IF PROSPECTING IS DEAD, THEN SO ARE YOUR PLANS FOR LONG-TERM GROWTH

By Michael Karlsrud
There is a disturbing trend in the sales world. No one is prospecting anymore. Companies are asking…demanding that sales organizations find double- digit growth year after year. Where is all this growth going to come from?

Your long-term growth plans may be in jeopardy if you’re not constantly building a broad customer base. Sounds foundational, right? Then why aren’t companies requiring sales representatives to deliver 10 or 15 percent of growth from new business? There are many reasons, and frankly they wouldn’t fly in many industries today. Some common reasons have to do with “organic growth,” “the market is saturated,” “the market is dominated by just three or four players and we can’t compete.” Rubbish. The reality is, it’s just hard work.
 
Growth in sales has always been attributed to prospecting for new opportunities while maintaining the current customer base. The sales funnel simplified: the more you put in the top, the more comes out the bottom. Prospecting is dead because of two reasons: management and the sales people they manage. The sales game being played today is a dangerous and a short-term game. A company wants 10 percent growth in sales in the coming year, however they won’t distinguish between current or new customer growth. All the company wants is to show growth. They might define a market segment to grow at the same time announcing an arsenal of new products to be launched in the coming year.
 
As any “good” sales representative knows, you just set him up for a really good year! And, you set the company up for becoming more vulnerable in a volatile market.
Management plays a significant role in the death of prospecting and future growth. First, it quit asking and tracking sales numbers based on new customers versus current customers. The optical industry is no different than a dozen others that have gone before it in consolidation and vertical integration. Before the optical industry there was the agricultural industry, information technology, and pharmaceuticals to name a few, and now optical. The lessons learned for sales and management are the same; broaden your customer base and play offense, not defense. Currently, the trend is to go deeper into a few customers—driving new technologies, products and services to those who already buy your “company.” This is a good strategy when the market isn’t heavily engaged in buying and consolidating your customer base. In every segment of the optical industry, this is exactly what is happening. Whether your customers are part of an exclusive buying group, association or a network—accessibility to a “free market” is becoming much more difficult to find. As a result we tend to “hunker down” and support and cater to the loyal band of customers we already have in our database. And herein lies the danger.

Years ago we’d say, “You can have quality, service or price…pick two.” Today, it is expected to have all three to be in the market and considered a viable competitor. Everyone can lose a customer at any time, for almost any reason. And today, it’s not only to the competitor down the street, but to one on the other side of the globe. So what are we doing as managers to ensure that our base is always expanding? What does the top of your sales funnel look like? What processes do you have in place to keep adding new “suspects” into the funnel? How are you constantly attracting new customers, not just focusing on the existing ones? How—in a time where sales territories are expanding and the numbers of representatives shrinking—are you maintaining a four-week call cycle? How many hours a week do you require cold calling by your reps? How often do you measure or inspect their call records? Do you have an active sales funnel? How are you keeping your “sales organization” from becoming a “service organization?” What are you measuring and why?

There is a natural law in sales and sales management that says simply: “It takes six calls to make a sale.” Today, it might even take longer. Prospecting is the life-blood of your sales organization. It keeps us talking to new customers, in new markets, with new approaches and opportunities to prove ourselves. If you lose a current customer, large or small, what is your recovery plan to replace that revenue? If it is a large player, do you have several prospects in the funnel to replace them? The death of prospecting means the organization is flat-footed. Flat-footed organizations get beat because they are not ready to respond to market conditions.

Over the last several years it has been interesting to observe the behavior of many sales organizations—large and small. Sales representatives have become dependent on new product introductions and promotions. Almost like adults addicted to coffee, you have to have your fix or know where it is coming from and when. As a result, prospecting, which is very hard work, falls to the wayside in hopes of catching the next wave of marketing solutions. With new marketing comes another round of calling on the same customers, telling a similar story, trying to deepen sales into a customer that you might have already reached market saturation. In the meantime, the representative drove past a dozen prospects that they have never called on before.

Driving by prospects happens for a couple of key reasons. First, no one gets paid to prospect. Second, cold calling takes time and investment. A representative has limited amount of time, and their return on investment is based on defending sales already secured, and selling into secure environments. Third, statistically it takes six calls before they’ll buy. Most quit at four calls. A sales cycle of four weeks means if you started working today on a prospect, you won’t have a return on time or investment for another six months. And yet, it’s the new life-blood of your business.

And then there is time to “run” the territory. Representatives find themselves with too much geography, too many clients, and no time to get to all of them. They establish “trap-runs.” They see a given number of clients in a given city on a given day. The following day, the same regime until the cycle runs its course. At no time in that cycle is there time to explore for new customers. Where does your growth come from? What is your plan if you lose a customer? How do you plan to recover? What have you been investing in for six months so that it can hatch when you need it to? From a sales representative’s point of view, these are personal as well as professional questions. Lost customers means lost income.
 
One explanation of how most sales reps manage their time is the 80-20 rule. Eighty percent of your sales are coming from 20 percent of your customers but chances are, these customers are only getting 20 percent of your time. The other 80 percent of your time is maintaining customers that give you only 20 percent of your business.
Another approach is to spend time calling on the phone and qualifying prospects ahead of time. This takes time, tenacity and a whole lot of dedication to growing your business. Typically, for 100 “suspects” you call, 50 will become a “prospect” and 10 will become a viable customer.

Success in sales will always be a numbers game. The more numbers you put in the top of the funnel, the more comes out the bottom. Prospecting puts numbers in your sales funnel. Don’t kill your growth and long-term stability in the marketplace. Prospect and go tell your story. Your new customers are out there and they want to hear what you have to say.

Michael Karlsrud is the owner and CEO of 6 Calls, a tele-services company that serves the optical industry with its two divisions; Telecare and Business-to-Business. In addition, he is the principle of The Karlsrud Company, a leading sales, marketing and training company serving the optical industry. Michael is a regularly requested speaker/trainer and specifically presented to the Opticians Association of America, Optical Laboratory Association, the Optical Women’s Association and many other regional and local venues. In addition, Michael serves as a “Resident Coach” for the Vision Councils popular program “On the Road Sales Coach.” He is published in 20/20 magazine (October 2008) and in LabTalk (May/June 2009) and again in December 2010 for 20/20 discussing selling techniques and creating an outstanding customer experience. Currently he is published through the Review of Optometric Business on various topics focusing on patient retention, patient relationship building and sales techniques for the optician. www.karlsrudcompany.com or www.6Calls.biz

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November/December 2014