4. Learn how to convert more deals into revenue

Improve the convertibility and predictability of your sales pipeline.

In this episode, we explore the 3rd stage of demand: Convert Demand.

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Transcript

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Alrighty. So thank you everyone for joining in today's fourth episode of Breaking Down Revenue Gen. I'm Grant Greeff and I'm the Chief Revenue Officer here at SearchKings Africa. And today what we're gonna focus on is the third stage of demand, and that stage is where we convert demand. And I think just to give you a recap in what we've discussed in the previous episodes. The first episode we went into the overview of the stages of demand and there are four stages of demand. The first stage being where we create and where we channel demand. Then the second stages where you capture the demand that has been channeled. And then now the third stage, which we're gonna be chatting about today, is where we convert that demand that you have captured. And then finally the fourth stage. And this is really where the ball falls in the businesses court, where you focus on fulfilling the actual demand that you've converted into actual revenue. So without further ado, let's go into the specifics of what we mean by converting demand that you've captured. And practically speaking, how do you capture demand? Like we chatted in the previous episode, you focus on making sure. That you extract personal information from someone at any point in time, whether, and it's mostly on their website. So on the website, you have a submit inquiry form. Uh, you have a call us now. And whenever someone takes action, a prospect or a lead takes action with that, then that means that you're able to capture the demand and then now begin the next stage where we wanna focus on converting the. So if we really focus then on the definition or the description when it comes to converting. What you'll see here is it basically shares that it's the stage at which an individual contractually commits to buying your, um, your offering in exchange for economic gain. And why this is super important is we need to make sure that we understand that there are human beings making buying decisions. And if there are human beings making buying decisions, it. It doesn't necessarily matter in terms of if it's an organization or if it's for themself. Um, because at the end of the day, if you're not, uh, setting up your sales environment in such a way to communicate with decision makers, influencers and gatekeepers within, say, an organization, if they're buying for, um, or in representation for that organization, then that sales environment will be inadequate in actually fulfilling that opportunity to convert the demand. Or in other words, to increase the probability of you converting the demand for any leads that you've captured into your sales pipeline. So the, just to rephrase here, so we basically got the stage at which an individual contractually commits to buying your offering in exchange for economic gain, right? So this is, uh, economic gain doesn't necessarily just needs to be for money per se. It can be for other economic means and. It's a nice, broad enough, uh, definition to make sure that we include as, as many, uh, cases around, um, this stage when it comes to growth and converting, um, that capture demand into revenue. Now, we've, there, there's a lot out there when it comes to the use of, say, a crm, a customer relationship management tool within a particular sales environment in a business, but ultimately, We look at the two types of scenarios of businesses in South Africa and abroad, you've, you've basically got one business where they've got marketing, right? They've got an entire marketing team and helping, making sure that they create and channel demand and then capture that demand and simultaneously that business because it's, um, purely an e-commerce business. Then the capturing and the conversion of that demand. Happens simultaneously when someone adds a product to their cart, checks out, pays, and then the transaction is completed in that space when it's, when it's b2c, where you're dealing with end users that are, in this case, buying products online through eCommerce. Then you've got the capture demand and the convert demand stage that is happening actually simultaneously, but. For other businesses, and they don't necessarily just need to be what we call B2B businesses, i e businesses that are, um, transacting with other businesses. It can also be businesses providing professional services. It can be businesses providing Any types of services such as plumbing, you know, any artisan or trade service, they actually do have some function of sales within their business. Whereas in an e-commerce business, there isn't a sales team. There's only marketing and then customer success with within. Where we wanna focus here today is it's gonna really be focused around businesses that have a sales team or at least a sales function. And it can literally, a four person team, if the CEO is also doing the sales with anyone that is inquiring, well, that still has a sales function. And this is really where today's focus is gonna be on businesses that have, um, a sales function. And it's not purely and solely reliant then on, on marketing because it's dealing with what we. A low touch environment where someone just adds a product to a cart and, and, and they, and, and they purchase a product through e-commerce beats. So I hope that makes sense. And then in terms of the discussion now around where we converting demand, it's the intersection between. Capturing and converting demand, that is the sales actual function. So in terms of sales, now we need to make sure that we achieve two particular outcomes when it comes