How To Increase Sales

“Nothing happens in business until somebody sells something.” How many times have you heard that? It makes no difference whether that something is a product, a service, a commodity, a tangible, or an intangible. Nor does it matter how good is your manufacturing operation, how cutting-edge your technology, how tight your financial goals, or how progressive and forward-thinking your management techniques. You must still have a sales mechanism, in place, or everything else is useless.

Sales is the one department in which a business organization generates revenues. Sales supply that vital elixir that all businesses need—the steady flow of cash.

Small businesses, therefore, must develop a sales strategy and a comprehensive sales plan to maximize this essential function.

Understanding Profitable Customers

There is a long standing rule of thumb known as the ‘Pareto Principle,’ which states that 80% of outcomes can be attributed to 20% of the causes, for a given event. In business, the 80-20 rule is used to help managers identify problems and determine which operating factors are most important and should receive the most attention, based upon an efficient use of resources.

For example, 80% of your revenue is generated by 20% of your customers. Also, 80% of your profit is generated by 20% of your customers. What we often overlook, is that these are not always the same customers. Since this may be the case, it is imperative that customers and product lines should be analyzed to determine how they contribute to company profits. It is important for your small business to identify the most profitable customers and understand what perils these customers face. As a customer’s fortune rises, your product or service may be in more demand. Conversely, with a decline in their profits, they may fall out of your most profitable customer category.

Your best customers are also your best salespeople. They will be willing to recommend your products and services to others as well as buy any relevant products that you sell. The best time to obtain a referral is at the point of sale. That’s when the customer is happiest with you. He has just agreed to your terms.

It is also important that you identify who are your least profitable customers and try not to add customers which match those parameters. By tracking the cost of servicing each client, you’ll be able to see where your profits are being optimized, or where they are being decimated. The affects of discount pricing, high or low returns, cost of re-do’s, the cost of slow pays—all impinge on the profitability of a customer.

Tracking systems must be put in place to make certain that these customer attributes are measured correctly. The systems must be based upon accounting systems with a solid chart of accounts. Accurate daily, weekly, and monthly reporting will reflect the critical functions needed to guide decisions regarding profit.

First, identify which products are most profitable, most valuable in driving the company to its ultimate goal, and can help facilitate a balanced revenue stream to maximize the company’s cash flow. Next, resources should be allocated to addressing the input factors that have the most effect on your company’s bottom line.

Utilizing Your Sales Team

Use your salespeople as efficiently as possible. It costs five times as much to acquire a new customer as it does to resell an existing customer, however, you need a constant stream of new customers. Adding new customers to your business is vital to your growth and well being as a company. How you manage the sales efforts and how well you manage the cost of these sales will determine how fast and how much your business can grow.

The 80 – 20 rule applies to salespeople just as it does to any other population. The challenge that sales managers have is encouraging the second 20% of the sales people to generate as much in profitable sales as the first 20%.

There are three behavioral traits that most successful salespeople share:

• One would be knowledge—through training, research, and other available resources, which is conveyed in a format that has value to customers;
• The second common dominator is they are solution-based. They listen to the customer, identify their issues and problems, and offer products and services that might help resolve those specific concerns;
• The third is an intrinsic belief in what their company offers customers.

Salespeople are the personal link between you and your customer. Their actions, statements, and presence represent everything about your company and establish the company’s persona, integrity, and over-all character. They not only represent your products and services, they reflect you. Whatever a business wants to be, it must be faithfully presented by salespeople who will never waiver from the company’s standards.

The Care & Nurture of Salespeople

Your salespeople must be trained in product knowledge and the full scope of what your company offers. This is true, whether the salesperson is face-to-face with the customer, or on a phone, hundreds of miles away. They must also have full trust that you will deliver to the customer what they have been asked to sell. The more that salespeople know about your products or services, the more that they will be able to apply towards customers’ needs. The products and services that you provide may, or may not, be unique, but good salesmanship will find the best solution for the customer.

Managing salespeople to keep focused on pursuing profitable, meaningful sales, rather than spending time grabbing easy, but not profitable sales just for the sake of making sales numbers, is always difficult. Nurturing an aggressive sale team requires constant reminders of what market segment should be targeted and why it is important to the company. Updating product knowledge, gaining a better understanding of customer and industry needs, should be constantly reinforced with sales meetings. Sale techniques and time management training should also be an ongoing practice.

Managing sales goals must also take into account the other functions within a company. Can sales agreements be met in a timely manner by production? Are there products or services, in surplus, which necessitate immediate sales?

It all begins once somebody sells something!