Create a Powerful Sales Process in 6 Easy Steps

Create a Powerful Sales Process in 6 Easy Steps
By Geoffrey James | July 6, 2010

STEP #1: Forget Your Current Sales Process

Chances are that, if you’ve got a sales process, it looks something like this:
Step #1. Engage customer.
Step #2. Investigate needs.
Step #3. Propose a solution.
Step #4. Demonstrate the product.
Step #5. Propose a purchase.
Step #6. Negotiate terms.
Step #7. Answer objections.
Step #8. Close the deal.

This kind of traditional sales process (aka sales funnel) has been around for decades. According to the metaphor, opportunities and leads come in the top of the funnel and eventually some of those leads come out the bottom as actual customers.

The model does have value because it separates the sales process into stages, providing a structure for what should happen at each stage, and how long each stage should take. Unfortunately, it also a serious limitation - it is not the best indicator of where the opportunity exists in the customer’s buying process.

This raises the very real possibility that the sales team may be pursuing an activity that is complete disconnected from what actually needs to happen in order for the prospect to move to the next stage of the decision-making process.

For example, the sales team might end up busily working on a detailed proposal when the would-be customer hasn’t even decided whether the problem the proposal attempts to solve is high priority or not. The result can be a series of disconnects that increase the cost of sales and makes it more difficult to close.

The truth is that a prospect’s needs — and ability to react to those needs — will vary according to what’s going on in the customer’s business. It’s those needs — and the budget — that are driving the pace and timing of the purchase, not any actions that you’re taking in order to make the sale happen.

If you go into a sales opportunity with the fantasy that you’re going to be driving it through those steps, you’re could easily miss what’s really going on. Worst case, a traditional sales process could leave you with the mistaken belief that your to “sell to” the customer.

Customers may buy something to achieve a result, but they HATE being “sold to.” Remember: selling means helping the customer figure out what to buy, not something that you “do to” a customer.

Does this mean that you shouldn’t be prepared to take those actions in order to develop a sales opportunity? Of course not. However, don’t pretend that the list of things that YOU do is a sales process. It’s an activity list, nothing more.

If you want to know what a REAL sales process is, read on…

STEP #2: Define How Your Customers Buy

A real sales process is ALWAYS the customer’s buying process. Your first job is therefore to define how your typical customer buys from you.

While the specific process will differ from industry to industry, B2B customers typically go through six stages when they’re purchasing a big ticket item:
STAGE #1: Problem recognition. The customer is not going to buy anything unless they perceive that they have a problem that needs solving. Note that a problem can also be an opportunity; the inability to address that opportunity represents the problem that needs solving.
STAGE #2: Define economic consequences. The customer can’t possibly make an intelligent decision on whether the problem is worthy of attention until they have an idea of how much the problem is costing them. Without a dollar number attached to it, a problem is just a wish list.
STAGE #3: Commit Funding. If the customer recognizes that there is a problem and that the problem has economic consequences (stages 1 and 2 above), then they’ll take the next logical step and commit some funding. They may not know the exact amount, but they’re willing to put down, in writing, a number that represents and intent to spend.
STAGE #4: Define Decision Criteria. It is only after the customer has gone through all three stages above, that the customer begins to define how to fix the problem. Previously, they may have an idea of what’s needed (e.g. we need CRM because we’re losing customers to the tune of $10 million a year.), but they haven’t decided how they’ll decide which system to buy.
STAGE #5: Evaluate Alternatives. This is when the customer looks at what solutions are available and how those solutions fit with the budget dollars that they’ve determined are worth spending to fix the problem. Note: if there is no firm commitment on the four previous stages, a sale is probably NOT going to take place.
STAGE #6: Select Vendor Solution. It is at this point that the real decision is made, based upon the commitments made at all five prior stages. Needless to say, a vendor who has worked closely with the customer on the previous five stages is more likely to win the final business because that vendor has helped “frame” the problem, the budget, and the criteria.