to sales. So on the one outcome, we wanna focus on increasing the convertibility, of the leads, and then the prospects that come into our sales pipeline. So what I mean by that is that when we capture demand via someone submitting a website inquiry or they're popping you an email or giving you a call, that initially is a lead, which then moves into a prospect if they're showing active interest around purchasing your offering, that can be a service or it can be a product offering. The critical point here is we need to increase the probability of converting that captured demand into an actual revenue generating deal. And so that's the, if I were to say in terms of a phased approach, whenever we're trying to re-look at our, um, sales environments to, to improve it, to optimize it, we're first gonna focus. Convertibility, making sure that, are there any friction points within the sales process? For example, we had a meeting with one of our customers whereby all the incoming calls were going first to reception, and then the receptionist was forwarding all of those incoming calls for sales, um, to the sales team. What we did is we just set up specific call tracking and recording in such a way where any incoming calls that were in relation to sales, cuz we knew they were running, say through Google Ads campaigns. They then were skipping the reception so that they could go straight to the sales team. So reducing one friction point within that sales process. And that's just a simple example, but it's very, very practical in the way that we need to think about optimiz. Our sales environments so that we can increase the convertibility of any deal that has entered the pipeline, the sales pipeline. That's the first one we wanna tick off. And then the second one we wanna tick off, um, in terms of an objective here, is to improve the predictability of our sales pipeline. And so what I mean by this is that, um, if you've ever experienced a CRM before you've got the sales pipeline and you've got stages within the sales pipeline, and the problem arises when. You're using the stages in such a way where it doesn't allow you to predict what the potential revenue is based on the existing deals in your pipeline. And so that's why as a second objective, call it a phase two, once the team has got a lot of confidence in, say, adopting a CRM solution, I e. Really formalizing and using a tool to really optimize your sales process. When that happens, then you can move into the next stage where you really wanna focus on improving predictability of revenue and the likelihood of, of then achieving specific goals at, at, um, specific future months, whether there be quarters or years. So those are the two key object. And if you think about, if you have a crm, right, I'd highly recommend that you review what your current stages are and if your stages are set up in such a way where it helps improve, not only just the convertibility i e or sales teams, making sure that they go through a due process and, and a proven process that increases the likelihood of converting that into a deal. You wanna then go into the predictability side where you wanna make sure that there's accuracy in your future predictions, because as any business owner will tell you or any EXCO member will tell you that they want more predictability in the future because that allows for planning. And if you allow for planning, then that means that you can allocate capacity more correctly when it comes. People, products and or services that you need to actually offer at that particular, uh, sales level. So now that we've gone to the convertibility and predictability outcomes, let's go into what it means to truly be able to influence. The, the actual sales environment, and in this case, to influence how we can convert, um, demand more effectively and more efficiently. So if you haven't seen this before, this, this is basically a sales velocity formula and in every single sales. Environment. And more specifically now for everyone that has adopted a CRM solution, a customer relationship management solution, this is what we use to make sure that you start understanding how effective and efficient your sales pipeline is. Right? And so we're a channel partner for for Pipedrive. Here in South Africa, and this is one element that we use within the insights available in the CRM to make sure that the, the movement of what is considered to be important and a priority is, is considered. And so if I just quickly go through it in a very overview level, as you can see here, sales velocity is a function of the number of opportunities or the number of deals that you have in your pipeline. Multiplied by the average deal value. And this of course would be in rans in South African terms, multiplied by the average win rate. So of say, the 10 deals that have gone through, um, on average, how many have you won? So if you won, say four deals out of the 10, then that's a 40% win rate. And so you take those three elements, and you divide it then by the length of your sales cycle. And the key point share with the length of your sales cycle is understanding that the length of a sales cycle can be number of days or can be number of months. I would recommend doing number of days. And the key point here is it doesn't necessarily change anything so long as you then are using that specific denominator consistently throughout when you calculate the outcome to this formula. And so to give you an example then of, of what this looks like is if I have. Over a particular quarter, and I'd highly recommend that you focus on measuring your sales velocity every quarter, so don't fall into the mistake of just doing it at month, every month. If you're doing it every month, it doesn't allow you to, uh, take into account certain, uh, seasonal patterns or it doesn't allow you enough information to truly understand, um, in a very, um, uh, effective way, comparable quarters. Um, and so highly recommend that you start looking at your business, through the eyes of a quarter, every three months instead of just month on month. Um, when it comes now specifically to your, uh, your sales, sales, And so if using an example, if we had say 10. 