What is a sale? Simply, it's selling a product or service in return for money - an act of completion of a commercial activity. But it's not that straightforward. Selling is not something you just do. Rather, it is a skill to be mastered. Some individuals are born salespeople, but those who are not have to learn sales skills - over time and with practice.
Master the art of selling, and you will be able to make your business fly. It's simple: the success of your sales can lead to explosive growth and profitability.
The sale is important because it impacts the bottom line of the business. Without selling, there is no buying, which means that no-one is paying for your products or services - and that means there is no business. Learning how to sell is therefore one of the most vital lessons to learn if you want your business to succeed.
This BizConnect guide provides an overview of the basic principles of sales and will help you to understand how to close the deal:
Understanding the sales pipeline
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Building and managing a sales pipeline can be critical to a small business's success because it creates a stable sales cycle. The pipeline is the amount of business you try to close in a month, quarter, year, or any other defined period. A sales pipeline works by placing leads or prospects at the different stages of the sales process/sales cycle, and then measuring their progress through the pipeline, from unqualified lead to satisfied repeat customer. Like all pipelines, the sales pipeline may leak and prospects will be lost.
Generally presented as a spreadsheet that tracks all of the business your sales team has pursued, the sales pipeline gives you the ability to track how many sales you close. Over time, it's possible to achieve a level of consistency that will let you forecast sales with greater accuracy. This in turn gives your sales team greater confidence and helps operations staff plan accurately for future demand.
Tracking the sales pipeline will also shed light on where your sales team falls short. You may find, for example, that your conversion rate is low or that you are you converting plenty of customers, but only getting a small share of their total business.
Ways to effectively manage your sales pipeline:
- Identify the customer's total budget, the likely length of the sales cycle, and the key decision-makers
- The largest driver of lead-to-sale conversion is the time it takes to respond to a customer, so be sure to measure response times
- Give stuff away. Offer customers free advice that is pertinent to their business and demonstrates how well you know your own area of expertise
- Consistently measure the factors that turn leads into sales. This will enable you to identify high-quality leads and get your sales people to focus on them more
- Don't take no for an answer. It often just means "not right now". When you hear no, continue to follow up at regular intervals. It may take a year to close a deal, but it will be worth it
- Get your sales team to report on their wins and losses at weekly pipeline meetings. Analyse that data and try to determine where it is that your people are falling short
Ultimately, sales pipeline management is nothing more than estimating incoming cash flow. Look at your leads and prospects, make some estimates of the likelihood that they'll eventually buy your products and services, and feed that information - along with the expected spend - into your projections to find out how much revenue you can expect to earn.
The biggest benefit of managing your sales pipeline effectively is that demand for your services will be smoother and your cash flow more reliable. An in-depth analysis of when and why some of your leads and prospects are lost will highlight specific areas for improvement and help you train your team better.
Tracking the pipeline will also give you the ability to construct a profile of prospects who are more likely to buy and prospects who are less likely to buy. This knowledge will help you to focus your marketing material and allow you to more accurately qualify your leads, leading to a more streamlined, more efficient and less costly sales process.
Closing the sale: the basic principles
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Successful selling is the lifeblood of any business. That's why every salesperson and business owner wants to close as many sales as possible.
Five key elements for closing sales:
- Present strong, compelling arguments quickly to your customers. You have a few minutes to connect with a customer. If you miss that window of opportunity, the prospect is often lost. Develop an opening statement designed to establish rapport with your customer. State what you and your company do well. Know your competitive advantage and define it
- Listen to your customers. They are your best source of information, provided that you hear what they have to say. This will give you clues and cues about their wants and needs. Develop questions that draw out information which you can use to develop the best possible service or product. The more questions you are able to get answered, the better the product you can develop
- Keep your conversation on target. Don't let your key points get lost in the clutter of too many words. Use fewer, well-focused words to hit the mark. Make your key points clearly and concisely in one or two sentences, and then stop. Instead of rambling, allow for silence
- Develop several key questions designed to get a "yes" from your customer. Often, the process of closing a sale involves getting the customer to agree to several preliminary points. This brings the customer along one step at a time. Ask questions such as: if I can show you how we can improve quality, would you be interested? If I can improve delivery times, would that improve your operation? This is often the best way to close the sale because you are getting a series of "yes" answers from your prospect
- Ask for the sale. Most often, sales are lost because the salesperson fails to ask for the business. Ask for the sale directly and then wait for an answer. If the customer is undecided, determine what additional information is needed to help the customer make a decision. If the answer is no, try to find out why. The more information you can gather about lost sales, the more effective you can be in the future.
Spreading your client base
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Sales is an ongoing process. Don't make the mistake of thinking that once you have one or two big clients you can rest easy. Consider what would happen to your business if you were to lose that client? Just as they helped your company make that great leap forward they could also destroy your business if they were to leave you. That's why it is so important to keep a diverse client base. The better your sales spread is, the more protection your business has for the unforeseen.
Ideally, no customer should represent more than 10% of your annual sales. If they do, your business is at risk. Imagine what would happen if they moved their needs elsewhere, or if they went bankrupt. The consequences for your business could be disastrous.
If you do land a big client, the best move is to use that advantage to sign up even more business with additional clients. That will reduce your reliance on that client and ensure that you do not have all your eggs in one basket.
1. Sell on value rather than price
When you start your business, you may use promotions and discounts to attract new clients. That's all very well, but remember that in the long term, you cannot sell on price alone - selling on value is what will make your products and services stand out in a world filled with discount offerings.
2. Choose your target market
Do not be forced to compromise on price. The truth is that your product or service is probably not for everyone. Choose your prospects carefully and don't target those who are simply looking for the cheapest deal. The right customers will listen to why they should pay more for a certain product over another.
3. Be confident
When you're highlighting the value of a product over cheaper competitors, don't hesitate on price. You are asking people for money, and that is simply not the time to show any lack of conviction.
Highlight why your product's value is worth consideration over lower-price options.
4. Highlight customer service
Talk about more than just the product. Focus on personal touches and developing a relationship with the client by getting to know their needs and business. Customers that see your value understand that your customer service is likely to be superior. Ultimately, price is short term, value is long term.
5. Use your strengths and experience
Tell the potential client about the history of the company, which helps build confidence in the product. Build up your success stories by documenting testimonials from past successes and showing them off to future opportunities. This is about using happy customers as your sales people.