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The Ultimate Guide to B2B Sales Process - Chapter 2

Business Benefits of a Great Sales Process.

business benefits of a great sales process

It got old really fast…


Come see me in my office.

How I dreaded receiving this message from the COO. I was working as a Sales Director at a large Telco and the sales team kept making errors on the order forms which weren’t noticed until the customer had signed and the agreement was sitting with the service delivery team. It was frustrating because we had to either live with the error (which cost the company money) OR, worse still, go back to the customer and ask them to sign a new order form. And it wasn’t a one-off occurrence. It was a weekly issue that caused significant angst between the sales and operations teams.

I wish I could say that this is the only time I’ve witnessed this flaw in the sales process. Unfortunately, this is all too common in businesses with complex products and sales people under the pressure of targets.

Another career lowlight was the time a sales executive sold a product that was grandfathered (ie not available for sale any longer). The COO flipped his lid. But when we tracked down the issue, it turned out the sales person had done the right thing by checking the internal product wiki. Unfortunately the product page had not been archived properly and was still available (if out on a spur). The argument over whose fault this actually was then ensued across multiple departments - Yay, fun times!

These problems can spiral out of control very easily. At its worst I have seen an operations team reject an order with a trivial spelling mistake because they had become so vigilant for errors that they felt made their job harder that they became extremists. Unfortunately, this increased focus and added pressure can often exacerbate the errors and issues.

Given how much of an impact ‘bad orders’ can have on not just operations but on revenue and company culture, spending time on your sales process is time incredibly well spent. Let’s talk about the benefits for a business with a tight sales process.

Focus on profitability (that’s still important, right?)

If your sales process is not tight, margin or profitability control can often suffer. A good sales process will track profitability and ensure you know how much margin is required to ensure that the business is making a profit. You must know this to correctly manage discounting.

At a previous organisation I worked at we acquired a company that marked up their buy prices by 30% (times by 1.3) and then for a 36 month term or greater (recurring revenue product) they would discount by 20% (times by 0.8)??? They made 10% Gross Profit (GP) they told me with a smile on their face. Err that’s not 10%, it’s less, and surely you need to make more than 10% GP to actually make a profit? (Spoiler alert - They did need to make more). This was a major failure of oversight of the sales process by management.

Report on the right things

Great sales process is focused on what your business needs to be successful and this is super important for sales reporting. Maintaining a strong connection between sales reporting (Leading indicators) and Billing or Revenue (Lagging indicators) is critical as you scale. Any disconnect no matter how well you believe it’s understood can cause issues.

I learned this lesson from making the mistake. The company I worked at sold a small percentage of services based on a single upfront payment to provide access for 10 or 15 years. This was great for us as a business because we could recognise the vast majority of the fee as profit as soon as we had delivered the service which gave that year’s profitability a big bump (New Accounting Standards have now put this practice behind us…). Unfortunately, for our sales reporting we decided to ‘normalise’ the data in our CRM to New Monthly Recurring Revenue which was our key metric. This worked really well to assess sales performance and for commission payments, but it distorted the sales figures and created a disconnect between what finance reported and what sales reported. I was hauled over the coals by the board who had not understood how we reported. Not fun, but lesson learned!

Another prime example of sales process going wrong was when we acquired a company that had flat recurring revenue and declining profits but amazing sales results. When we dug into the data we realised that they were trying to move their customers from an old technology to a new technology that came with future upsell opportunities and they decided to treat these sales like they were new revenue for sales reporting and commission purposes. The sales team spent all their time just cross selling their existing customer base into the new product for an entire year with no actual revenue or profitability increase! The sales team was paid huge commissions but almost certainly the flat revenue and lack of profit growth is what made them “acquirable”.

Happy customers

Of course, one of the most important results from a great sales process is happy customers. If your product is easy to buy, then buy it they will! It’s human nature. When we are ‘ready to go’, we want to do it now. If I’m a customer stuck waiting for your internal process to get me an order form or worse still, if the order form I waited for and then signed is returned to re-sign because you made an error then I will be unsatisfied and probably start considering other suppliers.

Hopefully by now you agree on the importance of a great sales process - so let’s get started by reviewing your current sales process!

Analyse and measure your current sales process

The first step is understanding where you are at today. If you have not reviewed your sales process in the last 12 months, I would be shocked and impressed if you can’t find at least one meaningful improvement. (I would genuinely love to hear from you if your process is so good you can’t find one.)

In the next chapter we will dig into the systems you use to track your sales proces. But today, let’s start to understand how well your process works by having a look at:

  1. How long does each step take? You should focus on key parts of the process such as quoting or sending an order form. Speed helps you sell more.
  2. How many steps are in each part of the process? Remember to look across departments too, if you’re reliant on operations, finance or the product team to keep parts of the process current.
  3. How much sense does the process make? (Processes often evolve over time and some thoughtful process re-design will go a long way).

Tip: One of the best ways to analyse your sales process is to create training material for a new sales person and then take someone in your business who is not in sales through the training to see if it makes sense. This process really quickly highlights how good your process is and where there are gaps. The blank look on your pilot trainee’s face is a sure sign it’s over complicated. Often by just starting to document your process you realise it’s overly complex with unnecessary or overly complicated steps.

Two other great questions to ask yourself are, "How long does any part of the process take that requires another part of your business to complete (ie pre-sales, legal, commercial etc)” and “Is there an internal SLA?"

When I was consulting a few years ago, I took a customer through these questions and we discovered that it took them 13 working days on average from the first customer meeting to discuss requirements to a quote capable of acceptance. The time broke down as follows:

On review of their sales process we worked out that 80% of the work completed by Pre-sales (the main bottleneck) was relatively simple work that could be built into a Configure, Price and Quote application to allow easy, fast and accurate quoting by the sales team while sitting in front of the customer. This work meant that in the first meeting they could quote, revise, quote, revise, quote until the customer said “yep that’s what I want!” The quote was ‘capable of acceptance’ in the first meeting! They saved themselves 12 days!

Just think about how much this business saved on pre-sales costs alone - 80% of deals now don’t need their input!! One of the best outcomes from this project was Pre-sales having more time to work on bigger and more complex opportunities which allowed the business to tackle, and win, bigger opportunities than they could in the past.

Takeaways

  1. Understand what the rest of the your business needs from your sales process.
  2. Review and understand your own sales process.
  3. Ensure sales reporting is in sync with revenue reporting.


Matt Hollis
Co-founder & CEO at Opvia

Other Chapters

Chapter 1 - Easy to Sell, Easy to Buy



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