The importance of having a sales process in place as a startup
Every year about 300 million people try to start about 150 million businesses, out of which only one-third see the light of the day, which means 50 million firms are born every year. However, less than 10% of them manage to survive; a pretty shocking statistic. While 42% of the start-ups fail because there is no demand for their product, 17% aren’t successful because of an inappropriate business model and 14% due to poor marketing.
If you are a new entrepreneur or planning to establish a business, you might be having second thoughts after reading these disappointing stats. As discouraging as these statistics are, they are not meant to demotivate you. In fact, they have been mentioned to guide you so that your business can be among the 10% that survive.
So, majority businesses fail because of a misfit product, but you have tested the market and you believe that your product will be a hit. On top of that, you have also recruited the best team, but that still doesn’t guarantee that it would end up being a successful venture. Why? It is because the devil is in the details, which are often ignored.
Let us illustrate with an example – Rdio, a music company launched by founders of Skype was started in 2010. The company managed to attract a lot of investors and soon was available in 60 countries.
It was also termed as one of the best online streaming apps. The product was great, there was market demand, but 5 years down the road it filed for bankruptcy. What went wrong? The company had a poor marketing and distribution strategy.
Rdio’s failure clearly shows that no matter how awesome your product may be, you need robust processes in place. In fact as a start-up, the first and the foremost thing you should do is establish processes, especially sales and business development process that can drive growth and add to the bottom line of your company. A sales process is not the same as a marketing process, hence, do not confuse the two. While marketing is about increasing your visibility, sales process involves converting potential customers into actual customers.
It is more about lead generation and closing the final deal. By creating a process and breaking it into stages, you can better understand how to lead customers through each stage. Moreover, by doing so you will be able to identify at which stage you need to work the most by capturing data.
Capturing data at each stage will help you identify trends that will eventually help you forecast your marketing strategies. The best advantage of a sales process is perhaps consistency, which reduces uncertainty for your employees as well as your customers.
Of course, there is not one fool proof sales process out there that every company can replicate. A sales process of a technology company would be very different from that of a real estate company. However, every sales process has some common elements. A robust sales process is not only about closing deals, it also reflects the values of the organization, and its customers and products. It is basically a detailed plan about how to find clients, approach them and close deals.
However, before you begin drafting a sales process, you need to observe. As a startup, you can benchmark best practices of the companies that are already successful in your niche. Once you do that, observe past few deals that you have done and identify the major steps involved, how long the entire process took and what were some of the bottlenecks. Your next step is to map out the process and then fill in the details.
The idea is to come up with a process that is simple and easy-to-understand by an average sales representative. A general sales process usually starts with lead generation strategies.
Your sales plan should include how to approach your customers. Plus, your sales reps should also know how to talk to customers. In case a sales rep annoys someone, it will hurt the image of your company and you will end up losing a potential client.
Moreover, your sales reps should also know how to identify a qualified customer, someone who is actually interested and can afford your product or service. Otherwise, they will be wasting time and each minute lost is going to cost your company.
Once your sales reps manage to attract the attention of a qualified customer, they should know how to proceed further. Extensive knowledge about the product is extremely crucial at this stage. Also, the sales reps should know what customers demand they can accept and what are against the company’s policy.
The example of Dijiwan is quite relevant here. Dijiwan failed miserably and had to file for bankruptcy. One of the mistakes the company made was that it gave out a lot of discounts in the hope of signing new, cyclical contracts in the future. Those contracts never happened. On top of it, the CEO was not really sure about the product that he was selling and, hence, was not able to convince the customers.
Perhaps, the most vital step in the process is closing deals. Most of the sales fail because sales reps are not able to close the deal. Your sales process should mention in detail how a sale should be closed and what formality needs to be completed once you have an order.
Your sales process doesn’t end at defining the steps involved. Once you are done with that, you need to document the process to make it scalable and repeatable. Building an apt sales pipeline template can also be of great help in this regard. Next, you have to set up some metrics to measure the performance of your sales team. You can use these metrics to pinpoint issues and subsequently improve performance. It is better if you can establish some guidelines for hiring and training your sales staff as part of the process.
Just having a sales process in place does not a guarantee success; it is more about executing it correctly. Also, remember that your sales process should always be work in progress. Customers’ demands and market trends change every day. Hence, it would be better if you take feedback from your sales representatives and update your processes accordingly.