How to identify gaps in your sales processOn December 1, 2021 by blog-admin
You have a sales process in place, your salespeople have been carefully chosen and qualified, your selection process is one of the best. Anyway, your investment in sales is huge.
However, month by month you close without reaching the goal and that makes it difficult to dream of higher flights. They invest a little more there and here, but the end result is always the same.
Where is the error? How can it not work? You ask yourself.
Well, if your team can’t diagnose the problem, that’s the first big mistake. Tracking the process with data is essential to correct flaws and find key growth points.
The diagnosis in sales is essential for the company to grow.
And in long processes and complex sales, this is even more essential. In these cases, the intensity and length of the sales cycle causes several obstacles to arise.
Without knowing how to measure and evaluate the process, the company will always be vulnerable to market variations and decisions will be taken blindly.
So we already know that the first step in diagnosing gaps is measuring. But how to get information out of the data?
In this text, Sales Managers of Blue World City are going to talk a little about sales diagnostics.
Collecting the clues
To correctly diagnose your business process, you first need to know how to deal with metrics and indicators. Metrics are the raw numbers you harvest. Indicators are basically a specific reading of metrics.
As I explained above, measuring and monitoring the sales process has a very clear objective: to identify what is working and what is not. That is, you will turn the metrics into indicators to see if the reading is positive or negative.
Indicators are the greatest tools for managers when performing sales diagnostics. They show the existence of problems, show their causes and even solutions.
Want some examples of important indicators? Come on.
Number of conversions per step
As you well know, unfortunately, not all leads turn into customers. The reasons are the most varied, but to find them, you need to know at which stage of the process the lead failed to convert.
And the indicator that will show this is the number of leads passing from one step of the process to another – Smart Leads, MQLs and SQLs.
These conversions are extremely important to define the amount of leads that must be generated at the beginning of the flow to reach MQL and SQL goals. In addition, they allow you to better understand your process and identify gaps and areas for improvement.
Vo ltando to that initial setting with u m segmented process, qualified vendors, high investment, only that the targets are not met.
Shall we add some numbers to this?
Imagine that, in this process, 100 smart leads are generated per week.
Of these 100 companies prospected, only two give an initial positive response and evolve.
These two are qualified, receive a proposal, but only one of them signs a contract.
In other words, 2% of smart leads respond positively and open up to a first conversation, 100% of those are MQL-qualified and receive a proposal (SQL), and 50% become customers.
But how do you find out where the problem is?
Realize that the lowest conversion rate is at the beginning of the process. If only 2% of companies are willing to talk, that means we are targeting the wrong market or sending ineffective emails.
Therefore, it is obvious that the problem lies in prospecting. But what if 50% becomes MQL, 40% moves to SQL, and of those 40 leads, one closes a contract?
In this case, it is the closing process that needs to improve. As you can see, conversions clearly show where the main barriers to lead evolution are.
By identifying gaps, we know exactly which step needs improvement and we can act immediately. And time, when it comes to sales of plot in Capital Smart City, really is quality.
Another indicator that deserves attention is the forecast. It is the forecast of contracts that have not yet been signed, but which are expected to be.
The sales team can try to predict how many closures will occur in a given period of time, according to the qualification and expectation generated.
And, at the end of this period, it is evaluated how many of these proposals were actually carried out.
The forecast, therefore, can give you good information about your sales process.
If the contracts you hope to sign do not materialize, for example, it is an indication that your commercial has a gap in the qualification stage.
A final indicator suggestion is the sales cycle, which I believe is one of the most important. How long does a lead take, on average, to become a customer?
In other words, how long does it take for a lead to stop being a cost and become revenue for your company?
Knowing this is a good way to work with return on investment.
And this indicator is very simple to be measured, you just need to know when a lead was contacted for the first time by your team and when the contract was closed.
If you want to go deeper, you can also record the conversion date at each step. Thus, you can assess how long your leads take, on average, to evolve in the funnel. But this is just another indicator.
There are several types of numbers you can harvest. That’s why one of the most common questions for managers is: what exactly do I need to measure?
Well, this will depend a lot on your scenario, although there are some sales indicators that you can’t miss.
Interpreting evidence and defining hypotheses
Now you know that measuring is important, you have some ideas of what to measure. But how to get information from these numbers?
Getting straight to the point, the key is in comparison.
You will only know that the quality has dropped if you have something to compare 😉
Comparing data is the best way to generate insights and diagnose sales.
Metrics are only useful when we have a baseline. There are three ways to compare.
They are: history, internal and external benchmarking. I’m going to talk about each one now.
