Setting sale: is your business anchored down by a stale sales plan? Learn how to navigate the 5 biggest sales challenges facing entrepreneurs today, and get back on course

Entrepreneur,  August, 2004  by Chris Penttila

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A profitability breakdown of each customer--which includes an analysis of time spent per customer, system changes made to accommodate the client, and the salesperson's salary--can identify where margin growth is being lost. "You'll find your most difficult customers [that take] up the most resources are also the ones causing the most problems--and where you have the lowest margins," Reese says. "Those are the customers you want to fire." Or at least figure out how to allocate fewer resources in servicing them.

Hessan tells clients a price break might mean putting a lower-level person on the account or cutting the number of reports the client receives. "I'm up for getting very aggressive about how we can cut our costs to serve clients and come up with ways for them to pay less," Hessan says. "But usually, if I'm coming up with a way for them to pay less, it's because they're going to get less." Communispace is growing 83 percent annually, and sales should exceed $5 million in 2004.

SALES CHALLENGE NO. 5:

REDUCING THE SALES CYCLE

Pushing clients to closure is a real problem for sales teams. In fact, 90 percent of sales deals do not close as forecasted, according to the CSO Insights study. In the Miller Heiman study, meanwhile, 69 percent of sales leaders said prospects are regularly putting off final decisions. "If you have a six-month sales cycle, it typically takes nine calls to close the deal," says Trailer.

To reduce the sales cycle, Robson is working with his sales team to separate the real leads from ones that are a big waste of time. "We've had to determine who we can't sell to," Robson says. "I think it's one of the reasons we've survived." He's also revamped the company's sales reporting and compensation structures so sales-people work toward monthly and quarterly goals instead of an annual quota. These changes have cut the 12-to-18-month sales cycle down to three to six months.

Savvy sales managers are spending more time examining closing rates--how many sales aren't closing--and they're instituting "loss reviews," calling prospects who didn't buy to find out why. Nothing is sold during the interaction; it's an opportunity to find out why the deal fell through. "You may find you lost the deal for other reasons than you thought," Reese says. Managers use this information to alter sales tactics in ways that sell the next customer more effectively and quickly.

Trailer says companies need to pay greater attention to psychographics, not just demographics. Psychographic questions delve into a prospect's thought process, such as how much a prospect values premium services or seems risk-taking vs. being indecisive. By looking at common characteristics of their best customers, sales teams can better target messages and reduce the overall sales cycle. "Most [sales-people] aren't clear on their psychographics," Trailer says. "Look at the characteristics common among and unique to the best customers vs. the worst customers." With a few changes in strategy, sales teams may find their biggest challenge will be turning down business instead of creating it.