues, right? Approaching the conversation from this angle defuses any appearance of "greedy, opportunistic salesperson."
Success is all in the wording
How your salespeople request this discussion with their contacts is where it will succeed or fail. They should be using wording that goes something like this: "Sally, our two companies have been doing business together for, what, about five years now, right? And while I’m confident that I understand your day-to-day technical issues and the like, I think it would be to our mutual value for me to take a step back and make sure I understand XYZ’s bigger-picture business issues as well. Our experience at ABC Company is that we can maximize our value contribution to customers to the extent that we have our arms around their overall business picture, and not limit our knowledge to only their immediate needs."
Leave the products at the door
While the request for the meeting is the hardest part of the process, your salesperson is not out of the woods yet. He or she must do what, to many in sales, is the unthinkable — leave the products at the door. If the call starts to smell to the customer like your salesperson is on a fishing expedition, your company will lose ground with this customer, not gain it.
Salespeople must master the discipline and sharpen their skills in the area of understanding a company’s business. Part of this discipline is to save the job of translating business knowledge into a solution fit for after the meeting itself.
One client company took this idea to heart and, over a two-year period, estimates that revenues grew incrementally by 30% and margins by more than 50%. After seeing this payback, there was a collective slapping of the forehead among leadership and the salespeople alike with a simple exclamation along the lines of, "This almost seems too easy!"
Jerry Stapleton and Nancy McKeon are with Stapleton Resources LLC, a Waukesha-based sales force effectiveness practice. They can be reached at 262-524-8099 or on the Web at www.stapletonresources.com.
For summary box
There’s enormous untapped profitable revenue within relatively easy reach in your current customer base that’s just waiting to be tapped. But, one of selling’s dirty little secrets is that most salespeople won’t try to tap it. Think about how much revenue-and margin-lies in these three areas:
1. The opportunity to displace competitors who co-exist with you in some accounts
2. The opportunity to do more things that customers are doing in-house
3. The opportunity to do things that aren’t being done at all
There really is gold in them there accounts. Isn’t it time you started your own gold rush?
Oct. 31, 2003 Small Business Times, Milwaukee
