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Focus! The dilemma of Prospecting or Growing Customers

Balancing act: Prospecting or Growing Customers

 

Finding the balance between prospecting for new customers and growing your existing customer base can be difficult. On one hand, you need to bring in new business to keep your company moving forward. On the other hand, you don’t want to sacrifice the customers you already have in order to do so. So how do you find the balance?

 

 

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Photo by Pixabay on Pexels

 

In this blog post, we’ll take a look at the benefits of prospecting and how it can help you grow your business. We’ll also explore some ways to find the balance between prospecting and growing your customer base without sacrificing one for the other.

 

Prospecting is about survival.

Prospecting is an essential part of any sales process, and there are many benefits to doing it effectively. Perhaps the most obvious benefit is that prospecting is needed to find you new customers and grow your business.

Even in a perfect world, we know that a small part of your customers will move away from you every year. Of course, this could be because of problems on your side, (then you are wise to fix those), but more often it is due to circumstances completely out of your reach, factories moving to other continents, rotation of contacts in the account, customers mergers or some even go out of business. 

Over time, we must always be at least replacing the churn, the customer that leaves. For every account that leaves you must acquire at least one new one. If you want to replace the revenue from the lost account, you need more new accounts to compensate.  

 

Prospecting keeps your ears to the ground

There are other benefits as well, such as:

  1. It helps you understand your target market better. By talking to potential customers and getting their feedback, you can learn a lot about who your target market is, what they want, and how best to reach them.
  2. It helps you improve your sales skills. The more you practice your sales pitch and learn to handle objections, the better you’ll get at selling.
  3. It keeps you motivated. The act of prospecting itself can be motivating since it’s a way of taking action towards your goal of growing your business. And when you do make a sale, it’s even more motivating!
  4. It builds relationships. Even if a particular prospect doesn’t become a customer, the relationship you build with them during the process can be valuable in its own right. Who knows, they may refer someone else to you down the line!

 

The cost of prospecting vs growing customers

How much effort does it take to sell for a million to prospects, compared to selling the same million to large repeat customers that have been with us for years? 

Let’s compare 3 scenarios, prospecting, growing an existing account, and maintaining sales in a fully penetrated account

  • Prospecting is by far the most time-consuming process among the sales processes. First, for the successful prospects that become customers, the sales cycle is longer than for well-known accounts. Secondly, for every successful prospect sale, you will have spent time on 10 -20 suspect calls with other companies, 5- 10 initial meetings, 3-4 second meetings, and a few proposals – all with those prospects that didn’t end up buying. 
  • Growing an account means that they buy something new, that the didn’t buy yesterday, either cross-selling new solutions or upselling advanced features or more seats. It can also be expanding to new departments, projects and sites, so that is also something new to somebody (to us) new. 
  • Maintaining your sales with your best customers is often considered by salespeople to be the top priority. After all, that is where the money is at! This is, however, the easiest bit, since all the hard work was already done previously so to say. And this is where salespeople add the least value. 

So how should I balance time between these? Is it even possible? A simple rule of thumb can be helpful here. Prospecting is 5-15 times more time-consuming than selling the same to the “maintain” or keep customers in the example above. 

 

The problem with the “maintain” customer is that there is no more room for growth. We can not grow, or compensate for churn, by hoping that these super-good customers will buy more from us. 

 

Growing customers require more work, but we have a working business relationship, so the cycle to introduce new things here is shorter. The hitrates are also higher than what we expect in Prospecting sales projects. This means that we can expect 2-4 times more time needed to 

 

Qualification is key 

The first thing to keep in mind is that not every prospect is a good fit for your business. It’s important to qualify prospects upfront so that you’re not wasting time pursuing leads that aren’t going to convert. There are a few key questions you can ask to help you qualify a prospect:

  • What need does this product or service address?
  • Is this need urgent?
  • Does the prospect have a budget allocated for this purchase?
  • What is the decision-making process for this type of purchase?
  • Who else is involved in the decision?

