What Type of Sales are You Looking for?
How long should your sales cycle be?
Sales can come in all shapes and sizes really. Some are quick hits, think shopping online and the “One-Click” buy button. Others take a long time and require more bidding and general information about your company, think request for proposal process. Neither is right or wrong, but do you know which one your customers fall into?
So there are a few questions to think of when looking at your product and service, as well as your customers. Answer these questions will give you an idea of how long your sales cycle should be, as well as do you have the right number of customers.
Quick and Short verse Long Term (contracts)?
Easy or Hard, does your customer know they need it?
Are these the kind of customers you want to work with?
Can you make it harder to change for your customers?
I’m not going to touch on each one, but we dialogue through the list with some additional thoughts.
Quick vs long term really comes down to a transaction vs a contract. Are your customers signing up to buy one product from you once, or are the going to agree to work with you over the next 1-3 years? It’s pretty obvious why this matters, but we’ll say it out loud just to make sure. If you are in the quick transactional game then you need a lot of customers, after all your customers are only buying from you once or twice. So you need a really big sales funnel that drives a lot of potential customers to your product offering. This always means you need to find ways to drive future sales. That could be a new version of the product, think different color schemes for clothing and accessories. It could also mean that you need a second product, or a service that goes with the product, subscriptions are all the rage today, just make sure there is real value for your customer.
On the long term side, do you have the resources to support that contract. Likely you will need someone to manage the day to day activities. Can you do that or do you need to hire for that? If you need to hire, does your pricing account for that? If you plan to manage the contract how will that impact your future sales. Remember we want a diverse revenue stream. Also will there be up sell opportunities? That’s aways a good way to make sure that you can improve margins down the road. After all most companies going through a request for proposal process probably have a procurement department, who is focused on reducing cost. So just be prepared. Also know the contract, what are the outs for you or the customer, they are in the contract, trust me. What power do you have and what power does the customer have. I do not say this in a negative way, contracts are good for both parties to ensure that what is intended is outlined in writing. After all people change roles and sometimes it’s just good to have that handshake agreement in writing, so nobody forgets. Bottom line is know the kind of transaction your product or service lends toward and make sure your customer base allows for a good health and diverse revenue stream.
Another consideration is how much does your customer know they need your service? This leads to an easy sale verses a hard sale. For a hard sale you are going to have to account for a lot more time to show the customer the value and why they need the service. For an easy sale you just need to get your name out there, so customers know where to come when they need it. This will affect here and how often you market as well. Harder products will have a lot more upfront spend on marketing before you bring your revenue up, so make sure you have the funds to support that. You will also want to listen to your customers even more intently on the harder products. When they are telling your why they bought it, or when, or where, those are the key points you need to use in future marketing campaigns. You current customers will help you find your future customers. Trust me there will be some driving factor for them that you never thought of, so listen and use what you hear.
One questions to ask from the get go is are these the kinds of customers that you want to deal with on a day to day bases? If not you might want to consider another product or service. Maybe you find a business manager to take over the day to day and you focus on the ideas for future products. It is ok to deal with the kinds of customers you do not like for a short period of time, but signing yourself of for that long term is not a good way to build your company for long term success. So do an honest reflection and make sure you are working with the right customers for you.
Finally something to consider is can you make it harder for your customers to switch. Remember that the general accept number is 5X to gain a new customer verses keeping an existing customer. So the customers you have will bring you more profit per sell. What value can you bring to keep them coming back, even if you are in a transaction environment? That way they cost you less profit. Of course you will still want to grow, that is part of a diverse revenue stream, but so is keep your current customers and engaging them in repeat sales. This build loyalty, so even without a formal contract they will continue to return for future business with you.
So remember:
Know what kind of customers you have, it will drive your marketing decisions.
Remember Boeing is not selling airplanes on facebook ads.
Make sure those are the kind of customers you want to work with.
Find ways to add value and make it harder for your customers to switch.
I hope you find some value in today’s post. If you do, please do me a huge favor and share it with a friend or 6. Every share is greatly appreciated!