No doubt, making sales is a critical part of any business to achieve success. Simply put, if you donâ€™t make enough sales of your products or services, there is no way you can cover your cost of operation, let alone make profit. And it will only be a matter of time for the business to collapse.
This is why it is very important for business owners, managers, and entrepreneur to know how to sell, so that they can outsell their competitors in the market place.
Ryan Allis discusses The Art of the Sale so powerfully in his book, ZERO TO ONE MILLION: HOW I BUILT A COMPANY TO $1 MILLION IN SALESâ€¦AND HOW YOU CAN, TOO, and I want you to read it.
If youâ€™ve been having problem with sales in your business, you are in luck today because Ryan will show you how to turn that situation around after reading this excerpt from his book.
By the way, Ryanâ€™s ZERO TO ONE MILLION: HOW I BUILT A COMPANY TO $1 MILLION IN SALESâ€¦AND HOW YOU CAN, TOO, is a great book that I very much recommend you read if you need to know exactly what to do to achieve success in your business â€“ heâ€™s done it for himself and he can help you do it for yourself.
Here is the excerpt. Enjoy it:
The Art of the Sale
The skill of sales is one of the most-prized attributes that an aspiring entrepreneur can have. The ability to layout the reasons why someone should buy from you and not your competitor, in a customer centered fashion-and then go for the sale at the exact right moment-is more difficult than you would imagine.
In your company, you may have a long or short sales cycle. You may sell a product directly to consumers via the Internet and not have to have any interaction with customers at all before they buy. Alternatively, you may be selling a service or product that costs thousands of dollars, and requires the approval of multiple departments.
You may have to present to school boards or Fortune 500 companies. It may take nine months between the time of first contact and the time the sale is closed. If your sales cycle is long, you’ll have to compensate for this in your projections. It can become very frustrating to sell a high-ticket item or service that takes months of presentations, discussions, and contract revisions to sell.
Here are eight questions to answer to get you started on your sales plan:
1. How will the product be sold? In a retail store, online, by direct mail, by catalogs, by infomercials, through distributors, or by a combination?
2. Will you sell your product at wholesale, at retail, or both?
3. Is your main market businesses or consumers?
4. Where do customers currently go to look for the product?
5. How can we be positioned so that we’re in these places?
6. Could the price point support a telesales force?
7. Could the price point support a direct sales force?
8. What is my unique selling proposition? What will make my product so different that customers will buy it rather than competing products?
Take, for example, my good friend Erik Severinghaus’s former company, MainBrain, Inc. MainBrain sold Web-based school administration software that featured grade documentation and recordkeeping for teachers; the capability for parents to view the grades, tardiness, and absences of their children online; a Web-based interface for teachers and coaches to maintain a Web page for their class or sport; school closing information; event calendars; faculty and staff profiles; school message boards; and a staff directory. The software sold for between $5,000 and $25,000, depending on the requested modules and features.
The sales cycle for MainBrain was much longer than that for iContact. After MainBrain contacted a school and set up its first appointment, it could be six months until they got a signed contract. They often had to present to a school board or school administratorsâ€™ multiple times, negotiate the details of each contract, and then wait for funding to be available for each school or county that it sells to. iContact, on the other hand, selling Web-based software that costs between $10 and $699 a month rather than $5,000 to $25,000, has a sales cycle of less than a week in most cases, and in some cases, no sales cycle at all. Approximately half of iContact’s customers sign up without ever contacting us.
If I find it easier on the psyche to sell short-sales-cycle products. If you do choose to sell a more expensive product that has a longer cycle, make sure you are very good at the sales process or have a sales team that is. While iContact can rely on our Web site, frequently asked questions (FAQs) page, and free trial to make most of the sales, you will have to take an active role, experiment with direct marketing, and keep detailed follow-up spreadsheets. Either way, learning to sell is a big benefit.
Even though the iContact sales team rarely goes on sales visits, each one of us has to know how to sell. For the half of our customer base that does contact us before purchasing our product, we have to know how to sell via e-mail and phone. We have to know our product inside and out, be able to answer any questions, talk on the phone with confidence, be enthusiastic, listen to the customers’ needs and
emphasize our competitive advantages.
Napoleon Hill, in his book, Succeed and Grow Rich through Persuasion, listed 11 traits that the successful salesperson must possess. I have adapted these traits and created my own list of 9 traits that a successful salesperson must have:
1. Knowledge of merchandise
2. Belief in the merchandise or service
3. Knowledge of the prospective buyer
4. Ability to make the prospective buyer receptive
5. Ability to know the right psychological moment to close the sale
7. Persistence and the ability to follow up
8. Ability to listen and respond to the customer’s needs
9. A good memory
The customer only wants to know what the product or service will do for him tomorrow. All he is interested in are his own values, his own wants, his own reality. For this reason alone, any serious attempt to state what our business is, must start with the customer, his realities, his situation, his behavior, his expectations, and his values.
-Peter Drucker in Management: Tasks, Responsibilities, and Practices
In making sales, you’ll have to set certain factors such as price, return policy, warranty, length of required contract, and so on. If you are the owner of the company, try to give your salespeople a selection of things they are authorized to offer if they feel they can close the sale. For example, if the enterprise sales rep at iContact needs to close a sale, he knows that he can offer a discount up to a certain percentage to get that sale.
