Almost every business I’ve ever worked with has shared at least one goal: Close as many new customers per month as humanly possible.
Unfortunately, achieving that goal isn’t as easy in practice as it often seems in theory. And very often in sales organizations, when revenue from new business begins to stagnate—or disappear altogether—sellers tend to jump to conclusions quickly about which initiative or process is the source of their problems.
“New business development numbers are way down this month,” they might say. “It has to be a lead generation problem.”
And maybe it is. After all, if sales are lacking, an insufficient number of leads at the top of the funnel might be the culprit.
Or maybe it isn’t.
In fact, maybe leads are flowing in just like they always have, but sellers aren’t efficiently converting them into opportunities or sales later in the sales process. And if that’s the case, sinking time and money into fixing your lead generation program before you’ve fixed the real problem is simply akin to placing a piece of duct tape on a severed hose.
So, the question many sellers end up asking themselves is this: How can we know which area of our sales organization—lead generation or the sales process—to fix first when new business development isn’t going as planned?
The answer, much as you might not like to hear it, is that it depends.
Two Problems, Two Different Causes
I’ll explain my answer above by presenting two different—and very common—sales scenarios.
Let’s say that VAR X discovers that it’s not meeting its new business goals and does not have a lead generation program. That VAR’s first inclination, of course, will be to assume that its low volume of leads at the top of the funnel is the primary problem. But what if VAR X also discovers that it is only closing 20 percent of the proposals it delivers. Isn’t that a much bigger problem?
After all, no matter how many leads VAR X is able to bring in, the inefficiency in the middle of its sales process will still prevent it from meeting its sales goals.
By contrast, let’s say that VAR Z is also struggling to close new sales, but its metrics reveal a closing ratio of 50 percent. By industry standards, anything between 40 percent and 60 percent is strong, so that VAR can, in all likelihood, assume that its sales process isn’t the issue.
Instead, VAR Z should be looking at the top of its funnel. And if it finds that a small number of new opportunities each month is forcing its sellers to try to grow revenue by siphoning every last dollar out of existing accounts, that’s a clear sign that its lead generation program is badly broken.
The Final Verdict: Make Sure Your Lead Generation Program and Sales Process are Functioning Optimally
The bottom line is that while it’s important to diagnose your most pressing sales problem and fix it first, the reality is that you proactively must ensure that both your lead generation program and overall sales process are continually operating at a high level. That’s really the only way to consistently reach your new business sales goals.
That being said, if you’re in a pinch and struggling to decide which one to repair, here’s a good rule of thumb to follow: Look at where you’re bleeding the most and quickly apply a tourniquet.
More than likely, that will give you time to explore and analyze your new business development effort as a whole, and figure out a longer-term strategy to solving your sales woes.
If your closing ratio isn’t where you’d like it to be, join me for our next Coffee with Kendra free webinar on June 20 when master negotiator and Top Sales Expert Mark Hunter joins me for “Negotiation: Avoid the Trap of Giving Away Profit.”
Click here to enroll for free and learn how to negotiate to close more sales. We will be recording the session, so enroll and get past those sales size stagnation challenges.
Kendra Lee is a top IT Seller, Prospect Attraction Expert, author of the newly released book, “The Sales Magnet,” and the award winning book, “Selling Against the Goal,” and president of KLA Group. Specializing in the IT industry, KLA Group works with companies to break in and exceed revenue objectives in the Small and Midmarket Business (SMB) segment.