Dont We Qualify Prospects Anymore?

I’ve been struck over the past few weeks how few people recognise the importance of properly qualifying sales prospects. The current vogue for focusing on closing has almost completely ignored the critical role qualification plays in managing the sales process and improving your chances of closing sales and more importantly stops you wasting your time with those companies that have no real intention of purchasing from you. I recall a specific example of a London based business that was struggling for sales going to Manchester to bid for a in a market that they never before won a deal. Surprise, surprise, they didn’t win the deal, when I asked them why they went their answer was well with the shortage of prospects we have to chase down everything.

How much did it cost you to go? I asked “well only about £300 in travel,”

"and the amount of preparation? “About a day each” was the response

“Did you spend much time in finding out what they wanted and how much they’d be prepared to pay?” They said “well we knew we were more expensive but we thought we might swing it.”

I then asked “wouldn’t you have been better spending the time and effort uncovering and nurturing prospects in an area where you could win rather than chasing prospects in an area you can’t.” Their response was a mixture of resignation and embarrassment.

In times of recession prospects are harder to uncover and you need more of them as with increased competition your win ratio declines. Under these circumstances a salesperson will have to choose from a wider pool of prospects to find the deal they can win. Also this has to take place in an environment of greater internal pressure on the sales force and greater external competition. In order to be able to survive in this climate a salesperson must qualify rigorously to separate time wasters from real buyers. It requires a real strength of character to ask difficult questions in this environment but in order to succeed you must ask them.

So what sort of qualification questions do we need to ask? The most important group of questions in this environment is about money, especially in a B2B sale if the money isn’t allocated then you can’t make the sale. The larger the organisation the more rigid the budgeting process is likely to be so the more critical it becomes to understand not only if the money is budgeted but what the budget includes when can it be released and what is the process for doing so. Next you need understand how important the purchase is to the business, again because of the recession the ROI has to be very strong if it’s not again it’s unlikely that the purchase will be made.

The two groups of questions above address the question will the prospect buy. Next you have to identify the likelihood of prospect buying from you.

Your questions now need to centre around the solution the prospect seeks and to get an understanding if their requirements put your product or solution at an advantage or disadvantage. Clearly the questioning needs to try to draw out circumstances where the prospect has issues but where you consider that your prospect or service has a competitive advantage. The more of these you can identify and more importantly get the prospect to accept as important them more likely they will buy from you. You should also get an understanding of the competitive landscape, what your seeking to identify is if there is a bias towards one particular supplier, the stronger that bias (assuming its toward another company) the more you should consider if it worth continuing with the sale.

Poor qualification is at the route of many a lost sale, and it comes from two areas firstly, from not asking qualifying questions systematically when meeting prospects and secondly; commonly weekly qualifying a prospect by avoiding asking those tough questions which might result in you qualifying out a sale.

I would recommend companies to be even more aggressive in their qualification process so they stop wasting time on business they can't win so that they can concentrate on business they should win.

ExigentConsulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business.

We help Business Owners improve the profit performance of their business

The 5 Stages in a Business Restructure- Taking Your Business to the Gym

Most Businesses at some time or another will need to restructure their business. In times of recession this becomes an important priority as a business restructure is often the key to survival. In truth all businesses should plan a restructure review to keep their organisation "light & agile" to quote Jack Welch. These past 8 years business conditions have been particularly benign and as a result many businesses have not felt, sufficiently, the cold wind of competition to encourage them to restructure. Now faced with a veritable storm of fierce competition the need for a business restructure becomes urgent.

Stage 1 of a Business Restructure is to establish a baseline. Before imposing change the company would need to understand what is working well and what is not. So to confirm this it is important to perform an audit on the business covering all the main operational functions and in addition we'll look at Strategy, and management strength.

Stage 2 of a Business Restructure is to prioritise the issues identified and set out a timeline for their implementation. At this stage of a business restructure its important to achieve some quick wins as this builds confidence in the process.

Stage 3 of a Business Restructure is to revise the business strategy based on the outcomes from Stage 2 which will identify weaknesses and gaps in your current strategy. This part of the business restructure process is critical as it will lay the foundations for the long-term success of the business. The difficulty, particularly in a recession is that there are serious time pressures. In order to prevent a long drawn out soul searching process we have developed techniques to get to the nub of the matter in a few short hours and within a couple of days we can have a new and more relevant strategy in place.

Stage 4 is the most difficult part of any business structure and that is implementation. This is the point at which most businesses fail, why? Because it is at this stage that the rest of the business experiences significant change. Everybody, with the exception of a few souls, is resistant to change. It is at this time one needs to be clear about what individuals say and what they do. To improve your chances of success a detailed implementation plan needs to be established.

Stage 5 of a Business Restructure is to assess the success of the restructure by measuring the results of decisions made. This review and measurement system should cover all aspects of the business but concentrated on a relatively small number Key Performance Indicators. In addition the company should seek to ensure that the benefits identified that the beginning of this process are achieved.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketingand Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business

Taking Your Business to the Gym – Pricing for Profit

I was giving a seminar recently and it included a section on pricing. What really shocked me was how few people understood how to price properly and just how many businesses were almost paralysed with fear about raising their prices. Now i understand that we're the worst recession for at least 20 years, but at least 50% of my audience had not increased prices for more than 2 years. Their argument in a nutshell was that they couldn't increase their prices because they'd lose too many customers. I asked them if any of their suppliers had increased prices to them in that time, not surprisingly many of them complained just how many times suppliers had raised prices over the period. When I asked if they had changed suppliers as a result of these price increases they said, without exception, no. In fact they seemed rather surprised that I should even suggest it. My question was then if you've accepted price increases from your suppliers why won't your customers accept price increases from you. At this point there was a lot of murmuring and a few brave souls suggested because they were small companies there would be less loyalty and their customers would move. I simply can't except that as a valid argument and experience shows that most customers are immune to price increases.

I decided then to demonstrate how raising your price delivers more profit even if some of your customers leave.

No of units	10	9	11
Price per unit	10	11	9
Sales Total	100	99	99
Fixed cost	30	30	30
Variable Cost@£6 per unit	60	54	66
Profit	10	15	3

The table above explains what I mean. Let's assume you sell ten units of a product at £10 each giving you a sales income of £100. Of that £30 was fixed cost and the variable cost was £6 per item sold equalling £60 which when subtracted from your sales total gives a profit of £10. In our second case we raise our prices by 10% which leads to a fall in demand of 10%> So we now sell 9 units at £11 pounds each total sales are £99, fixed costs remain at £30 and variable costs are only £54 leaving a profit of £15. In our third scenario we reduce prices by 10% which in turn leads to a 10% increase in sales. We still only have £99 in sales however variable costs have gone up to £66 leaving a paltry £3 profit.

So what conclusions can we draw from this situation, well firstly to price for profit you MUST increase your prices, if you hold you prices whilst your suppliers increase their you are in effect offering a hidden discount and putting pressure on your margins as your variable costs are increasing. In the example above a 10% discount means you have to increase sales by 33% to maintain your profit. By contrast if you increase sales by 10% sales have to fall by more than 20% for profits to suffer. The most important thing however is to understand is that in reality most people are price insensitive, for example on Accountant client I worked with increased their prices on simple tax returns by 100% and lost only 5 out of 80 clients delivering over £15000 in extra profit.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.