If you're the kind of person who is always looking for an edge or a different perspective, join my newsletter. This is not the same old tired stuff...guaranteed.
by Kelly Riggs
The most important asset any salesperson has is time.
Nothing else is close. You can take away a lot of things and still be in the game, but take away your time and you have nothing. Not convinced? Assume for a moment you are the very best salesperson in the world – or in your industry, or company, or whatever – but you are provided absolutely no time in the field or on the phone. How much will you sell?
That’s right. The old saying “time is money” is the real deal, and you have to manage your time effectively.
Yet, given how ridiculously easy it is to prove the value of time, salespeople are incredibly cavalier about giving it away. For instance, they typically have no definitive sales plan, a mandatory prerequisite to managing time effectively. And the ever-present To-Do list doesn’t count. A to-do list can be incredibly useful, especially as a reminder, but a list of things to be done does not necessarily mean you have an effective plan to reach your sales objectives.
The lack of a plan is just a start. Trust me when I tell you that the average salesperson easily gives away 3-5 hours per week. In many cases, the number is as high as 8 hours per week. Every week.
But what if you had that time back and you used it to do just one thing: develop new opportunities? Is there a possibility your results would change in the next three months?
OK, you’re convinced. You’ve decided to be far more diligent about your time, and you’re prepared to begin by making more specific plans to develop new opportunities. The question is where should you focus? On large opportunities or small ones? Or, should you simply pursue whatever opportunity happens to present itself?
If you’ve been conditioned to consider every lead as being equally important, you probably think this is a bizarre question. After all, a lead is a lead, right? And any opportunity represents the potential to add revenue, so you should chase it accordingly, correct?
Of course not. Since time is your most valuable resource and opportunity development is a function of time, it makes sense to use your time to pursue larger, more profitable opportunities. Unfortunately for most sales managers, that’s not how the average salesperson works. Instead, the average salesperson typically follows the path of least resistance, which includes smaller prospects (easier to convert), favorite customers (friendly faces with little or no resistance), and leads of any size (no prospecting required).
That is a major mistake.
“The average salesperson typically follows the path of least resistance – small prospects and favorite customers.” via @kellyriggs #salesClick to tweet
First, as I have detailed at great length, 80% of your revenue will typically come from only 20% of your customers (do you own a copy of Quit Whining and Start SELLING?). In fact, research indicates that the top 25% of your customers will consistently produce 89% of your revenue! The conclusion should be clear: smaller opportunities cannot accelerate your revenue growth at the level necessary to reach your sales objectives, despite the fact that smaller opportunities typically takes almost as much time to develop and convert as large ones.
Second, smaller opportunities don’t pay nearly as much in commissions! At some point, income has to have some bearing on your time decisions, so why would you consistently invest your time in opportunities that provide little in the way of return on that investment?
Finally, detailed financial analysis will show that the top 25% of your customers are producing over 100% of your company’s profit. Wait…what? Yes, you read that right – over 100% of your profit. That’s because the bottom 50% of your customers (as a group) are actually losing money! If, for example, your net profit is $1 million, the top 20% of your customers may actually produce $1.2 million in net profit, while your bottom 50% of customers are losing $200,000.
Congratulations, you have a big chunk of customers that you lose money to keep. #greatdecision
Clearly, salespeople should focus their pursuit of new customers on those opportunities that will add to the top quartile of business revenue. However, at the same time, large accounts present unique problems of their own, as detailed in a recent Gallup article, “Why B2B Leaders Should Rethink the True Cost of Large Accounts.”
The truth is you need to think very carefully about large customer management because there is a tendency to give away large chunks of profit to acquire and retain those customers. For example:
So, while larger customers are absolutely necessary to the health of your company (growth and profits), salespeople (and companies) often give back a lot of the profit to which they are entitled simply because they don’t specific plans in place to effectively manage those customers.
As a salesperson, managing your time has one simple objective: acquire more profitable revenue in the largest chunks possible (read: larger opportunities). At the same time, you MUST consider carefully how you acquire and retain those customers so you don’t squander large chunks of the profits you worked so hard to obtain!
Kelly Riggs is a business performance coach and founder of the Business LockerRoom. A former national Salesperson of the Year and serial entrepreneur, Kelly is a recognized thought leader in the areas of sales, management leadership, and strategic planning. He serves clients ranging from small, privately held companies to Fortune 500 firms.
Kelly has written two books: “1-on-1 Management™: What Every Great Manager Knows That You Don’t” and “Quit Whining and Start SELLING! A Step-by-Step Guide to a Hall of Fame Career in Sales.”