Sales are the lifeblood of any business and without a steady flow of sales a business will struggle. Our tips and advice will guide you through the process step by step.
Step 1 is that you need to know where you stand and what your audience wants so that you can then define an effective business strategy and sales forecast. After that, you can then consider how to increase or improve sales…
There are 10 things you need to know about your customers:
- Why they are
- What they do
- What they buy
- How they buy
- What they earn
- What makes them feel good about buying
- What they expect of you
- What they think about you
- What they think of your competitors
Step 2 is about predicting the future – your sales forecast. The sales forecast is an essential tool for managing the business. It’s a month by month forecast of the level of sales you would expect to achieve, based on what you know about your marketplace – usually over a 12 month period. It’s useful to forecast in this way so that you can identify problems quickly – spot opportunities and importantly, do something about them.
To create a forecast for a new business a combination of market research, competitor analysis and a bit of sound judgement will enable you to predict expected level of sales. For an existing business, the most effective method to use is to set targets based on what’s been achieved so far. Once a forecast has been created, you will need to calculate the likely conversion rates – the percentage chance of each sale happening – e.g. how many customers will you need to contact in order to make each sale?
Step 3 is target setting – what you want v’s what you can achieve:
- Sell more of your existing products
- Sell improved, higher value products to your customers
- Sell a whole new product range to these customers.
- Sell existing products to entirely new markets
- Sell an entirely new set of products for a new market
As you go down the list, each sales decision represents an increase in the risk.
Having set targets, you then need to think about how you are going to achieve them.
That’s Step 4 – retaining your existing customers. Think about those customers you already sell to – identify your key customers and those who bring you the highest profits. If your customer base is largely made up of individuals- it may be useful to know their age, gender and income status. If you sell to businesses, you may want to know their size, industry sector and suppliers.
Do a quick analysis – look at your customer base and break it down into segments i.e. individual customer groups that may have very distinct and different needs. Calculate the financial benefits to your business serving each segment. With a bit of research, your most important customers will become clear so that you can decide what strategies to use to retain their business.
Your most valuable customers are generally people who:
• Buy high margin products
• Pay full price without negotiating discounts
• Place a small number of large orders rather than large numbers of small orders
• Do not cancel or amend orders
• Pay on time without being chased
• Do not require extensive after sales service
Step 5 Finding New Customers – If you have now identified your profile of best customers, then you should be concentrating your efforts on finding more people or businesses with similar profiles. Sell the features and benefits of your products. Find a niche area that larger companies cannot or don’t want to fill and repeat this if you can for different niches. Reliance on any one niche can be risky if the market changes.
Develop your sales channels and communicate regularly with new and existing customers. Try to get in front of the right people – in general there are three key people you will need to deal with when selling to a business:
The Influencer – a key user of the product, perhaps a manager of a department;
The Specifier – draws up the requirement, often led by the influencer;
The Final Decision Maker – has the authority to agree or veto a deal and to sign the cheque
Your aim should always be to go the final decision maker, but offending those lower down the chain, by not consulting with them, might lose you the sale.
Step 6 – Budgeting
Increasing sales is likely to require investment and you will need to work out what you can afford. Getting the right balance will be key. For instance, you may set yourself a target to increase sales by £50,000, but how much will it cost you to achieve this? You will need to identify how much time and money you will need to commit and the percentage of successful sales this commitment will bring. When it comes to forecasting cost and turnover, every detail is important and prepare pessimistic as well as realistic budgets to allow for different outcomes.
Break down every projected sale month by month or week, if possible, by product type and whether the customer is current or potential. Also work out when the money will arrive to accurately forecast cashflow. Consider market trends and price fluctuations.
Consider what sales channels are going to work best for you and what costs are involved.
Step 7 – the Sales Plan – this will provide you with a long term vision for your company and a yardstick for your business performance. You will need a strategic objective – so consider:
• What are your sales objectives by month, territory and sales person? A non specific aim of getting more customers is not sufficient. Set measurable objectives such as ‘an increase in sales of £50,000 at the end of quarter one’
• What are you going to focus on?
• What are you going to change?
• What practical steps can you take to achieve your intentions?
• What territories and targets are you going to give each salesperson or team?
Consider what resources are available to you.
Step 8 – the sales reporting structure – set up a system that enables you to monitor and track sales – month by month (individuals will also benefit from something on a daily and week basis too), with response rates and costs in comparison to the return on investment. A useful acronym to remember is AIDA:
A Get the customer’s attention
I Stimulate the customer’s interest
D Create a desire to buy
A Confirm the action to be taken
Written by Lou Cessford, Nwes Business Advisor based at the Enterprise Centre Bury St Edmunds