CEO Advisor Newsletter May 2018
CEOs Remain Focused on Growth
A) Organic growth - business expansion by increased sales (new sales, upselling/cross-selling existing customers, reseller sales, geographic expansion, or new product development)
B) Inorganic growth - business expansion through acquisitions (this will be covered in future enewsletters)
CEOs that put strategy, sales and sales management as their top proiority outperform their competitors in revenue and profits by up to 80%. While CEOs and presidents of small and mid-size companies play a key role in driving performance improvements across all aspects of a company, sales has traditionally not been the main focus of CEOs and business owners for many companies. This is a very costly mistake.
CEOs, presidents and business owners of top performing companies are very hands-on in driving their businesses forward. Setting budgets and sales goals are just the beginning. The best CEOs pinpoint a specific sales strategy, tools, sales management processes, analytics and key performance indicators (KPIs) to ensure substantial growth (at or above industry growth rates) in revenues, gross margins, and profits in order to substantially increase shareholder value. They also ensure that they have the right people in the right positions and that each sales team member is performing consistently as a well managed "A" player.
Similar to marketing, sales is both an art and a science. Here are 5 key sales issues that will create a tremendous return on your investment and grow your business to the next level.
If sales and sales management are not your strengths, gain the help you need from a seasoned business advisor as failing in these important aspects of sales can cost you millions of dollars over a short period of years.
1. Sales Goals to Increase Results
Well managed sales teams produce big results. CEOs must go beyond monthly sales goals for each member of the sales team. CEOs must develop KPIs that produce heightened, consistent results to meet goals. A direct sales team should have clearly defined goals for each salesperson that include, for example:
A) Dials per dayB) Live contacts per dayC) Opportunities created in your customer relationship management (CRM) software per week and monthD) New sales appointments per week and monthE) Proposals presented per monthF) Closed sales per monthG) Closed sales in dollars per month, etc.
2. Key Performance Indicators (KPIs) to Drive Sales and Profits
Additional goals that can be readily tracked monthly (in real time if possible) will be the difference in a proactive, results-oriented sales team vs. a sales team that is always behind the curve. You should monitor and track:
A) Average dollar size of each sale (ensure you are selling to larger customers with larger budgets)B) Average length of contracts in yearsC) Renewal rates of contractsD) Track the amount of sales to your top 25-50 customers per quarter and year to ensure you are properly servicing them and hitting sales goals; also track sales growth of each customer based on sales goals per customer.E) Average Number of Days to Close a Sale (Ave. Sales Cycle)F) Gross profit marginsG) Net profit marginsH) Customer ChurnI) Revenue ChurnJ) Industry growth rateK) Your total market shareL) Market share of your key competitorsM) Growth rate of your market share, etc.
3. Build a Sales and Marketing Machine to Optimize Sales and Value of your Business
By building a sales and marketing machine within your company, you will optimize your gross and net profit margins and tremendously increase the value of your company. As part of your sales strategy, expand your direct sales efforts with indirect sales by formulating a Reseller Channel Program and then recruit, build, train, motivate and support these Resellers and Referral Partners. Making this a top priority is the greatest return on investment you can make. This takes planning, focus and attention to details to put in place and manage, so gain the needed outside help to get this right the first time.
4. Get Out of the Office and Visit Customers
As the CEO of your company, get out of your office and go with sales managers and individual salespeople and visit your major customers at least annually. Understand the customers' needs and satisfaction level, understand how you can help them by upselling and cross-selling additional products and services, renew annual contracts and secure a tighter relationship by demonstrating real interest and commitment to your customers.
5. Make Sales and Account Management (Servicing, Upselling and Cross-selling Customers) the Life Blood of your Business
A) Strong sales management should be part of the fabric of your company
B) Making top sales performers heroes at your business should be paramount to you
C) Training your sales team should be exciting and part of every weekly sales meeting
D) Designing the right sales compensation plan and retention of your best performing sales team members should be a top priority
E) Consistently held weekly sales meetings that are motivating, numbers driven and training-intensive should be a weekly occurrence like clock-work.
Creating a written, disciplined Account Management Program will enable you to create loyalty amongst your customers, increase renewals, generate upsells and cross-sells, and increase sales, profits and the value of your business substantially.
Maximizing sales will be the difference in reaching your goals and a successful exit in the future versus strained cash flow and diminishing value of our business.
CEO Advisor, Inc. has the expertise and experience to help you through this challenging and exciting process. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
7 Critical Tips for Increasing Your
As you build your customer base, you need to realize as many dollars as possible from each customer - now and on-going. Boost the dollar value of your average sale, and you boost your cash flow, bottom line and value upon exit.
Here are seven ways you can increase your average sale, while providing a better service to your customers.
1. Crunch the NumbersBegin by figuring the dollar value of your average sale for a day, month or year. If you gain 10 customers and total sales of $40,000 in a typical week, your average sale is $4,000 (Cloud based software contract of $4,000 for a year per customer). Then, you can set a new target and plot your strategy to exceed it by targeting larger companies, upselling a higher level service or set of products, and cross-selling other products and services.
2. Bundle Your Offerings Encourage customers to spend more by offering multiple products or services. You can also bundle your time. An IT services company charging by the hour started selling services in 20 or 30-hour blocks or on a retainer basis for a one year or two year agreement. This new option yielded higher average sales and ensured recurring business.
3. Change Your Product or Service MixAdding or remixing what you sell can help grow your typical sale size. The same effect can sometimes be achieved by no longer offering lower-priced products or services. Focus your sales team on the products/services with the most demand, at the highest dollar amounts and the highest gross profit margins.
4. Add-on Sales are Key "Do you want fries with that?" is a textbook example, but the same approach works for any business. Every existing customer should consistently be marketed to and sold to, including all products and services that fit their needs.
5. Create Monthly Sales ChallengesFocusing your sales team on a particular area for a month can also generate add-on business. Focusing on a specific product or service each month with a spiff or bonus for achieving a sales goal can greatly increase sales over the year.
6. Promote Hidden Products or Services I once advised a technology service company that sold an average of only 1.5 services per customer despite offering more than 20 types of services. A survey revealed that most clients didn't know the company offered those services. This alone can increase sales substantially.
7. Train Your Staff to Make the Higher Dollar Sale to Larger Prospects This is critical. Simply making your sales team aware of your target sale value will help you get there. If they're just selling what the customer inquired about, you're not going to hit your numbers. A goal based solely on the number of closed deals per month will only drive your sales team to focus on smaller prospects and disincentivize them to focus on larger, higher value customers.
By using sales strategies and tactics like these to maximize every sale, you will increase cash flow while you're building profits and the value of your business. Sales strategy and planning will pay off many times over and your customers tend to be more satisfied with the higher level of services.
CEO Advisor, Inc. specializes in Strategic Planning and Sales Strategy/Execution. Contact Mark Hartsell, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.