In a series of recent interviews with sales manager and leaders, I hear one dominant theme: Change. Competitors react to successful selling strategies with counter-moves. New products and services constantly enter the market, both yours and competitive offerings. The economy impacts prices and delays decisions. Product life cycles advance to maturity. Social media increasingly helps buyers to share information, opinions and comparisons. These changes significantly influence the buying process and purchasing habits change. Your sales process must keep pace with the speed of change in your environment.
How can you tell if it is time to update your sales process? Look for changes in these 6 key indicators:
1. A higher percentage of deals involve a Request for Proposal or on-line reverse auction.
Your prospect is becoming self-educated on the features and benefits of your offering. You are engaged too late to provide any value or influence the evaluation criteria. Either your competitor has already wired the requirements, or your offering has become a commodity where price is the primary differentiator.
2. A higher percentage of deals are quickly passing through the early phases of the sales process.
This is a symptom that buyers have found alternative avenues to become informed without engaging your sales force. Has a competitor recently added a convincing white paper or evaluation tool to their website? Has a social network group formed to share opinions about your market or industry?
3. Deals are more frequently stalled in the later phases of the sales cycle.
This is a bright red flag that your selling process has skipped an essential step in the buyer’s process. The selling efforts continue unabated, but the buying just isn’t happening. It takes two to tango. Are you presenting pricing when the customer has added a new step to better define their needs?
4. Your Win-Loss Ratio has significantly declined.
You are losing more deals than you should, based on your own history. Something must have changed on the buyer’s side because you haven’t made any changes to your sales process. The longer you are out of synch, the worse the ratio gets.
5. Your Average Order Size is spiraling down.
The largest deals feel the first impact when the buying process changes. If your selling process is not aligned to the new buying strategies you can watch your share of the large deals plummet. Which direction is your Order Size going?
6. Your average Sales Cycle Time is increasing.
It takes longer to close deals than ever before. Maybe “It’s the economy, Stupid.” Recent macro events like the rise of gas prices caused by the Arab Spring and impact of Greece and Portugal debt on the EuroZone, and the U.S. deficit noose tightening make big news. But these events have not appreciably changed buying patterns. The answer is likely closer to home. Drill down into your wins and losses and you will discover the true root cause.
A robust CRM system with strong adoption by users will give you visibility to these danger signs. Something has changed in the buying environment. One of our B2B technology clients recently investigated this kind of behavioral change and discovered that buyers were unsure of whether the lease/purchase would qualify for a federal tax incentive. A rapid change to the sales techniques filled this information gap and became a competitive advantage.
There is no single trigger that signals that your sales process that has lost its effectiveness. Some of the warning signs above can be indications of other problems perhaps caused by technological change or economic conditions. But, one thing is for sure – the purchasing behaviors of your buyers are constantly evolving. Your sales process needs to stay in close alignment.
A recent survey by The Aberdeen Group has found that 95% of the firms enjoying Best-in-Class performance utilize formal and documented sales processes. But an outdated sales process will not deliver maximum results. How long has it been?
If the warning signs of an ineffective sales process are flashing, it is time to investigate and take action today.