Sales Blog with Sales Tips

Is the following statement true or false? When you don’t prospect, your account base will always end up in shambles.

True. Very true.

All of us have had times when we’ve gotten lazy and stopped prospecting. Do this long enough and we’ll unknowingly plant a malignancy within our collection of customers. Slow growing at first. But obvious, painful and lethal in the end.

There are two primary reasons why cessation of business development will kill a customer base.

#1, Entropy Always Increases
“Entropy” in this context refers to disorder. In physics, entropy is always increasing. In other words, things in the universe tend to naturally go haywire if they’re left on their own (like children).

Account attrition (i.e. losing accounts) is a perfect example of account entropy. Every Fortune 500 company, on average, loses approximately 25% of their account base each year.

That can’t be, you say! Oh yes it can. We forget that when customers stop doing business with us they typically don’t send us a postcard with the news. They just quietly slip out the back door unnoticed. They slowly fade away.

#2, Unconscious Overreliance On Luck
Most of us work in businesses where prospects (actually, a better term is “suspects”) make unsolicited calls to us inquiring about our products and services.

This is great – we think. I call this lottery prospecting. What are the odds that a highly qualified and desirable prospect will call us out of thin air? Furthermore, what is the likelihood they will fit beautifully in our market sweet spot? I have a guess. Just about zero most of the time.

Building a customer base this way is just as foolish as my Looney-Tunes uncle whose retirement plan is the lottery. It’s based solely on luck.

Over time, this “strategy” based on hopes of good fortune creates nothing more than a large number of high maintenance, slow paying, low revenue and low margin customers. Before we know it, we’re Gulliver tied down by a bunch of Lilliputians.

Conclusion
For these two reasons, and a million more, never forget that business development is the lifeblood of a personal account base and a company.

©2010 Scott R. Sheaffer

There is a budget associated with being a sales professional that is only partially related to money. This budget metric is extremely important, yet many sales professionals have little awareness of it. Most have never done any planning in order to optimize it either.

Call Budgets
The metric I’m writing about is your call budget. Simply stated, this is the number of customer calls or prospect calls an average outside sales professional can make in any given period.

I’m going to provide call budget averages below and I think you’ll find them sobering. You have less time than you think. You’re probably wasting time on sub-optimal customers and prospects and not giving enough to others.

I provided some sales tips on segmenting your accounts and opportunities more efficiently in my last sales blog post.

Call Budget Stats
These aren’t my numbers. These are accepted numbers for an outside sales professional.

• Average number of calls per day: 4
• Average number of net selling days in a year: 220 (365 minus weekends, holidays, vacation, sales meetings, office days, training, sick, etc.)
• Average number of calls per year: 880
• Average number of calls per month: 73

The Math
Add your number of accounts to the number of prospects in your funnel. I think you’ll find you don’t have the call budget that will enable you to keep in contact with all of them in a way that even approximates regularity.

As a result, you have to segment. You have to make choices. You have to profile. Not all customers and opportunities are created equal.

For starters, let inside sales or your company’s website handle low potential accounts. Completely ignore low potential prospects.

Sales Tips Wrap Up
I hope this sales tips post has been a call to action for you. There are hard limits to the amount of time available for servicing your customers while simultaneously growing your business.

Make the hard decisions regarding how you will allocate your time. Please see my last sales blog post for more information.

©2010 Scott R. Sheaffer

Do you have a large customer base of mid-sized accounts or do you only have a few large customers you rely on? Your answer to that question will determine your success over the long haul.

Staying Power
I don’t think I’ve ever known of a top producer over an extended period who built a successful account base with a few large customers. What I’ve observed is quite the opposite. Sales professionals who are rainmakers do so year after year with a large number of medium-sized customers.

Experienced sales professionals know better than to put all of their eggs into two or three customer baskets.

The Problem With Selling To Really-Big-Companies

1. They beat you up on price. Everyone is after Really-Big-Companies so the downward price pressure is enormous.
2. You’ll waste lots of time on their government-like bureaucracy. And “may the force be with you” if one of your Really-Big-Customers is a government entity.  Double jeopardy.
3. Don’t be in a hurry to get your invoices paid; they aren’t.
4. They have people on the payroll to keep metrics on your performance. If you fall below their thresholds, you’re out. You’re a number. You have to watch your step on every order.
5. Since they eat up so much of your time, you can only maintain a limited number of these Really-Big-Companies as customers. Do the math. If you have three of these and lose one, you’ve just lost 33% of your sales. In short, you’re very vulnerable. A large account base of mid-sized customers allows you to spread the risk. Remember, 100% of sales professionals lose 99% of their customers over time because of normal attrition. I’ve seen too many examples of sales professionals who thought they were exempt from this universal sales law.
6. You’ll most likely be dealing with the purchasing department. Selling to purchasing departments is rarely a good thing from a sales perspective.
7. Whether you call it supplier reduction or vendor consolidation, Really-Big-Companies are constantly trying to reduce their number of vendors. See number four above.
8. You’ll rarely be selling to high-level decision makers, even if you are able to break free of the purchasing department. You’ll be selling chiefly to mid-level managers who are usually just information gatherers and recommenders.

Sales Tips Wrap-Up
I’m not saying that you shouldn’t take big orders from Really-Big-Companies. To do otherwise is not too smart. What I am saying is that long-term, high producing sales professionals usually achieve their results with a large number of medium-sized customers. This kind of account makeup normally results in better margins, fewer competitors, time savings, reduced credit problems, less account vulnerability and better access to decision makers.

©2010 Scott R. Sheaffer