As far as return policies go, in nearly all cases, the longer and better your return policy is, the more money you will make in the end. Sure, if you have a lifetime guarantee you might have 1 percent of your orders returned instead of the 0.5 percent you would have had with a 30-day guarantee; however, you may also increase your sales by 50 percent.
If you are selling an item that doesn’t depreciate rapidly (such as technology items) and have anything less than a 90-day guarantee, experiment for a couple of months to see how much your sales would increase by offering a 90-day, or even a lifetime, guarantee. Run the numbers, and nine times out of ten you’ll be way ahead of the game.
The importance of being attentive to your customers’ needs cannot be emphasized enough. If sales are not taking off the way you’d like them to, it might be because-for one reason or another-you’re not selling what anyone wants to buy. If you are going to become a good salesperson and a successful entrepreneur you must always keep your ear to the ground and listen to both prospects and customers.
You must know what makes your customers buy and what is keeping your prospects from buying. If you can determine, and then overcome, the major buying objections of your prospects, you’ll greatly increase sales-and the size of your wallet.
If you choose to sell your product online, much of your success will ride on your sales copy. If you will be writing your sales copy yourself-either for your Web site or for any marketing materials be sure that you emphasize the benefits of your product or service and not the features. People don’t care all that much that your Superturbo Lawnmower 5000 has an oversize fuel tank, autosensing cutting, and extra-sharp blades.
They will care, however, when you tell them that their lawns will be cut in a third of the time without their supervision, making their lives that much easier. Always address prospects’ concerns, explain how and why you are unique and better, and use persuasive devices like case studies and testimonials. If you can remember to always keep in mind the acronym AIDA, you’ll be all right. Start by attracting Attention. Then develop Interest, create Desire, and spur Action.
“If you do choose to sell a more expensive product that has a longer cycle, make sure you are very good at the sales process or have a sales team that is.”
Building a Sales Compensation Plan
To be able to support your future revenue projections, you will need to show how these sales will be made. If all the sales are coming through your Website, you will only need to show your current traffic levels, rates of traffic growth, your visitor-to-customer conversion ratio, and your average sale size.
If you are selling your product to other businesses, however, via either telemarketing or direct sales, you will need a sales force and account managers who are compensated on the basis of customer acquisition and customer retention, respectively. You can view your sales force as the hunters who bring in the contracted revenue, and the account managers as the farmers who sow the relationships with clients, work to get the clients to renew the business at the end of the contract term, and advise the clients on other products or services they may need from your company.
Your sales plan and your sales compensation plan tie back into your sales coverage model, a spreadsheet that reconciles your projected revenues with the sales team and account manager count and cost. Being “at plan” refers to hitting your projected sales figures. Try to come up with a plan that has realistic sales goals, yet will require your team to stretch to hit them. To create a sales compensation plan, start by identifying and making assumptions for these variables:
â€¢ Leads generated by channel by month
â€¢ Lead-to-customer conversion ratio
â€¢ Average up front revenue per sale
â€¢ Average ongoing monthly or annual revenue per sale
â€¢ Number of leads one sales rep can manage
â€¢ Length of the sales cycle in weeks
â€¢ Percentage sales commission paid to lead generation source (generally on contracted year one revenue), if lead generator is separate from closer
â€¢ Percentage sales commission paid to closer of the lead into a customer (generally on contracted year one revenue)
â€¢ Target new contracts per month per sales rep
â€¢ Base salary for a sales representative (usually between $30,000 and $75,000, depending on market, type of sales, commission rate, and experience)
â€¢ Number of accounts one account manager can manage
â€¢ Average up-sell revenue per client per year (sold by the account manager, above and beyond the original contract revenue)
â€¢ Percentage commission paid to the account manager on account renewals
â€¢ Target percentage of accounts that will renew each year
â€¢ Base salary for an account manager (usually between $25,000 and $40,000)
Once assumptions for these variables are in place, you can create your spreadsheet such that it outputs the following information:
â€¢ Base salary-to-commission ratio (many companies offer 50 percent base, 50 percent commission for their at-plan compensation)
â€¢ Target total annual compensation at plan for a sales representative (usually between $50,000 and $150,000, depending on market, type of sales, and experience)
â€¢ Target annual compensation at plan for an account manager (usually between $45,000 and $75,000, depending on market and experience)
â€¢ Number of sales representatives you will need to have to hit plan
â€¢ Number of account managers you will need to have to hit plan
â€¢ Revenue from sales at 75 percent of plan (worst-case projection)
â€¢ Revenue from sales at 100 percent of plan (expected-case projection)
â€¢ Revenue from sales at 125 percent of plan (best-case projection)
Building out a professional sales plan allows you to determine the breakdown in the number of people that you will need to hit the revenues you have projected as well as allowing you to share with your sales reps and account managers what you expect of them. When the time is right to build out your sales team, ensure that you have a CRM tool in place to track and manage your lead generation rates, sales funnel, sales cycle length, customer retention rates, and commission payments.
“When the time is right to build out your sales team, ensure that you have a CRM tool in place to track and manage your lead generation rates, sales funnel, sales cycle length, customer retention rates, and commission payments.”
This is a great book by all standard, and I very much gladly recommend it to you if you desire to know how to increase your sales, and make more money in your business.
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