As your company grows in Stage 2, you should use your sales process to drive more value – yes, for your company…but also for your customers. The only sustainable growth comes from win-win sales, so your sales process will benefit you and your customers.
One of the most important ways that your sales process can increase the value you bring to and get from your customers is by uncovering what the real need is. Oftentimes, customers don’t know what they don’t know, and by managing the sales process well, you can help them realize what they really need. In doing that, you also make sure that you’re paid for any premium value that you give them.
Price is a function of value, and the surprising fact that you need to know is that value is established when the need is defined, not when the solution is defined. If a customer comes to you and tells you what they need, then they have already set the price in their mind. On the other hand, if a customer comes to you and asks you to help define what they need, then you create the value together.
If you’re like most Second Stage companies, it’s hit or miss whether you’re talking to customers about the answer or the problem. It takes a clearly-defined market strategy, and a disciplined sales process, to ensure your conversations consistently focus on the need. That takes some work, but it’s also the best way to grow your small business in Stage 2.
As a small business emerges from the start-up phase, and becomes a Second Stage company, the sales process can and should be formalized.
It can be formalized because you now have enough experience with sales to know some standard steps that you usually follow.
It should be formalized because you need to start building consistent expectations with your customers, you need more consistent information for your team, and you need to start to build up systems around your sales that will need some standardization.
I’m not suggesting you go overboard on this – just some general guidelines or steps that you’ve learned help you.
How do you create a (somewhat) standard sales process?
As a first step, think about the customers or orders that your team handles smoothly. What usually happens when those orders come in?
Then, think about the customers or orders that are a hassle. What usually happens with those orders – and what do you notice doesn’t happen with those.
When I asked these questions of a 20-person manufacturer last year, they realized that most of their sales followed 4 basic steps – but also that complex, unclear orders (which happened to be their highest-value work) needed a different process. They outlined the two different processes, and when I met with them 3 months later, they said, “We’re handling all of our orders much, much better. And the customers are a lot happier.”
If your small business has grown into a Second Stage company, your team and your customers will appreciate you starting to understand and standardize your sales process.
One of the pleasures of working with Second Stage small businesses – the largest part of the economy – is that I can mostly ignore Wall Street. It’s not the people – I’m sure there are good people and bad people working there. It’s just that for the small business economy, money is the benefit of good work, not the reason for it.
But today is different.
Greg Smith, a leader at Goldman Sachs, has pulled back the curtain on Goldman Sachs culture in an Op-Ed article in the New York Times. Not surprisingly, he portrays a culture focused on making money, sometimes to an extreme.
Although small businesses mostly ignore Wall Street, there’s actually some value for us in what Mr. Smith has to say – because he highlights 2 key ideas about culture.
First, company culture comes from leadership. For a small business, this means that leaders have to be aware that their little behaviors get magnified and projected in the organization. There are many benefits of being a small business leader, but one of the burdens is that you may need to crimp your style for the good of the company.
Second, culture must be evaluated in the context of strategy. Strategy provides the direction, but culture provides the energy. So, before you work on “solving” culture problems, you first have to make sure your strategy is right. It sounds like Goldman Sachs has done a good job of aligning its culture with its strategy – with enough clarity that talented and motivated people who aren’t a fit are self-selecting out. Although there may be long-term problems with the strategy, you have to give the Goldman Sachs leadership credit for being focused.
You’ve probably made a difference in 5 or 10 small business’ cultures by your article today, so thank you Mr. Smith and Goldman Sachs for the lesson.
Once you have segmented your customer base, the question is, “What can I do for my best customers that will drive value for them and us?”
The answer to that question should be captured in an Account Plan, which outlines the relationship and opportunities you have with a key customer.
Here’s what I recommend you include in the Account Plans you write for your Second Stage company:
– History and highlights of the relationship
– Background on relevant people you know at the company
– Description of why they work with your company and why they think you’re valuable
– Immediate and next-year opportunities that you’ve identified, as well as the 3-5 year potential for the relationship
– Likely relationship and engagement for the coming year
– Plan for additional activities to expand or enhance the relationship and engagement in the coming year
You’ll be surprised at how much you learn about your customer and yourself when you write an account plan.
Like many other areas of the business, sales change significantly in Second Stage companies. Because there are so many customers that you’re dealing with, you can’t manage them the way you did when you were a start-up – responding to whoever had the hot need at the moment, or treating everyone the same.
No, in Stage 2, you have to start to differentiate your customers. To start to do that, ask these questions:
Who are your best 5 customers?
What are the characteristics of the Top 20% of your customers?
What are the characteristics of the Bottom 20% of your customers?
When I asked these questions at a recent seminar, one executive said that she realized that they were spending most of their effort on their worst customers, instead of on their best. That’s the kind of thing that happens if you manage your sales with a start-up mindset when you’re a Second Stage company.
But once she realized her mistake, she was able to refocus her team and her energy to her best customers – something that her best customers, and her own team, appreciated.