Do you have a lot of questions about sales development that you’ve been afraid to ask (or had noone to ask them)? Some time ago at my previous company, we’ve conducted a 20-minute Q&A session, which we devoted to this topic. If you missed it, fear not — below you will find the questions that most often came to our mailbox and my answers to them.
How to go beyond network and referrals in sales?
If your company is still a start-up or you are just developing it, then you probably start with the recommendations of friends, previous clients and people met at conferences. Networking works and is great to start with. Unfortunately, this process makes you lazy and doesn’t build sales competences. You’re selling your product to people who already know you or come from recommendations of trusted business partners. Therefore, you’re not selling to strangers / new customers. Besides, no matter how sociable you are, your friends list will end one day.
What can you do? Either go to conferences more often and devote more time to networking (but this only works in the short run), or turn to unknown people through inbound and outbound marketing.
Currently, almost everyone is limited to writing blog posts. It’s great, but inbound has a relatively short sales cycle and a long marketing cycle — content needs to be distributed in order to take effect. At the beginning I recommend spending 30 minutes a day on Quora. I did this for a year and as a result we have obtained over 100,000 visits to our content on this site. I only invested my time. In addition, the results of the responses on Quora suggest what the market needs and what topics are currently hot.
Does sales outsourcing work?
Based on my experience, I can say that definitely not. Let’s assume that you outsource all sales to an outsourcing company (if it actually even exists). You transfer full responsibility for the most important department outside your organization. This is only the first problem. Secondly, you lose contact with the market. No third party will give you such feedback as your salesperson — what went wrong in the conversation with the customer, what was missing, what were the objections to the product. This information needs to circulate quickly so that you can respond properly.
Additionally, the outsourcing company would only work with businesses that have very high margins, considerable transaction value and can pay extremely large commissions. Why? Because it would need good and effective salespeople, and they are a relatively rare and expensive asset. They generate high fixed costs and revenues are variable (seasonality in B2B sales is a separate topic that I won’t discuss here).
Moreover, such an outsourcing company model would only work in cooperation with enterprises that have short sales cycles. So, if you have high margins, a big transaction value and short sales cycles in the company, why share with someone who sells for you? You can have your own better, cheaper resources — a team of good sales specialists.
Is it good to have clients that make for over ⅓ of our revenue?
Every customer who brings big money is obviously good for your business. Unfortunately, he can also be dangerous. Firstly, because he has a strong negotiating position and it will be difficult to refuse him a discount or extend the payment deadline when he asks for it. Secondly, because he can threaten your financial liquidity, e.g. when he goes bankrupt or has liquidity problems.
A good example would be an advertising agency with several clients. The largest one represents the said 33 percent of revenues. Assuming that there is a sudden drop in orders from a large customer and a lack of financial reserves, liquidity is immediately in question. And you have to remember about fixed costs (the agency employs people, rents an office, etc.). Your customer had a 90-day payment deadline and didn’t keep it? That’s precisely how he has caused the company’s financial liquidity to be threatened. Therefore, when signing contracts, you must carefully take into account the restrictions on payment terms and conditions of long-term cooperation.
Try to have a varied selection of clients — take into account both the percentage share in your company’s revenue and the industry they represent. A new regulation in one industry may result in a sudden collapse among entities that live only from customers operating on it. That’s why it is worth having clients from various industries. If our client represented more than 5 percent participation in this industry, this regulation will also have a negative impact on you. Don’t bet your company’s future on one big client.