In your zeal to land new business, don’t overlook certain basic principles of sales management, or you may set yourself up for problems in the future.
Everyone makes mistakes, but missteps in the selling process can have especially serious consequences. Not only do they deprive your business of revenue, but they can erode confidence in your company among members of your staff as well as potential customers. The following mistakes are particularly common among start-ups, but even the most seasoned entrepreneurs can fall victim to them. Here’s how to identify them—and avoid them.
Neglecting to collect customer data. Every time you make a sale, it’s an opportunity to make another sale down the road. Remember that your existing customers are your best source of revenue. But you can only tap them if you have a method for keeping track of them. Sonny Ahuja, the CEO of Grandperfumes.com, learned that the hard way. “Five years ago I had seven stores selling designer perfumes and colognes in all major malls of Wisconsin,” he says. When he began losing customers to Amazon and eBay, Ahuja decided to close his stores and move his business online. But when he launched Grandperfumes.com, he had no money for online marketing. “That’s when I realized that if only all my sales people had collected all the names and addresses of customers that came to my stores for the past eight years — imagine the power of that database! I could have been back in business in no time.” Now, he’s diligent about collecting and segmenting customer data on Grandperfumes.com.
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Relying too heavily on the Internet. So you’ve been exceptionally clever with your web strategy and your organic vegan dog food is at the tippity-top of the relevant search engine rankings. The stuff is practically selling itself. Good for you! Until, that is, Google gives you a nasty smack down. That’s what happened to Christian Arno, founder Lingo24, an international translation company with offices in London; Aberdeen, Scotland; and New York City. “In 2006, our high Google rankings for key search terms suffered, probably because of Google changing its search algorithm,” says Arno. “We suddenly dropped on Google search results for terms we’d always ranked highly for such as translation services and translation agencies. We didn’t have any proactive sales strategy in place, so our revenue suffered.” Since then, he’s hired several outbound sales people who proactively identify potential clients. “And our Google rankings are back up too now, so we have two strong avenues for sales,” says Arno.
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Failing to qualify leads. “When I first started in sales, I was an eager beaver,” recalls Jon Biedermann, vice president of DonorPerfect, a CRM fundraising software company in Horsham, Pennsylvania. “No lead went untouched or uncalled — I treated every opportunity as the sure fire next sale.” Big mistake. Early in his career, Biedermann got a lead from a large university. He called to assess their needs, customized the software for them, and worked on personalizing the demonstration for days. “The day of the demo came, and I presented our software in front of 10 people from the university. We had everything they needed — it was perfect,” he says. But when he asked about the decision-making timeframe, he was crushed. “Oh, we aren’t going to switch software,” they told him. “We were thinking about using this for our smaller satellite campus and we were hoping you would donate it to us.” Biedermann realized his error instantly. “In my zeal to get the sale, I completely forgot to ask the one crucial question: Do you have the authority and money to make this decision?”
- Dig Deeper: How to Qualify Sales Leads
Delaying sales until your product or service is ready for primetime. There’s a lot to be said for doing market research for a new product or service by trying to sell it while it’s still in development. That way, you’ll find out exactly what customers want before you spend time perfecting your offering in a vacuum. “Entrepreneurs should hit the streets, and talk to ‘friendlies’ to sell your product or service even when its still just an idea, and ask people what they are willing to pay for it,” says Kyle Hawke, co-founder of Whinot, a Charlottesville, Virginia-based virtual firm of independent consultants who work on small business marketing projects. Hawke learned that lesson after spending $5,000 on web features that he says “no one cared about.” He now knows that he should have tested Whinot out on low-risk clients who were willing to sign on for a discounted price – or a free trial – while he and his partners worked out the kinks. “The best way to figure out how much something is worth is to get someone to pay for it,” he says.
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Accepting every sale. “No” is not a popular word among entrepreneurs, especially during the start-up phase, and most especially as it pertains to sales. But maybe it should be uttered more often, because the wrong kind of sale is ultimately worse than no sale at all. “It’s a big challenge as a small company to say ‘No, thanks, this isn’t a good fit for us, please give your money to someone else,'” says Michael Buckingham, founder of Holy Cow Creative, a Midland, Michigan, design and marketing company that works with churches and ministries. “In the beginning I said yes to everyone; financially, it felt like I had to,” he says. “Next thing I knew I was involved in a project that was not good for me or the client. We pushed through it, we met our objectives but our work is about more than projects and invoices. I learned that relationships are key to sales. It’s why I now turn down nearly every RFP; it’s void of relationship.”
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Offloading the sales function. When Tom Greenshaw first started Cashier Live in Chicago, he wanted to focus mainly on product development and support for the web-based point of sales software that he sells to independent retailers. So he built a sales channel with affiliates and partners, hoping to offload as much of the direct sales function as possible. “This seemed to be working well and we quickly signed up a number of partners that were interested in selling Cashier Live,” he says. “But those partners weren’t as well versed in the software as we were.” Many of them over-promised customers regarding the capabilities of the software, or dragged Greenshaw’s staff into the sales process, which confused customers and ate up company time and resources. “I learned a lot from this experience, and we’ve since been very successful with our own sales efforts,” he says today. When he tries selling through channel partners again, he’ll make sure to train them thoroughly on the company’s software.
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Fixating on big fish. When Scott Gerber first founded Sizzle It!, a New York City-based video production company, he admits that he “used to be obsessed with only going after home-run clients—those that had big names and huge wallets.” But selling to very large companies is time consuming and often frustrating since decision-making is slow and payments even slower. Sizzle It! ultimately landed big clients like Procter & Gamble, but closing sales would sometimes take six months or more. And frequently, Gerber’s staff would put months of effort into sales that never materialized. “The pursuit of these titans often put us in cash flow crunches,” says Gerber. “My biggest mistake in guiding Sizzle It!’s strategy in its earlier years was not going after more base-hit clients. Now, we have an even split of clients, which has not only helped us to spread the word about our company faster, but also helped us to maintain a healthy cash flow.”