Congratulations! You now know how customers buy your offering. Now you need to know what to do to make sure that they buy more quickly and predictably…

STEP #3: Define Your Activities at Each Stage

Using the customer-focused sales process defined in Step #2, decide what actions you need to take to help the prospect move through each stage of their buying process:
STAGE #1: Problem recognition. What actions should I take at or before the beginning of the sales cycle to make sure the prospect recognizes the problem?
STAGE #2: Define economic consequences. The prospect realizes that there’s a problem. What actions should I take to ensure the prospect recognizes the financial impact of the problem?
STAGE #3: Commit Funding. The prospect understands that there is a financial penalty to be paid if the problem is not addressed. What actions should I take at this stage to ensure the prospect actually commits funding.
STAGE #4: Define Decision Criteria. The prospect has tentatively determined that there is budget to fix the problem. What actions should I take at this stage to ensure the prospect defines criteria that are favorable to my solution?
STAGE #5: Evaluate Alternatives. The prospect has defined how they’re going to make a decision. What actions should I take at this stage to ensure that the evaluation process favors my solution?
STAGE #6: Select Vendor Solution. The prospect has made a decision. What actions should I take at this stage to ensure that either 1) the final purchase of my solution is successful, or 2) I learn whatever possible from the loss of this opportunity.

Once you’ve answered these questions and have a list of activities, you’re still not done…

STEP #4: Adapt Behaviors to the Process

You now have a model that allows you to put your selling activity into the context of the customer’s buying activity. Go through the list of activities and schedule them based upon the stage that each of prospect currently occupies.

For example, if you’ve got a prospect that’s contacted you and read some of your materials, you need to take action to move them to Stage #2, where they identify the economic impact of their problem.

Similarly, if you’ve got a prospect that you think is ready to close, but that prospect has not yet made some kind of budgetary commitment, you need to backtrack and get that commitment before asking for the close.

The primary value of this way of thinking is that it guides you to think twice before automatically committing to selling activities. Because you’re not focusing on YOUR process, you can decide whether or not “giving a demo” (for instance) will actually help the sale at this point.

This can be a huge savings of time/improvement in sales productivity since salespeople often commit to activities that have little impact on the customer making a purchase.

For example, under a traditional sales process you might meet with a prospect and launch into a presentation about the benefits of a product - even though the customer does not yet perceive a need for that product. The presentation might include some “problem definition” slides, but a problem isn’t a problem until the customer says that it’s a problem.

If you’re thinking about the stages that the customer will be going through, however, you’re far less likely to waste your time (and the prospects!) by making this mistake.

Similarly, this way of thinking keeps you from wasting time on customers who aren’t going to buy.

For example, an engineering firm using a decade-old CAD system might know that their engineers might be more productive with a modern one, but still not know whether an upgrade would save $100 a day or make it possible to earn new business that’s worth $10,000 a day. Understanding that you need to quantify the finances early in the sales cycle keeps you from following up on a prospect that won’t pan out.

One of the most important insights inherent in this model is that it’s a mistake to spend too much time defining a solution until the prospect has actually decided to spend some money. The traditional sales funnel often puts “define solution” relatively early in the process, and attempts to use that definition as a wedge to pry loose budget dollars.

STEP #5: Update Your Forecast

Now that you’ve scheduled your activities to match how the customer is likely to buy, you need to formalize that by making certain that your forecast matches when the customers are likely to buy, based upon your ability to help the process along.

Traditional sales processes typically leads sales reps to focus on a solution too early, resulting in proposals for sales “opportunities” that aren’t real, because the customer never intended to spend money on the problem. However, because the sales rep believes that he or she is “driving” the process, it creates the fiction that the sales rep is in control.

By contrast, a customer-focused sales funnel keeps you from clogging up your forecasts with deals that aren’t going to happen. Because the “buy cycle” model is based upon the actual stages that the customer is going through, it doesn’t make any sense to include in your forecast any “opportunities” that haven’t reached stage 3.

This will not just improve the accuracy of the forecast, but will also increase your ability to put your time and energy on the opportunities that are most likely to result in an actual sale.

STEP #6: Measure and Adjust

Finally, you need to measure each stage of the process and adjust your activities to make sure that they truly help the customer move through the various stages.

One way to do this is to use a CRM system and then log your various activities so that you can go back and see what worked (and what didn’t).

If that’s not possible, though, it can be nearly as useful to simply keep track of your activities and notice whether they help customers move forward.

You see, the value of a process is that it makes your success repeatable. The more time and effort that you spend in measurement, the more effective your process will get.

And that means more sales for you and more profit for your company!

SUMMARY:
STEP #1: Forget Your Current Sales Process
STEP #2: Define How Your Customers Buy
STEP #3: Define Your Activities at Each Stage
STEP #4: Adapt Behaviors to the Process
STEP #5: Update Your Forecast
STEP #6: Measure and Adjust

http://www.bnet.com/blog/salesmachine/create-a-powerful-sales-process-in-6-easy-steps/10937?pg=8