Asking these questions will help you determine whether or not a lead is worth pursuing. If they don’t meet all of the criteria, it may be best to move on.

 

How to Grow Existing Customers Without sacrificing Prospecting.

There are a few key ways to grow your existing customer base without sacrificing prospecting:

  1. Offer additional products or services to existing customers – upselling and cross-selling are great ways to do this.
  2. Get involved in referral programs – word-of-mouth marketing is still one of the most powerful forms of marketing there is.
  3. Run targeted campaigns – create targeted content and campaigns specifically for your existing customers to get them to refer friends or family members.

 

Time to balance

When you’re trying to balance prospecting with growing your customer base, time management is key. You need to make sure that you’re spending enough time on each activity, without letting one suffer at the expense of the other.

 

Tips for Time Management for Prospecting

 

Here are a few tips for managing your time when prospecting:

  • Set aside a specific amount of time each day or week for prospecting. This will help you stay focused and ensure that you’re making progress. As a rule of thumb, think 8-10 times the time for each new customer you acquire. 
  • It’s hard work to get 10 no’s for each yes, only for a meeting. Make it fun through competitions and group calling exercises. 
  • Use a CRM system to track your prospects and customers. This will help you keep organized and prioritize your time accordingly.
  • Take advantage of automation where possible. There are many tools available that can automate repetitive tasks, freeing up your time for more important activities.

 

 

Tips for Time Management for Growing Existing Customers

Similarly, when you’re trying to grow your customer base, effective time management is essential. You need to make sure that you’re spending enough time on activities that will directly impact your bottom line, without neglecting other important areas of your business.

 

Here are a few tips for managing your time when growing your customer base:

  • Invest in customer relationship management (CRM) software. This will help you keep track of your customers’ data and interactions, so you can better understand their needs and how best to serve them.
  • Segment your customers according to buying behaviour or other criteria. This will allow you to focus your attention on those who are most likely to grow your business or have the highest lifetime value.
  • Give attention to customer surveys to detect attitudes among your growth-accounts, focus on selling to those with good feedback from stakeholders, and work to improve the perception of the others 
  • Give less priority to accounts that already buy all they can from you. This may sound contradictory to many –  where most of your current money comes from, is where your sales team adds the least value. Go for an excellent customer experience here instead, and let other teams create this. 
  • Create targeted marketing campaigns based on smart customer segmentation. This will ensure that you’re using your resources efficiently and reaching those who are most likely to respond positively to your message.
  • Use data from past campaigns to inform your future marketing efforts. This will help you fine-tune your strategies and better allocate your time and resources.

 

Conclusion

 

If you’re like most business owners, you understand the importance of both prospecting and growing your customer base. However, finding the balance between the two can be difficult. Too much focus on prospecting can result in losing customers, while too much focus on existing customers can prevent you from acquiring new ones.

 

The key is to strike a balance between the two. Prospect without losing customers, and grow existing customers without sacrificing prospecting. By doing so, you’ll ensure that your business continues to thrive.

Leadership will get you really far, but only management knows where to…

A couple of weeks ago, I was asked the question about Leaders and Managers, and what you should be. The answer is both. In management models, they live side by side and must work together. Our 6 pillars of Sales Management is no exception, the 3 cornerstones of Sales Management are Management – Leadership – Development in our model.

 

 

 

 

Leader or Manager? Both!

Management and Leadership are necessary and complementary. In his 1990 Harvard Business Review article “What Leaders Really Do,” John P. Potter argues that management and leadership are both crucial for the success of executives as they advance in their careers.

 

 

The myth of the born leader

One of the most prevalent misconceptions in the business world today is that there is a competition between leadership and management, and that only leadership will take you where you want to go. Often leadership is thought to be all about charisma and vision – and that it is something you are born with and into. Leadership is different from management, but it’s not about having a certain personality or being chosen by a higher power.

 

Leadership skills are not there from birth, some personality traits may make it easier for you to develop them, but they can certainly be acquired, developed and fine-tuned by anyone!

