An effective sales strategy is an essential part of building a growing business. A well-thought out strategy lets you make the best use of your resources and ensure a co-ordinated approach across the business.
Your strategy should be underpinned by clear objectives and a thorough understanding of your customers and the market. Key issues include deciding how best to sell, making sure you have the right resources and managing sales performance.
1. Your objectives
Review your overall business strategy
- Review your business strategy for the next one to three years. Make sure any objectives are measurable and have a specified time frame.
- Remind yourself of the constraints you need to operate within, such as limited financial resources.
Establish your broad sales strategy and objectives
- Decide how you want to position your business and your products or services. For example, if you launch an innovative new product, you could aim to sell small volumes at high prices to early adopters, or opt for rapid market penetration to deter competitors.
- For a new business, a key objective might be to quickly build a core customer base. Or you might concentrate on acquiring a single large customer to boost your profile.
Review what you know about your market
- Clarify who your main competitors are, what they offer and the main trends driving your market. You should review this regularly, checking competitor literature and websites and subscribing to trade publications.
- Establish who your customers and potential customers are, and what they want. Be clear about the benefits your product or service offers them.
- Establish who your target audience is and what it wants. You must offer something different or improved, because customers will be loath to change if they cannot see any additional value.
Decide which groups of customers to target
- Effective market research is essential to identify the most promising targets. Research individual prospects, finding out their individual priorities and who their key influencers and decision-makers are.
- As you build up a customer base, remember that retaining existing customers and winning repeat business is usually much easier and less expensive than selling to new customers.
- The easiest new customers to sell to are usually ones who are similar to your existing customers. However, building a broad mix of customers is less risky than relying on a small number of similar customers.
Take a co-ordinated approach
- Link sales with other marketing activities. For example, you might use a local advertising campaign to support a sales push.
- Co-ordinate sales campaigns with other areas of the business. For example, you will need to ensure that you have adequate production capacity and the financial resources to fund an increase in working capital before boosting sales.
- Plan the after-sales service you will offer.
2. Sales methods and channels
Evaluate the best method of selling to customers
- Selling face-to-face is often the most effective method, particularly for complex sales, but it is time-consuming and expensive. It is usually only worthwhile for high-value sales or to build a long-term relationship with a customer.
- Retail, direct mail and telesales are more cost-effective for lower-value sales. They can also be a good way of generating repeat business once a relationship with a customer exists.
- Selling via your website can be the cheapest method, once the initial set-up costs have been taken into account.
- You could opt to combine some or all of these sales methods in order to reach a wide range of potential customers.
- Remember that it can take several months to build credibility and get access to a key decision-maker, particularly for high-value sales to large businesses.
Decide whether to use intermediaries
- Look for agents who have access to your customers and can sell to them more cost-effectively than you. For example, you might sell to individual consumers via retailers or to businesses through a wholesaler.
- If you sell through an intermediary such as a distributor, you need to plan how you will sell to that intermediary. You may also want to plan ways to help them sell to your end customers, increasing overall demand for your products.
- You may want to use an agent to help you break into new markets – for example, if you are going to export.
Consider whether there are any alternatives
- You might aim to develop a ‘corporate venturing’ arrangement with a larger business, so that you can sell through their distribution channels. In return they might take an equity stake in your business or part-ownership of your intellectual property.
- You could consider co-operating with non-competing companies that sell to the same customers. For example, you might introduce each other to key decision-makers or promote each other’s products when the opportunity arises.
3. Customer relationships
Learn more about customers
- Establish when, where and how they purchase. Identify individuals who influence or make the purchasing decision. Your sales records or customer relationship management software can give you valuable insights into buying habits.
- Encourage them to give you feedback on your products and services and how you compare to competitors.
- Run regular customer surveys – with an incentive to reply. You can use free online tools such as SurveyMonkey to set up a customer questionnaire.
- If you sell to other businesses, take an active interest in how they are performing and what their plans are.
Look for opportunities to sell more
- Look for opportunities to encourage customers to make higher value purchases or to buy additional or related products or services from your range.
- Time your sales approaches – for example, to fit in with a customer’s annual budget or seasonal levels of demand.
- Use sales tactics carefully. For example, discounts might appeal to the wrong sort of customer or harm your image. If you run special offers too often, your customers will come to expect them and won’t buy your product at full price.
Communicate regularly with customers and potential customers
- Social media has become a vital business tool for staying in touch with customers. Using Facebook or Twitter to alert customers to news and offers can be an easy way to get started.
- Where possible, contact customers from time to time just to discuss their business plans and remind them that your business exists, rather than always trying to make an immediate sale.
- Follow up on meetings or sales calls to confirm what happens next.
