What have the following got in common?
- Bradley Wiggins (Tour de France 2012)
- Chris Froome (Tour de France 2013, Tour de France 2015)
- England Rugby Union team (Rugby World Cup 2003)
All attribute their success, in some part, to the aggregation of marginal gains. That might sound a bit high falutin’ so we’ll let Sir Clive Woodward explain it
Winning the Rugby World Cup was not about doing one thing 100% better, but about doing 100 things 1% better.
What does this have to do with sales?
If you have spent any time at all on this website or on our Twitter feed, you’ll know the strength of our feeling about having a formal sales process.
In simple terms, a sales process is a systematic approach involving a series of steps that enables a sales force to close more deals, increase margins and make more sales through referrals. Doug Dvorak (our emphasis).
At every single step of the way, you have the opportunity to do something better. It’s important to note that a 1% improvement in any single action may not be notable or even noticeable. However, it’s the accumulation of these improvements that make a real difference in the long term.
It’s very easy to fall into the trap of believing that change comes from one or two large ‘defining moments’. The reality is that habits, both good and bad, are the result of numerous small decisions made over time.
Consider the following example:
|Pipeline Stage||Leads / Prospects||% Conversion|
If we increase initial leads by 1%, we have 1010 leads but if the % conversion stage to stage doesn’t change, we still end up with 24 orders.
However, if we improve our conversion rate by 1% at each stage, we end up with 27 orders from 1000 leads – an improvement of 12.5% in orders without changing the number of leads.
Continuing with the same example, let’s look at the money side of the equation:
|No. of Orders||Average Value||Margin / %||% of Orders Discounted||Discount Applied / %||Total Profit|
That’s an increase of £89,020 (over 23%!) in total profit just by making small 1% changes in conversion rates, order value, margins and discounting.
It’s a commonly held belief that ‘sales is a numbers game’. Yes, it is but it depends which numbers you are talking about.
To go back to our original example, if nothing else changes you would need 30 orders to give you £204,020 profit but this would have to start with 1,238 leads.
Is it easier for you to make the single change of increasing your leads by nearly 24% or to make a number of 1% changes at a number of different points?
Don’t make the mistake of assuming that the most important number in sales is the number of leads you pour into the top of your sales funnel (or into the bottom of your sales process, if you want to think about it in a more relevant way.)
Lead generation is a key part of your sales efforts but it’s not the only thing that matters.
Contact us if you would like to know more about making your sales processes more efficient.
(If you would like to play around with your own figures, you can download this handy Excel spreadsheet calculator. You’re welcome.)
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