The key levers to achieve success in sales
By Richard Higham, of Saleslevers and i-snapshot
Concentrate – real sales call data proves it works!
One of the three levers that control sales success is concentration of effort.
Sales data insight: 121,465 sales calls analysed
Sales management used to be seen as being driven by judgement, opinion and instinct. The clear trend is towards data-led sales management.
Saleslevers and i-snapshot recently (Autumn 2020) commissioned research from Glasgow Caledonian University’s Department of Computing to analyse 121,465 sales visits and explore the correlation between the concentration of effort and the sales result. The data was gathered using i-snaphot, the sales automation app.
The thinking behind this was based on Saleslevers’ ACE model which focuses on three levers of sales success:
Activity: Are salespeople doing enough?
Concentration of effort:… of the right things with the right people?
Effectiveness:… in the right way?
Part of the research focused on concentration of effort….. are the sales team focused on the right contacts, products, purpose and customers?
The research compared the conversion ratios achieved when salespeople visited Directors compared with Branch Managers. The visits to BMs achieved 27% conversion ratio but visits at director level achieved 56%.
When the conversion ratio for higher value sales were examined, there was an even clearer divergence: 10% for BMs v 35% for Directors.
Yet sales people made twice as many visits to branch managers as to directors (14,219 v 29,807)
This data does not tell us “why” this is happening but it does provoke some very clear and defined questions and does indicate that a changed concentration of effort would generate a significant return.
When salespeople concentrated on Product A they achieved a conversion ratio of 7%. When they focused on Product B they achieved a 59% conversion ratio. This means that it takes 2 visits to sell Product B but 14 visits to sell Product A. Can the difference be justified? What could be done to improve the conversion ratio on Product A.
Salespeople asked to record the purpose of their calls. A Territory call was defined as a call with no pre-set agenda. Territory calls generated a 23% conversion.
When there was a definite goal of a pre-booked full demonstration, the conversion ratio improved to 68%.
This does not mean that all territory calls should be stopped but 77% of these calls did not directly generate a sale. In this instance there were 16670 territory calls a year. At an average cost per sales visit of £120 that’s over £2Mn a year spent on territory calls.
Are you selling to the right customers? Segmenting your customers is critically important and almost certainly needs doing again in the light of COVID. You are looking for the correlation between two numbers: the Customer Lifetime Value (LTV) and The Customer Acquisition Cost (CAC). The received wisdom (e.g. David Skok of Matrix Partners quoted in John Warrilow’s The Automatic Customer p129) is that the LTV needs to be 3 times greater than the CAC. In a separate Saleslevers analysis of two different sales relationships, the contrast was remarkable. Client A’s LTV was £260,000 but the CAC was £110,000 (i.e. 2.4:1) but client B’s LTV was £1,830,000 with a CAC of £185,000 – a ratio of 9.9:1. Identifying and concentrating on the right customers is a critical success factor for profitable selling.
This data gives a clear indication of where and how to improve the sales result. If a company does not have this sort of data available it is firing very expensive ammunition into the dark. Concentration of focus on one of the three key sales levers for management – which sales lever do you need to be working on?