 

It is true that many larger companies today have too much management and structures and often lack the space and energy to develop the right leadership. They need to develop their leadership skills by identifying people with potential and giving them opportunities to grow. However, it’s important to remember that strong leadership alone is not enough and needs to be balanced with strong management. Both leadership and management are necessary for success in business. A successful company needs both strong leadership and strong management to thrive.

 

Leadership is about dealing with change and being able to inspire and guide others to work towards a vision. Management, on the other hand, is about dealing with complexity and keeping the day-to-day operations running smoothly.

 

 

 

 

In essence:

 

 

 

Management skills, such as planning, organizing, and controlling, are essential for maintaining the day-to-day operations of a company. However, leadership skills, such as visioning, inspiring, and guiding, are necessary for creating and implementing a strategy that will take the company to the next level.

 

 

 

The leader vs Manager roles

The role of the leader is to provide direction and set the course for the organization, while the role of the manager is to ensure that the organization is running smoothly and efficiently.

The best leaders are those who can balance these two roles effectively, by being able to both lead and manage. Potter writes that “good leaders are good managers, but good managers are not necessarily good leaders.”

Daniel Coleman’s 2004 article “What Makes a Leader” also emphasizes the importance of both leadership and management skills for success in the business world.

 

 

 

Leadership is more needed than ever

Coleman notes that the role of the leader has become increasingly important in recent years as the business environment has become more competitive and more volatile. He states that leaders must be able to create a vision for the future and inspire others to work towards that vision. At the same time he emphasizes the importance of management skills, stating that managers must be able to plan, organize, and control the day-to-day operations of the organization, in order to ensure that it is running smoothly and efficiently.

 

What makes a leader?

The article identifies the traits and characteristics of successful leaders. He argues that effective leaders have a combination of:

  • emotional intelligence, EQ- self-awareness, self-control, motivation, empathy, and social skills, which allow leaders to connect with and inspire their employees.
  • cognitive intelligence, IQ – strategic thinking and problem-solving, which allow leaders to make effective decisions.
  • technical or subject expertise in their field – allows leaders to understand the industry and the challenges their company faces.

 

Learn from mistakes

Coleman also emphasizes the importance of adaptability and the ability to learn from failure in leadership. He states that leaders who are able to adapt to changing circumstances and learn from their mistakes are more likely to be successful.

 

 

Conclusion

Companies should actively seek out people with leadership potential, give them opportunities to grow and use both strong leadership and strong management to balance each other. As a matter of fact, there are multiple facets of management that needs continuous evaluation, development and perfection. Below you will find an image collection that points to the function of our 6 Pillars of Sales Management. Enjoy!

 

Don’t sell to those who can’t buy – Decision makers and stakeholders

Don’t sell to those who can’t buy

A golden rule and common wisdom says:

“do not sell to someone that cannot buy”. 

As one of our highly appreciated colleagues at IBM used to put it,

 

– There are a few people in the buying process that you need to say “yes,” everyone else involved can only say “no,” so go sell to the former, but make sure the latter likes you.

 

In complex B2B sales situations, when:

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    • you are selling at premium price,
    • implementation of your product implies major change or a transformation
    • implementation involves many users and stakeholders

.. in the customer, then it is adamant that the perceived benefits must outweigh the pain, i.e., the cost of the implementation.

 

Regardless of your price, the real perceived cost to say yes is high—much higher than your price. Therefore, we need to spend our time talking to the people who can appreciate the business benefits—those who can say yes.

 

The real cost of saying yes

 

When we are selling value, we solve business critical problems for the customer, and the customer appreciates the value of this. Often the solution is a combination of a product or technical solution, and a transformation project. This implies a change process that is far more costly than any product we could ever sell.  

 

Even if we gave the whole solution away for free, in Value Based situations, the customer may still refuse or stall the decision.

