The purpose of marketing is to generate prospects. People who are interested in your product and might buy it. The purpose of sales is to try to convert these prospects into customers. The key difference between these activities is that marketing is one-to-many and sales is one-to-one. Each sales prospect is going to have different questions depending on their requirements, timescales and budgets.
For low cost products there is generally very little selling. You simply can’t afford to spend significant amounts of time engaging with someone who may or may not buy a product with a $30 lifetime value. But for higher price products (typically B2B), sales becomes more important. Sales activities might take the form of answering questions by email or phone, video conferences, quotes, online demonstrations and perhaps even site visits.
Many of my customers purchase from my website without any active selling. But organizations who wish to buy more expensive licences typically have questions about licensing, pricing, functionality, upgrading etc before purchasing. I characterise the stages of selling to these companies as:
- Enquiry – Someone has expressed an interest in one of my products and typically has questions about functionality, licensing and/or pricing. Initial contact is usually by email.
- Qualification – I answer the prospect’s questions. If my product isn’t a good fit for their requirements I let them know, as I don’t want to waste my time or theirs or end up with unhappy customers.
- Quoted – If the prospect looks like a good fit and is still interested I send them a quote.
- Verbal agreement – The prospect expresses an interest in buying the product. There may be some negotiation over number of licenses, discounts, payment methods, tax etc.
- Won/Lost/Cold – I either win or lose the sale, or the prospect stops responding (goes cold).
This step-by-step process is known as a ‘sales pipeline’ or ‘sales funnel’. Different companies use different terminology and a high-value enterprise sale would probably have more stages. But the process is the same in principal – your marketing (SEO, PPC, word of mouth etc) feeds people into the pipeline at one end and a certain proportion will drop out at each stage. Some will end up as customers.
You can take a very ‘hands-off’ approach to sales and only respond to communications that the prospect initiates. But this is not going to get you the best conversion rate from prospect to customer. People are busy and have lots of conflicting demands on their time. One of your response emails might get lost. Their initial contact might leave the company. It seems a pity to let a prospect slip away, just because you can’t be bothered to send a few follow-up emails.
I don’t really want to do a 30 minute online demo if I think I am only going to sell $50 of software (unless I think the feedback might be particularly valuable). But the more a sale is likely to be worth, the more effort I am prepared to put into it. I have found that I can make a pretty good guess at how much a sale is likely to be worth based on the organization they belong to and the initial questions they ask. And these guesses becomes more accurate as they travel along the pipeline.
Note that I am not trying to cajole or pressure the prospect into buying. I am simply trying to provide them with the information they need so they can make the right choice. If I don’t hear anything for a while I will email them something along the lines of:
Did you make a decision regarding purchasing ? Please let us know if you need any further information. We would be happy to call if you would prefer to discuss it on the phone.
If they reply that they aren’t interested or don’t reply after 2 or 3 emails from me, then I stop chasing them. No need to be an asshole about it.
I’m confident that I could increase my conversion rate by following up prospects by phone, instead of emailing them (most B2B prospects include contact details in their sig or are easy enough to Google). But that isn’t something I can summon up enthusiasm for, so I don’t do it. If I was less secure financially, I would be on the phone a lot more.
The issue is then, how to track the various sales prospects so you can follow them up as appropriate? Initially I just tracked sales by having a ‘prospects’ folder in my email client. I would put email from prospects in this folder. Occasionally I would go through the folder and email prospects who hadn’t replied in the last few weeks. If they didn’t reply to a few emails I would move them out of the ‘prospects’ folder. It wasn’t very efficient and there were all sorts of questions I couldn’t easily get answers to, including:
- What stage was each prospect at?
- How long was it since I last contacted a prospect?
- Was there anyone I needed to follow up today?
- How many prospects were there at each stage in the pipeline? What did I think those prospects might be worth?
- How were the sales divided into industry sectors (e.g. businesses vs charities vs government)?
- What proportion of sales was I winning and losing?
- How did the sales breakdown between new customers and upgrades? Direct sales and resellers?
But it just so happens that my own Hyper Plan product is excellent as sales pipeline software.
I now add a card into Hyper Plan for each prospect that I think might realistically purchase $200 of software or more.
Store any data about your prospects in custom fields.
I can then very easily slice and dice the data in any number of different ways. For example:
Active prospects are automatically arranged by sales pipeline stage and coloured by estimated value. Won/Lost/Cold cards are hidden by a filter. The card with the red highlight is overdue a follow-up call.
Active prospects are automatically arranged by when we last contacted them (column), when they last responded (row) and coloured by sales pipeline stage.
Charting the number of prospects at each stage of the sales pipeline.
Charting the number of prospects at each stage of the pipeline, by sector.
This has given me a lot more insight into how I am doing at sales and made me a lot more organized at following up prospects.
A few random things I have learnt about sales over 13 years of running my own software business:
- Some organizations will buy on the same day they first contact you. Other may take years. Generally the bigger and more famous the organization and the bigger the order, the longer it takes.
- Organizations sometimes ask for changes to my licensing agreement. I always refuse as it just isn’t worth the expense and stress of getting a lawyer involved. They usually buy anyway.
- Don’t give additional discounts to ‘value subtracted resellers’. It almost certainly won’t make any difference to whether they purchase or not.
- Sometimes it is quicker and more effective to talk on the phone, rather than sending lots of emails. But I will generally ask if it is ok by email, before calling.
- Trying to get video conferencing to work so you can demo your product can be a real headache. Every organization seems to have a different preferred video conferencing solution.
- Once you are confident your product is the right one for a prospect ask for the sale (‘close’). ‘Would you like to talk about licensing?’ is a not-to-pushy way to move the conversation onto money.
- You don’t have to be dishonest or pushy. Just give prospects the information so they can make the right decision.
- Prospects generally won’t tell you that they aren’t interested. They just stop replying to emails.
Hyper Plan is available for Windows and Mac. The Home edition, which has everything you need for sales pipeline tracking, is just $40. Download the free trial and start tracking your sales pipeline.