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| Seven Steps to Cash Proof Your Business |
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Dave Chase, Altus Alliance What do GE, Disney, HP and Microsoft have in common? They were all startups during steep declines in the U.S. economy. GE started during the panic of 1873, Disney started during the recession of 1923-24, HP began during the Great Depression, and Bill Gates and Paul Allen founded Microsoft during the recession of 1975. During those same periods well-established companies shut their doors and startups never got off the ground. How can you ensure that your business is a success story like GE, Disney, HP and Microsoft? Naturally, having a run way of cash reserves and a compelling product are absolutes. However, many companies had both of those and didn't thrive during past recessions. When access to capital is tight, the cheapest form of capital is sales revenue thus it's critical to ensure your end to end sales and marketing process is operating with optimum efficiency for maximum benefit. Too often, we find companies have significant deficiencies in their end to end sales process which decreases the potential yield from their sales and marketing investments. Such process defects often result in wasted precious resources and much more:
Studying the Great Depression, one learns that businesses and consumers didn't completely stop spending money. Rather, they were increasingly looking for deals. To enable "deals" on your products, it is vital that your sales process is efficient so that the "deal" can be structured, delivered and profitable. Even before this downturn, technology product prices have decreased dramatically over the last 10 years. A byproduct is that traditional lead generation methods (e.g., expensive and immeasurable advertising, tradeshows, etc.) and expensive shoe-leather sales people aren't penciling out the way they once did. In their place, more efficient web-driven leads coupled with an optimized sales and marketing process enabled our clients to operate within a cost effective model that generates strong revenue traction with early stage products. Unfortunately, even when senior execs have sales and marketing backgrounds, their backgrounds don't generally include recent experience in these new models. To re-engineer a sales process, we take clients through a complete process to crash-proof their business. Below are seven key elements companies need to run sales efficiently: Develop a H.O.T. (High Odds Target) Opportunity Profile that defines your most profitable lifetime value customers. Profile elements can include vertical markets and sub-segments, psychographic elements (e.g., risk aversion) and specific company and contact criteria. Optimize lead generation efforts by starting with your own in-house list. We find these lists are surprisingly under-utilized and can rapidly become stale if there isn't a "drip-irrigation" program for staying in contact with these prospects. Think like Hansel & Gretel leaving "bread crumbs" leading to your website and into the sales funnel. We believe that "content is marketing" (if done right). Thanks to Google and a website that is search engine optimized or at least an effective paid search campaign, you can get people to qualify themselves. Valuable analyst reports, whitepapers, buyer guides and the like frequently are used as bait to get someone to register their interest with your business. A well-optimized page can result in 2.5 times more leads for every dollar you spend, something that's critical in tough times. Closely align your marketing team's efforts with sales. Ensure both teams understand and agree on the HOT Opportunity Profile, marketing plans and execution timing so leads generated meet the requirement and aren't discarded by your sales team. This upfront work saves time and most importantly costs. Map the right resources to each step of the sales pipeline. For example, we frequently find that someone who is more of a "farmer" is put into a "hunter" role and visa versa resulting in sub-optimal sales yield. Altus Alliance has defined roles for lead qualification reps, acquisition reps, development reps, retention reps and on-boarding personnel. Just like a great football team , your sales team should operate so that everyone knows their role and is in the best position according to their skill set and experience. Appeal to the nervous buyer. A recession can mean more risk-adverse buyers, which may lead to a tendency to go with "safe" solutions. Startup companies need to do more than ever to build trust. This means your customers should be integrated into your marketing mix through references, reviews, etc. In addition, 3rd party awards, and any other validation is critical. Recessions mean fewer risk takers and visionaries, so take a lesson from Geoffrey Moore's Crossing the Chasm and use methods that appeal to mainstream pragmatists: industry-specific marketing tactics and solutions; vertical customer references; relevant partnerships and alliances. Tightly defining each step of the sales process with corresponding likelihood of sales closure. The following is an example of the stages of the sales pipeline that each have a corresponding set of questions answered or work completed to promote them to the next stage of the pipeline:
Companies taking the seven steps outlined have consistently reduced their cost of customer acquisition by 50% or more. One of the great examples of how a company preemptively made themselves crash-proof was a Software as a Service (SaaS) company. Previously they had an expensive field-heavy sales model. Over the course of 6+ months, their sales process was overhauled resulting in a 16-fold increase in monthly sales while also lowering their costs and achieving their first profitability. History has shown that recessions are a great time to launch new companies. In fact, 16 of the 30 companies whose stocks make up the Dow started during recessions. Smart companies can thrive during even steep declines if they have the right strategy in place. Better yet, they slingshot out of the recession when it is over as they are well-positioned for long-term success. |
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