Putting Sales Velocity into Action: Closing RatioArticle by Colleen Francis, July 25, 2019
So far in this series—which looks at four adjustments you can make to improve your sales velocity — each activity has involved both a planning and execution stage.
(As a reminder, your sales velocity measures your average daily sales per person. So every improvement means more sales, more quickly.)
Here, since you’re looking at your win/lose rate, it’s all about execution. And, to be effective at improving your close rate you must uncover important facts in the qualification stage at the start of your sales cycle.
To help you understand why the buyer is buying from you, here are the answers you must obtain from every customer:
- Why they will choose you over your competitors; (their buying criteria)
- What they want to accomplish by buying your product or service; and (what they are trying to improve or solve)
- What’s the value they associate with what they’re buying. (what is their desired ROI)
So how do you get those answers? With improvements to three tactics.
Create a sense of urgency by monetizing the problem.
Your job is to create a sense of urgency in the mind of your client about their return on investment by choosing your product or service. You do that by monetizing the problem your customer has during the qualification stage. The more successful you are at this, the better your closing ratio will be.
When I sold software to companies in the resource sector, I used this tactic often. For one those customers, a lot of money was on the line for them as we helped them make drilling decisions for new oil wells. Their sense of urgency was tied to being able to make better choices in less time. Their value was being able to increase the number of wells they drilled (and pumped from) each year. And the dollars associated with that incremental oil was worth far more than the service we were selling. But they only understood that ROI because I’d invested time asking questions about their operations, time to drill, and annual value of each well to demonstrate clearly in financial terms what those extra wells per year was worth.
Three clients of mine have automated one part of this tactic. They’ve each developed an online ROI calculator that shows their customers how much they can use or produce or save as a result of choosing their product. This structured approach works dramatically well. In all cases, they have improved their closing ratio from about 30% to 40%.
Connect with the right people in multiples.
Your account penetration is never complete with a single contact because there are always multiple influencers, advisors and buyers involved in the buying process—no matter the size of the organization. The more people you talk to inside your account, the more likely it is to close, simply because the more complete a picture you will have of the buying criteria and priority.
That’s not to say that your job is simply to boost your quantity of contacts within each account without regard to quality. You must create a high number of quality relationships with an equally high number of people. Sell high, wide and deep.
You do this for two reasons. First, to gain a broad range of perspectives: not everyone in that account is going to have the same point of view on the problem they are seeking to solve with your product or service. Your contacts in a client’s Finance department will have an opinion that’s quite different from Customer Service. Both are valid and need to be considered in your solution
The second reason you broaden your contacts is to ensure your range includes those who have decision-making authority inside the organization. It’s not enough to just find people who like what you’re selling. I learned that lesson years ago when I was selling to the US Air Force. First, I visited all the major command groups and obtained their buy-in on a solution I was selling. And then I went to the Pentagon, where I was stopped in my tracks by a high ranking General who looked at all my work and said: “while it’s nice that all those people are on board, Colleen, the last time I checked they all report to me.”
Simply put, you will hear “yes!” more often if you are speaking to people who have the authority to say yes.
Sell to referrals.
Our research at Engage shows that while a cold lead has a 1-in-10 chance of closing, a referred lead has a 1-in-2 chance on average. That’s a huge improvement, but it hinges on having a strong referral program in place first. Granted, not everyone has a client base that can support referrals yet. Some of you are entering new markets or are launching new product and services. Don’t despair if that situation applies to you. Your focus will be on the first two tactics I’ve outlined.
For the rest of you, ask for referrals. Everyday. Ask for introductions to external partners, customers and suppliers. As for introductions to internal colleagues in adjacent business units, locations or departments. The more you ask, the more you will receive and the faster your closing rate will improve.
When it comes to improving your sales velocity—speeding up how fast you and your team make a sale and earn revenue—we’ve looked at how you can make small changes in three areas. First, we looked at how you can boost your number of opportunities, followed by elevating your average deal size and improving your closing ratio. In the final step, we will look at how you can adjust your individual sales cycle length from prospect to close to produce dramatic boosts to performance.