Encourage customer loyalty
- Provide good customer service. For example, treat customers as individuals and plan systems that make life easy for them.
- Give customers the opportunity to provide feedback and listen to what they say. This can make a significant difference to customer satisfaction as well as making it easier to deal with any problems.
- Exceed expectations. Do not make promises that you cannot keep.
Focus on your most important customers
- Analyze which customers are most profitable, taking into account the cost of selling to them, how regularly they purchase and any special demands they make.
- Identify other customers who are important to you – for example, because they recommend you to other customers or have the potential to make repeat purchases.
- Remember not to neglect existing customers when pursuing new ones.
4. Sales resources
Decide if and when you need to recruit a dedicated sales team
- If you think the business is missing out on opportunities because of a lack of selling resources, or if you are uncomfortable selling yourself, you probably need a sales team.
- The number of salespeople and the skills they need depends on how you sell, your markets and the sales targets you hope to achieve
- Employing salespeople with existing customer relationships can reduce the time needed to break into a new market.
- Clearly define the skills and experience you require in your sales recruits.
- Make sure salespeople understand the key selling points for your products or services and how to approach customers and potential customers.
- Train salespeople in negotiation. Give them clear guidance on what is negotiable in order to win a sale, and make sure they understand how any concessions they make impact on profits.
- Train everyone who has contact with customers, not just salespeople.
Give salespeople the tools they need
- Some form of database is essential for holding information on customers and prospective customers. Consider using customer relationship management (CRM) software.
- Make sure that salespeople are trained in how to use your systems.
- Smartphones, tablets and remote intranet access to your customer database and stock information can improve the performance of traveling salespeople.
- Integrate sales and other IT systems wherever possible. For example, it is useful if salespeople can check what stock is available, whether orders have been despatched and whether customers are over their credit limit.
- Provide high-quality marketing material, such as brochures. The best marketing tool is often customer testimonials – and these are free.
Make selling easy
- Simplify systems so that salespeople do not spend their time on unnecessary administrative chores. Use standard documents wherever possible: for example, proposal letters and standard contracts.
5. Sales planning
Involve your salespeople in the planning process
- Imposing plans and targets without consultation rarely works.
- Salespeople can provide up-to-date market information and suggest the best way to approach customers.
Identify the key drivers of sales performance
- Externally, these will include the overall level of demand among your customers and what your competitors are doing.
- Internal factors will include your marketing activities, any change in prices, the size of your sales team and how you sell.
- Develop a small number of key performance indicators that will help you manage the sales team – for example, the number of new enquiries they generate, or the amount of time spent calling customers.
Prepare detailed forecasts
- Build up your forecasts by looking at each market segment separately. If you have a small number of high-value customers, consider forecasting likely sales to each one individually.
- Estimate the level of sales you hope to achieve and the percentage likelihood of closing them. Identify customers by name or by the number you expect to sell to.
- Define the number of sales you expect from a set number of calls, visits or other contacts (your conversion rate).
- Decide the levels of sales activity needed to reach your expected level of sales. Set out how you will allocate salespeople across different segments, and how time will be split between existing customers and new prospects.
- As your knowledge of your customer base builds up, use it to analyze the timing and size of likely purchases.
Make sure that targets are realistic
- Examine your assumptions and consider different scenarios, rather than simply assuming that sales will grow year-on-year by a set percentage.
- Justify the sales growth you are projecting. Distinguish between general market growth and the effects of using additional sales resources or selling more effectively.
- Be realistic about the lead time required to sell new products or to win new customers.
- Make sure any targets you set are measurable and time-specific.
Use your targets to feed into your budget
- Budget for sales costs at the same time. Include salaries, promotional materials and equipment.
6. Managing sales performance
Track sales progress on a weekly basis
- Monitor key performance indicators and levels of actual sales. Discuss the information with your sales team.
- For high-value sales, ask salespeople to assess the potential value of each sale they are working on and the likelihood of success.
Motivate salespeople with praise and incentives
- Make sure that incentives are geared to achieving your business goals. For example, you might link commissions to sales profits rather than simply the value of sales.
- Learn from each other’s experiences. For example, you could share information on how a lucrative deal was won or where your competitors succeeded. Encourage teamwork.
Modify your plans to reflect actual performance
- Regularly review performance against budget. Analyze any significant differences and find out the reasons for them. Consider planning new sales initiatives or refocusing your efforts on the most successful segments.
- Identify customers who have stopped ordering from you, and find out why.
- Analyze conversion rates for new prospects. Examine each stage in the selling process to find out where you are losing sales and why.
- Assess the cost-effectiveness of each distribution channel.
- Use feedback to refine your sales strategy and your overall business plan.
Source: Marketing Donut