Stories are databases containing the metrics and indicators for months on end.
They are essential for any manager! Otherwise, how will you know your business process is evolving?
Based on history, you can confirm process improvements or yield drops. For example, if you find a very large variance in the conversion rate of MQLs from past trends, you know you have a problem going on in prospecting and you can assess the causes.
As an example, I’ll tell you a case. Here at OTB, we work with prospecting emails that generate, on average, 75% of openings and 20% of responses.
Last month, we started to prospect companies in a new market, which we had not yet experienced. Days later, when evaluating email open and response rates, we saw that they dropped to 40% and 5% since we changed our prospecting focus.
Oops! Until then we had numbers much larger than these. What happened?
Hence, we can draw two conclusions: either our approach was not very effective for this market, or these companies really weren’t fit for our service.
To better identify the cause of the issue, we went deeper and evaluated conversions in the next steps. Even with a nice approach, rates were also low.
In other words, these companies weren’t really interested in our solution. In other words, we identified the gap by comparing two indicators (Open and Reply Rates) with our historical data.
So, analyzing the conversion rate by stage, we concluded that the market was not favorable to our business and we changed our company profile again to prospecting.
Now think with me: if we didn’t register everything, how would we know that open and reply rates dropped?
We would probably still be working on an ideal prospecting email for a persona who doesn’t fit with our solution – read throwing money away.
In addition to history, a great basis for comparing indicators are the members of your sales team.
Comparing the performance between people who perform the same function can bring numerous insights into the process.
Imagine a sales team with three salespeople.
Comparing the performance of each, it turns out that they use different methods of approach and one of the three has far superior results than the others.
After this evaluation, you can find out what he is doing differently and test the same method with everyone. But Lucas, what if everyone followed the same methodology and one did better?
In this case, the problem is with the methodology or with the other team members. You can run a few coaching sessions with other salespeople and review the background to find out.
If everyone is executing the methodology well, the track record shows that it works, and that salesperson still stands out, you’ll know you’re up against a top performer.
If they aren’t executing the method well despite the investment in training, maybe it’s time to renew your team.
Now, if the track record shows that the effectiveness of the methodology was dropping over time and the results of the entire team were impacted, including those of the best seller, it is an indication that you need to update your strategy.
Finally, internal benchmarks are excellent tools for sales diagnostics.
Of course, evaluating the process itself and getting to know it in depth is paramount.
But it’s not enough to just look in the mirror and admire the beauty of your numbers or look for the problems behind them.
Look at your neighbor’s grass! Does it look greener than yours? Ask yourself why.
It is extremely important to know the process of your partners, especially those who carry out business processes similar to yours. You can exchange knowledge and use it as a benchmark.
Do benchmarking with competitors is even more important to try to anticipate their footsteps and close more customers.
It is not easy to know in detail the results of other companies, but some simple information can now be compared with yours.
And then you can understand if the path you are following is the best one. For example, if you two do cold milling, but their conversion rate is higher, it’s worth a look at the template they use. Not to copy, of course. But to get insights.
Coming to the end of this text, we agree that measuring and analyzing is the way to identify gaps in your commercial, right?
Metrifying and monitoring a business process is not that simple…
It turns out that some processes can be more difficult to assess than others. The complexity of the sale and the number of people involved, for example, are factors that can directly influence this difficulty. Therefore, having an easy-to-measure process is the starting point for effective assessment.
Think with me, you have a team of salespeople who individually execute every step of the sales cycle. They prospect companies, negotiate and close contracts. Great, you can compare each seller’s performance: what closes more is better. Keep this one, dismiss the others, okay? Not!
With this assessment you can even find out who is being more efficient. However, the results are consequences of the methods, and here’s the problem: so you can’t evaluate the method.
Also, when a salesperson runs the entire cycle, it’s difficult to define transitions between steps. This means that when a problem occurs, you will not be able to identify which step level is causing it.
In the segmented process, the evolution of engagement is marked by a passing of the baton. And this shift in responsibility is an opportunity for numerical assessment.
Segmentation brings, of course, a smile but important indicator: conversions. So a segmented sales process is already halfway to the indicators.
No process is 100% perfect. As much as your results are great, there is always that 1% that can be improved.
And if the results are not good, there is certainly also a good practice that deserves to be validated and encouraged. Organize, measure and compare.
This is the key to optimizing your sales diagnostics. If you have any questions, you can comment here or send me an email: email@example.com.
Want more tips to optimize your commercial? The eBook below will certainly help you identify barriers to your growth and optimize the process. Just click on the image to download it for free.