Hey, Scott from The Sales Mastermind here. Today’s edition only takes 4 minutes.
This week, I'm trying a new series: Back to Basics
Focusing on beginner-level sales process. Is this the sort of content you like? Is it too simple/academic?
Reply to let me know!
If you like it, I'll do more Sales 101. If you don't, we can return to our regular "sales tactic of the week" style.
Sales is simple.
B2B Sales is simple. Generate some interest. Help those interested to buy your product.
At its most basic level, it looks like:
Lead >> Opportunity >> Customer
- Leads are individuals who have shown interest.
- Opportunities are companies where the seller has reciprocated the interest.
- Customers are paying you money.
Measuring Sales
In many businesses, sales is a black box. Leads go in, and customers, hopefully, come out.
To improve your sales, we first have to measure it. Today’s email clearly defines the major stages in a sales process.
Helping a lead become a customer is measured as a Sales Funnel.
Here is a simplistic sales funnel; most funnels would have more stages than below:
In the above funnel, for every 100 leads, 20 new customers are closed.
As you can see, the funnel and each stage of the funnel have a conversion rate.
In an ideal world, all conversion rates would be 100%. Everyone who has ever thought about your product becomes a customer.
In the real world, we want these numbers as high as humanly possible.
What is a lead?
Leads are anyone who has shown interest in your product.
Leads are typically broken down into how they are generated, inbound or outbound.
“Inbound, you get what you get. Outbound, you get what you go after.” (I wish I could remember who I was quoting. This line is from a podcast I listened to in ~2015.)
Inbound leads have made the first move, usually with more than just you. So they’re typically smaller deals, more competitive, and faster to buy.
Inbound leads are also finite, as only so many people will self-select.
Be aware ~50% of all inbound is garbage. Many don’t understand your offer or aren’t in the same financial ballpark as you.
Outbound leads are yet to show intent, so you must fight harder to get your foot in the door. Once you do, the deals are typically larger, less competitive, and slower from first meeting to customer.
You can influence the number of outbound leads you generate each week/month. Make another 100 dials or email another 100 prospects. It’s not a science, but it does balance out over time.
Conversion rate rules of thumb (for SaaS)
Inbound
- Referrals, the best inbound leads, convert to customers ~60-90%
- Content downloads and trade show/webinar attendees, the worst inbounds, convert ~3-5%
- High intent form fills, such as “book a demo,” convert around ~20-35%
Outbound
- For cold businesses who have never heard of you, expect ~3-5% from lead to customer.
- For reactivation businesses you’ve failed to sell in the past, ~1-2% conversion is acceptable.
What is an opportunity?
An opportunity means both the buyer and the sellers are working to make a deal happen.
Think about sales as similar to dating. A lead is like when a man asks for a woman’s number; maybe the woman says yes, or perhaps she says no. One side has shown interest, but nothing is guaranteed.
An opportunity is when they go on a 2nd date. It means both sides have put in effort and shown continued interest. It doesn’t mean any relationship will continue long, but the wheels are in motion.
An opportunity has double opt-in - both the seller and buyer engage.
Elite sellers recognize they have the power of choice. The seller is in control of which leads qualify to become opportunities. Other sellers take anything that is offered to them.
As an old sales training mentor of mine says:
“My buyers come to me as they have a sales problem. I don’t have a sales problem. I don’t have to work with them.”
In an ideal world, the seller’s company has a process including entry and exit criteria for opportunities. In the real world, many sellers create the requirements themselves.
An opportunity includes everything from when a seller says, “Yes, you're qualified,” to when the buyer signs a contract and, ultimately, “Yes, here is some money.”
As a seller, opportunities are where you spend the vast majority of your time.
What is a customer?
A customer pays you money.
Before they pay you money, they are not a customer:
- A lead is not a customer
- An opportunity is not a customer
- Anyone mid-trial is not a customer
- A signed letter of intent is not a customer
- Only when you receive money do they become a customer
Far too many salespeople refer to everyone as customers.
It can be as simple as talking in an internal meeting; “the customer is negotiating for an extra discount” before any money has been paid.
Treat the title of customer with the reverence it deserves. Customers pay your bills, fund your projects, and provide actual proof that your product is with something.
Customers are sacred.
Sales Funnels
Today, we covered the basics of a sales funnel.
If you take nothing away from this email other than using the term customer only after they have paid you, it’s a win. This will change your whole mindset.
LinkedIn Posts of the Week
Your pipeline is almost certainly full of crap. by Me
“We’re salespeople” by Ross Pomerantz
Let me know what you think! it to a friend
Until next week,
Scott Cowley
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