 

As we approach the purchase signature, concerns about the whole project rise. This is absolutely normal. Price is almost irrelevant at this point. Doubt and the perceived risk weigh over on the “reasons not to buy” side of the balance together with the internal cost of the change project, making your price a minor issue in comparison.

 

Never try to compensate risk and transformation concerns by lowering your price!

 

In the article about why pipeline deals slip and are delayed, we discuss what to do about this, but for the moment, we just need to understand who the key influencers and decision makers are, and that they are crucial to us to approve the project.

Otherwise, they can stop, scrap, or stall our deal at any time between now and the order. We have to make sure they don’t.

 

A major business decision is very rarely taken by one single person. If we want the customer (the company) to go ahead with the deal, we need to acknowledge this fact and make sure we know who is who in the company, and work to secure the deal in multiple fronts.

 

Decision makers and Influencers

Who should we look for?

Most companies within the same industry have similar internal structures (titles tend to vary much more between industries). This makes it a good idea to map out the typical decision chain and decision-making structures for the industry you are about to campaign or approach.  Describe the decision-making personas for the industry vertical, write them down, and then go search for them. This is helpful later when you create account plans for specific companies and put real names to the personas.

 

 

 

The influence circles

Some personas we often encounter and that you may want to start off with are listed below:

Decision maker – power sponsor

  • Has the ultimate YES/NO decision to make
  • Often merely a formal approval
  • Can go against recommendations of the team
  • Well protected and sometimes almost invisible

 

Things to consider

  • Qualify that the person is the true decision maker
  • If you can’t get direct access, what other players have the ear of this guy?

Influencer – expert

  • Sees things from a functional point of view
  • A filter in the process
  • Can say NO, but not really the YES we need

 

 

Things to consider

  • Engage influencer early in the process.
  • Is the offer presented in a way that the influencer understands and backs?
  • Do we know what their attitude towards us is?

 

The user

  • In general, very many of them in the company, professional roles.
  • They propel who will use our solution, and the support agreements that came with it. 
  • Influence decision making if asked, not always considered though. 

 

 

 

To consider

  • Reach out to at least a limited set of users and consult them.
  • Ask yourself what users will likely say about us if they are asked.
  • Consider the effort and return of engaging with them.

 

The Sponsor

  • A sponsor wants us to succeed, as this makes them look good within the organisation, or get the task done better.
  • Not necessarily in the leadership teams, can be outside the traditional contact surfaces, but should be influential enough.
  • A sponsor will support us informally with information, advice, etc.

 

To consider

  • Do you have a sponsor for the opportunity at hand? 
  • Is the sponsor powerful enough internally to drive the business forward?
  • Do we understand the sponsors pains and the benefit from our solution?

 

Beware: Just as you can find sponsors who back you, there can also be sponsors for our competitor with the same powers as the sponsor, but who will work against us – we call them anti-sponsors!

The Stakeholder map

Pains flow throughout the organisation

For both decision makers and important influencers, you need to understand the professional and/or personal motivators so that you can build an individual value-based argument for them. What keeps the these people awake at night? What would they be really enthusiastic about?

 

It is a good idea to think a little extra and try to map out the “who is who” in the company. To get you started, here are some examples – typical professional motivators associated with different roles. 

 

Some examples:

    • A CFO will have financial and cash flow considerations; he will listen to arguments focused on productivity gains, lower costs, less stocks, less CAPEX, payment terms, and subscription models.
    • The operations director will look at productivity, less risk for downtime, efficiency, less personnel rotation, job satisfaction, delivery precision, and quality.
    • A project manager will be interested in holding the deadlines, meeting requirements, strict budget control, etc.
    • Asking the right things to the right people is always important, and to do so we must understand them, who they are, and what they do and think. It is as easy as that.

 

If this is a big contract, spending time anchoring the decision with as many as we can from these people is absolutely key.

 

If the deal is smaller, perhaps we have to rely on our sponsors to do the internal selling. We have to use our common sense to judge the reasonable effort.

Example of how to use a simple stakeholder map, perhaps during your account planning