How has selling changed in the past several years? Has the new economy changed the way you manage and lead your business? For many entrepreneurs, these are crucial questions they must answer to take their business to the next level. Recently, I’ve been asked to get more involved in several clients’ business development activities. My new clients want me to help determine why their business growth has stalled. Is it something they changed or is it something outside their control?
As you know, entrepreneurs are good at coloring outside the lines to build successful organizations. To do this, they must have a clear view of how the economy has changed and they must change the way they manage their organizations.
This question got me thinking, so I called several friends who are senior sales leaders for emerging technology firms and professional service businesses ranging between $10 million and $250 million in annual sales. I thought it might be a good time to check in to see if they’ve noticed a change in the selling environment. I uncovered several ideas that are changing the way we do business. See if these are resonate with what you’re seeing in your markets today.
They are getting declining margins out of the products and services they sell. In the past, good strong sales professionals could be worth 5-10% higher margins on the business they brought in. Today, their margins are declining significantly and average performers may be struggling with margins between 5-10%, if any at all.
Sales cycles require more contact to get meetings even with your better clients. In the past, when you did a good job for a client, you would have received more time with buyers and their team so you might partner more effectively with their key stakeholders. This new trend is changing how we partner with clients. Today, it takes almost seven meetings to get new business with clients. In my conversations, I also learned many of our better sales professionals working with their current clients may take up to five meeting s to add additional sales in their accounts. In the past, it might have been one or two meetings. Both these facts are increasing the cost of a sale exponentially.
Today’s buyers may be better equipped than our sales teams when it comes to knowing how technology can help them grow their business. Because of the extended softness in the economy there are many unemployed IT and finance managers available who focus their practice on how much they can save their clients when buying technologies. They get paid by what they save and sometimes to the detriment of the clients. But that’s a topic for another blog. The key point is clients are getting help from people that know our business as well as we do.
Today’s customers are less loyal in the past. This and the increasing M&A activities within your customer base means the lifetime value of the customer has been decreasing over the past several years. New CFOs within our client organizations are going to suppliers to negotiate better rates on products and services. They will share with you that their customers are doing it to them and if you expect to continue doing business you must be willing to renegotiate your agreements.
Finally, clients have a decreasing willingness to try new products and services early in the product’s life cycle. Much of the new BYOD (Bring Your Own Device) Revolution is changing how companies invest in new technologies. You must be prepared to discuss this with your clients proactively. I was recently on a call with a successful CEO who asked one of my business partners why their analytic package cost so much versus the apps he buys for his iPad. I’m sure this is not the first time it has been asked. I’m not sure what scares me more, the question or the fact that the way we deliver software is changing forever.
This makes it even more difficult for us to recover our new product development costs. When the product moves to Main Street, a large portion of the product’s increased profit has been removed from the product or service. Few companies are willing to invest more to gain a larger edge over their competition early in the product’s rollout.
A secondary impact to this is that it’s harder to get early adopter marquee clients to talk about your products and services. This is creating a sales bottleneck because customers want to reduce their risk and without early adopter customers taking risk products struggle to take hold in the market.
Now what does this mean to you? It means that your organization needs to be able to leverage all resources to help the organization growing successfully. It also requires some different sales tactics to remain a market leader. Over the next weeks, I’ll share several of the implementation strategies I know that have worked to help organizations continue to grow.
If you’re wondering if you’re adding too much when working with your sales team you might enjoy this week’s video blog on Developing Serving Leaders featuring Marshall Goldsmith. It’s called “Are You Adding Too Much Value in Your Leadership Conversations? “ I think you will enjoy it. I saw myself in it almost immediately. I wonder if you will too?
See you next week.