10 opportunities, 10 deals, and the average deal rate was say, 50,000 round, then that would equate to then 500. Thousand ran for 10, uh, deals and say we averaged a, a closure rate, um, at one rate or 50%, then that's 250,000 rand. And say it takes you, um, a hundred days, uh, to, on average to close a particular sale. Then you take the, um, 250,000, divide by a hundred, and that equates then to your sales velocity number. Now, why that's important? Your sales velocity then becomes your benchmark, um, every quarter, right? And so if, for example, we land. Say R2,500 as the sales velocity number for this quarter and the next quarter equates then to a sales velocity of R2,900. That means that you're moving in the right direction. Assuming that you have set up the stages within your pipeline in such a way where it improves the integrity so that you don't have a situation where junk in is junk out, and therefore you can't even place any reliance, um, on the data that you're actually inputting within the formula. So that's a crucial element within your sales environment is making sure that you've got something and that is comparable in terms of understanding what growth looks like in your business. And if you understand what growth looks like in your business, and you can compare quarter on quarter and we'll move even to like year on year, then you can create more predictability in what you expect for the future. And so what I'd highly recommend that you do if you don't have a CRM. I'd recommend that you first document what the current processes and procedures are to actually take someone that first inquires with you a lead, right? And if they qualify as an actual potential customer, a prospect, then moving them through until they say yay or nay, or pay the deposit, or whatever you define as the pointed at which that exchange of economic gain is contractually, um, committed. And if you document those processes in such a way where you understand the sequence of events that can and do happen within that sales process, that then allows you to understand where possible opportunities are to reduce the friction points or add more clarity to speed up a sales cycle. Right? And what you're effectively then doing is you're looking. These specific, um, elements, the four elements that create, um, or equate to sales velocity, you're looking at what you can do out of those three right to influence improving your sales process. And that's even without a crm. So just with, even without a crm, you can at least just document the sequence of events within your sales process. Then you can look at, okay, how do I either increase the number of deals that we, that we're pulling through? And that's around of course, creating and channeling more demand. And then of course capturing more demand. So if you think about capturing more demand, like we discussed in the last episode, it would be improving the website side of things when it comes to optimizing the website to increase the probability of capturing more demand that is channeled there. That's how you are gonna influence how to increase the number of deals, number of opportunities. Then you wanna look at, well, are we, have we priced correctly? Right? What we're offering? Have we actually priced this correctly? And if there's opportunity to increase your pricing or add more what people normally call value ads, then you wanna do that. And that's ultimately gonna increase the average deal value. And then finally, okay, how do we increase the win? And a lot of the times, what you'll find with how you increase your one rate is understanding your ICP and your ICP isn't, um, is an acronym for your ideal customer profile. If you do not have, say, two to three, um, ICPs in your business, ideal customer profiles, then you're basically just moving blindly in a direction. And why this is important is because we want to make sure that our team understands who the ideal customer profile is. Because if they understand, especially at that sales, at that initial sales step, then they're gonna know whether this is either gonna be an effective use of time. It's gonna be a very ineffective use of time for taking someone through, say, a proposal offering whereby they're never actually either gonna be able to afford it. Their business, um, is in the wrong stage when it comes to the life cycle of the business. And so you really wanna make sure that any deals coming through actually have a, um, a chance of, of converting and not just an impossibility, because they're literally not your ideal customer profile. So that's how we would influence the numerator. So the number of opportunities, the, the average deal value as well as the win rate, and then of course the sales cycle. The denominator in the, um, formula. If we go straight back to maths, the key thing is we need to reduce the denominator. If we want to, um, increase then the neat outcome. And so in this case, how do you reduce the sales cycle? Are there unnecessary steps that you've introduced within the sales process that possibly could be removed or that could be merged together? And I'll give you a practical example, what we've done at SearchKings Africa. We've got a sales proposal tool that we use now where in the meeting, right? If there's opportunity to do so, we can prepare the proposal live in front of the customer and they will receive that proposal immediately while we're actually in the session. And where we've had examples, um, whereby