Another BarCampRDU bit for your reading pleasure…

There are plenty of “sales theories” out there. In my experience most
of them are bogus. My all time favorite stupid theory is The Yes Curve, which I’ve blogged about before .

Before we get in to theory, lets look at two basic subjects: why people buy and how they choose what they buy.

Fundamentally, people buy products because they need or want them.  There is a key difference between the two.

Purchases made based on needs are for things people cannot avoid buying.
These are purchases that are in some way genuinely critical to the
continuance of their every day life. Examples include car repair (if
you rely on your car), chemotherapy, and anniversary presents .  Some sales veterans will also refer to this as a "hard sell".

Purchases made based on wants are for things people like to buy, but they are not essential.  This is referred to as a "soft sell".

The vast majority of purchases made by consumers are wants not needs.
If you are lucky enough to be selling a product that people genuinely
need, your game is radically different from the sales game played by
the rest of us.

The rest of this piece targets wants and not needs.

This is simple.  People choose products that have value to them.  Value is not the same thing as features.

While a Rolex may have some impressive features, it is still just a watch.  People buy Rolex’s because the value
of a Rolex is important to them. A Rolex’s value comes primarily from
the perception that it is a status symbol and an indicator of success.

Louis Vuitton purses sell for hundreds of dollars because of the perceived value in the Vuitton brand. 

Apple Macs appeal to certain types of customers because of the lifestyle the Mac represents.

What Starbucks sells is still more or less just coffee. But Starbucks
does better than Joe’s Anonymous Coffee Shop because of the perceived
value inherent in their products. They have value to their target customers.

Many companies confuse value with features. This
is why you will see companies release a product with identical features
to a market-leading product. These products almost always fail because
they only capture the features and not the values of the market leading product.  Need an example?  Look at MP3
players. How many iPod clones or killers have been released only to
fail dismally? Many had bigger screens, more storage and more features
than the iPod, but they didn’t have more value, so the
customer didn’t buy them. They stuck with the iPod. By the million.
Even though the iPod had problems (batteries dying, less play time,
higher price etc).

Customers buy based on perceived value. That’s why figuring out
the value of your product or service should be your primary concern.

I have no idea who invented this theory. Whoever it was, I suspect it
was created a long time ago, before people became used to the process
of being sold something.  It is surprisingly tenacious in its refusal to die.

Here is the theory in essence:

Ask small questions one at a time. Each question should only have
one real answer: YES. As you move up the Yes Curve, you are
accumulating a “bank” of yes’s. This bank makes customer more amenable
to saying YES to the sale you are trying to make. As the bank grows and
you move along the yes-curve, you can ask harder questions, but you
don’t ask The Big Question (”will you buy?”) until you have achieved a
critical mass of yes’s. At this point the customer should be far enough
along the Yes Curve that you can simply close the sale.

Lets go back to buying a car to see the yes-curve theory being applied.
Ever noticed that car salespeople often asks a litany of stupid
questions like “do you like the color”, “doesn’t it drive nicely” and
“isn’t today a great day for a test drive”? Yup, you are being
yes-curved.

If you are mean-spirited like me, you’ll throw them the occasional random “no” just to break the yes-bank.

But in all seriousness, this theory has some fundamental flaws.  Specifically:

1. Customers buy products because they want them.  Not because they’re lulled in to a yes-frenzy.
2. The yes-curve often misses questions critical to the success of a sale because the person using it doesn’t want a “no” answer.
3. Using the yes-curve leads to the salesperson talking almost all of the time.  This is always a bad thing.  If you’re talking, you’re not listening.  If you’re not listening, you aren’t hearing what the customer really wants, you’re just making assumptions about
   what they want. People buy based on what they want. If you haven’t
   identified what they want, you’re wasting your time and theirs.

I’ll talk about why people buy in another post…

It is a very common misconception among salespeople that they can make
someone buy something. Short of holding a gun to someone’s head, this
is simply not true. Occasionally people can be herded or goaded into
buying something (absolutely not a practice I recommend or endorse in any way whatsoever), but almost no-one is every made to buy a product.

Unless that product fills a critical (critical like life-threateningly important) need.  But that’s another topic.

