Many companies struggle to increase the performance of their sales teams. Their ambition is to generate more, and preferably larger and more profitable, deals as well as longer term contracts.
To succeed, some companies put the emphasis on growing the number of leads as the only way to get more business.
Although it looks appealing, this approach is not sufficient; it is not the most efficient way to increase sales in the long term.
As a matter of fact, you want to make sure your sales teams are effective, not just busy.
More sales activity, more leads, more deals?
Let’s define the win rate as the amount of deals signed divided by the total amount of proposals sent.
The concept of solely focusing on generating more leads to sign more deals is a one-dimensional formula that assumes a constant win rate.
In other terms, signing 2 deals out of 10 proposals implies that 20 proposals must be issued in order to sign 4 deals.
This approach demands an increasing amount of sales activity: more calls, more client meetings, more proposals.
The limits of this approach
The primary metrics measured and challenged here are the number of calls, the number of meetings and proposals.
This approach shows a number of weaknesses:
- it provides a false sense of security (“the more leads the better”)
- those KPIs quickly hit a hard limitation: the size of your sales team and the number of hours in a day
- beliefs such as “in our industry the win rate is X” or “in our company the win rate has always been Y” prevent you from challenging the win rate
- and an increasing number of leads and proposals means additional pressure on internal resources.
To increase your win rate: focus first and then qualify!
It is essential to consider that Win rate and Qualification are the two sides of the same coin.
A sound qualification process will help select the opportunities worth chasing and therefore dedicate valuable resources accordingly.
Among other criteria, make sure that the deal is real and that the winning scenario is assessed and challenged.
Create the conditions to make your sales teams even more effective
To do so, carve these steps in stone:
- become a successful lead generation machine (a joint Sales and Marketing responsibility)
- implement a qualification process to select the opportunities worth pursuing
- expect your sales reps. to reduce risk: they should know the client, the background, the competition
- avoid silo behaviors, leverage your internal resources to optimize the winning strategy
- eventually close the deal
- …..and always learn from your mistakes (generalize the practice of post mortems).
As a result,
Instead of chasing 10 potential deals and signing 4, you might want to chase 7 deals and sign 5.