The science of plate tectonics is how we explain the movement of continents. Yes, continents are moving all the time … but extremely slowly! For instance, it is said that the North American and Eurasian tectonic plates are moving away from each other at about 2.5 centimetres per year!
Fortunately, changes in business don’t happen so slowly. One example is in sales. In previous decades, sales was very much the domain of… well… sales people. You needed the ‘gift of the gab’, ‘people skills’ and a ‘good dose of self-confidence’ to be successful.
This is changing because even the best sales people increasingly rely on data to drive their sales approach. And data has become more accessible than ever before and easier to analyse. How well are you using sales data in your business? Is it driving your decision-making?
- What does it cost you to get a lead (a business opportunity)? This can be calculated from your spending on digital marketing, events, networking functions, advertising and so on.
- How many leads do you generate in a month or a year? You might also ‘rate’ these leads in terms of their quality or how advanced they are in your sales cycle.
- How many of these leads do you convert into revenue – your ‘sales conversion rate’? Has this changed in the past few months or years?
Sounds pretty simple, right? But how do these figures vary depending on the product/service you are trying to sell? Maybe your sales conversion rate is higher for some products? Maybe certain sales people have a higher sales conversion than others? Have you given any thought to your sales lead times? That means how long it takes to close a deal. Shorter is usually better because selling costs money. Again, it may depend on what product you are selling or who is selling it. You don’t need to overthink this and you don’t need to answer all questions at once. Rome was not built in a day (and continents don’t race around the globe at a rate of knots!!) But it is sensible to develop a thesis on how you can improve sales performance and then find the data to support (or improve) your ideas.
Accountants are not known for their strong sales skills but they are great at surfacing relevant data, analysing it and enabling you to implement change in your businesses. And what could be more important than finding ways to grow revenue? Why not take a fresh look at sales data in your business? We’re here to help.
And remember… this is one area of business where we have to act fast and take charge. Waiting for continents to arrive at their destination will not get us the results we need!
The Importance of Categorising Your Customers
You probably heard the phrase the customer is always right, well maybe that’s not quite right. Perhaps it should be rephrased and what we should be thinking about here is, the RIGHT customer, is always right.
There’s a subtle difference there, I think that difference is that not all customers are equal. Not all customers fit your business model, and yet, our observation is that’s very few businesses actually categorise their customers. That’s understandable when you start your business or you acquire a business. Sometimes there’s pressure to put bread on the table and so we end up taking any customer that’s going, any customer with a chequebook who will pay your bills. But, there comes a stage in any business where it’s important to review where you are at or what sort of customers you’re dealing with and should they be still dealing with your business.
- What’s important here is to analyse your customers.
- What are we working with here?
- Who are they?
- Where do they live?
- What size are they?
- How long have they been dealing with your business?
Once we’ve done that sort of analysis, the next thing to do is to think about what are the criteria that make a really good customer for your business – a relatively simple thing to do, if you think about what an ideal customer would look like. You can back into those criteria so you list out those criteria. They could be things like:
- How large is the customer?
- How active are they?
- Are they a once a year or a once every three years customer?
- Do they buy something from you every month?
- What’s that product usage like? Do they buy just one thing from you, or do they buy several things from you?
- To what extent do they refer new customers to you? (That could be important to you)
- How easy they are to deal with?
- How easy are there to work with?
- How profitable are they as a customer?
Not all these criteria may be equal as well, so you might want to weight those criteria and once you do that, you’ll come up with a list that is most important to me and the others, well, may not be quite as important but we should still take them into consideration. Once you’ve gone through that process, what you’re able to do is to create a report which will essentially rank your customers by importance, and when you have that report you’ll then be able to make better decisions on your customer base.
A lot of what we talked about in this video is very process driven and that’s where we can help. We can help you with analysis, rankings and scoring to put a report together so that you get a really interesting view of what your customer base looks like, and how you can then serve each segment of that customer base.
We’d love to talk with you about this, if you feel it’s something that will be of interest to your business. Please get in touch and let’s schedule a time to talk.