In other words, a good salesperson is incapable of making someone buy a product.  What they do well is guide a customer through a controlled Sales Process.

In fact, there is a simple set of milestones that any controlled sale follows.

And again, by controlled, I do not mean that the salesperson is making someone buy something.  Perhaps a better phrase would be a disciplined sales process.

So lets get to it and tour this cosmic marvel.

Definitions:

Population Base: The Population Base contains all of your
target customers. Or to put it another way, this group contains
everyone who might, in any way, be interested in what you are selling

Suspect: Otherwise known as a lead. A Suspect is someone from your Population Base
that has in some way expressed preliminary interest in what you are
selling but has made no commitment whatsoever. This is the “Hmm, sounds
interesting. I might need that.” stage, and it usually ends with the Suspect contacting you in some way.  Contact might include visiting your website or in some way requesting information.

Qualified Suspect: The Suspect’s initial questions have been answered and they are still interested in your product.  In other words they are a qualified lead.  The key difference between a Suspect and a Qualified Suspect is a commitment to purchase, however vague, from someone with the authority to make such a commitment.  This is the “Hmm.  I’ll need one sometime” stage.

Prospect: The difference between a Qualified Suspect and a Prospect is direct contact and interaction.  Regardless of whether you have called, emailed or met with this potential customer, a Qualified Suspect becomes a Prospect when
there has been direct interaction with a salesperson. This is also the
point where you should establish the current status of the 5 keys that I blogged about before. 

Qualified Prospect: A Prospect becomes a Qualified Prospect once you have firmly established positive answers to the 5 keys.

Not all Qualified Prospects will turn in to sales, but if you’ve reached this point, as a salesperson, you have done everything within your power to line up the sale. 

Sale: The whole point of the process. You made the sale.
Just don’t forget to keep looking after
your customer from here.

Now that you have a way to establish where a customer is on the route to a Sale, you should begin tracking your sales process.

Remember, there are two components to being a good salesperson (a)
being able to close sales and (b) being able to learn from sales that
didn’t close.

If you don’t learn from every potential sale, regardless of the outcome, you will never become a better salesperson.

Here are some items you should be tracking:

• How long does it take to get from Suspect to Qualified Prospect?
• How many Suspects do you need to generate one Qualified Prospect?
• How long does it take to get from Qualified Suspect (when the salesperson gets involved) to Qualified Prospect?
• How many Qualified Suspects do you need to generate one Qualified Prospect?
• How long does it take to get from Qualified Prospect to Sale?
• How many Qualified Prospects do you need to get one Sale
• How many Suspects do you need to get one Sale

Other information you need includes:

• Is there a common cause behind lost sales?
• Is there a common point in [the five keys] where the sale is lost

Hopefully the usefulness of the last two is obvious. But what about
the other numbers? Why track those? It’s for two simple reasons

1. Estimating future sales based on potential customers already in your sales pipeline
2. Figuring out how many Suspects your company’s marketing needs to generate in order for you to meet your sales goals.

Lets look at (1) first. If you know that it takes 45 days on average
to go from Suspect to Qualified Prospect and 15 days to go from
Qualified Suspect to Sale, you have a total sales cycle of 60 days. If
you have potential customers that are 30 days in to the process, you
know they are probably 30 days away from a sale.

Now look at how many Suspects typically lead to one Sale. Lets say 100
Suspects usually product one sale. If you have 200 Suspects you can
reasonably expect at least two sales.

Now lets look at (2). Continuing the previous example, lets say you
need to make 10 sales. That implies that you need to have 1000 (or
10×100) Suspects in your sales pipeline. If your current marketing
efforts are only reaching 500 Suspects, the odds are pretty low that
you can make your quota. In other words, the scale of your marketing
efforts and the number of sales you can expect to make are closely
related.

Sales is a process. Like any other process it can be tracked and quantified and that data can be used to improve the process the next time around.

The more data you have, the more productive your sales and marketing
efforts will be. The more productive those efforts are, the more
successful your company.

You can make sales without such a process in place, but you’ll
always be relying on sales closing by luck. You can’t become a more
productive salesperson unless you’re working smarter, and the only way
to get smarter is with a properly tracked sales process.