customers or prospects have signed the proposal. While we are still in the actual proposal call, and that's an example then of, um, significantly reducing the number of, um, days within a sales cycle. On an average scale. And when we do that, we then increase the sales velocity overall, assuming everything stays cons constant from Enumerator point of view. So I hope this gave you some, at least an overview of the insights of how you can start, especially going into the new year, how you can start really looking at your current process in your business, even if you don't have a crm. And if you do wanna explore the option or the possibility of a CRM. I would say that the three key CRMs that, you know, you should be looking. Um, at a very, very, um, comprehensive and complex level would be Salesforce. Um, those are businesses that applicable businesses, and in my opinion, they would really focus on Salesforce. If they've got multiple different teams they're dealing with, most likely over a billion ran in revenue. That's possibly where, where Salesforce would be relevant, um, at a very, very high level point. Then you've got HubSpot. HubSpot is also comprehensive. And, um, again you're gonna need someone to really champion that and understand the capacity that, uh, HubSpot can provide you. It has got lots of balls and whistles as well. But if you are starting out and you're just starting from the beginning and you're moving from having no CRM to a crm, what I would highly recommend then is having, well, considering Pipedrive. In my mind it's the most intuitive and user-friendly. Hence, we, as SearchKings Africa, we became the channel partner here in South Africa because we know most of the businesses that we've helped implement with, with Pipedrive, they've come from no CRM to actually having a CRM now with Pipedrive. So they want something that is to the point. Very intuitive, not gonna require years and years of implementation and, and people to get an MBA degree, um, to just literally operate the actual platform. Uh, and it should not add to the administration, it should actually take away and then improve the decision making. And that's really why we chose to then use Pipedrive as our dedicated CRM platform to implement for customers. Does anyone have any questions around what we've discussed today? Grant, I have one question for you. Yeah. Um, with regard to some of the clients at Search Kings that have adopted Pipedrive as a CRM who have never had it before, do you have any like insights with regards to what has that done for their. Yeah, absolutely. So the first part is, well, going back to the crux of, what is a CRM in terms of the real outcome of why are we implementing it in the first place? Right? Is this just another gadget, another shiny object? If done properly, When you implement CRM in your business like Pipedrive, it's a tool that's gonna ultimately allow you to either achieve more output with the same amount of effort, or it's gonna allow you to achieve the same amount of output, for for less effort. And so what we find within implementing a CRM like Pipedrive is that the first, um, outcome that you see is that now there's a centralized. View of what is happening across the sales environment in the business. And when there's a centralized dashboard that everyone can actually have a look at, then what that allows for is alignment of the team to what they should be focusing on. You know? So there's that phrase, phrase or saying that goes, make sure the main thing is always the main thing. And so within then a crm we've done effectively. Everyone then is focusing on what they need to do, what is controllable for them, what the activities and future that they need to do when it, whether it be following up, sending a quote, um, reminding another colleague to do X. Making sure that you understand exactly what the process flow is for this type of client, or this type of prospect from this industry. So for us, what we've seen then, The moment that there's more a centralized view of what is happening, then decision making improves in terms of what to really focus on. So instead of chasing now every single inquiry that comes through, they're developing the actual empirical data. To inform what is likely to actually go across to a successful deal versus what type of lead or inquiry is not. And even just to share search keys, Africa example. What we've done in, when, when we implemented, um, the CRM into our business, we were able then to discern what types of characteristics influence the probability of us actually converting a deal into a win. So to give a transparent, um, view here, and it, it may seem obvious, but again, this is not an opinion. This is then empirically backed data. Is we were able then to ascertain that the win rates, right, for any prospect coming through any deal, um, and a prospect related to that deal coming through would like substantially reduce, if we weren't chatting or talking with the decision maker, if we were talking to an influencer, if we were talking to a gatekeeper within a business, within an organization. That would substantially reduce the probability of us winning because they would always then have to pitch our pitch to the actual decision maker. And the moment that you leave the actual pitch to the decision maker and you lose control or controllability of that, then they're never gonna pitch it in the way that you can respond to instantaneous questions that the decision maker may have. And so it's as a consequence of that, we, in the sales process, what we've included then is that during the sales call, we will ascertain whether the person actually is the decision maker or an influencer or gatekeeper. The moment that we identify that it is either an influencer or a gatekeeper, then in that sales score, we will then say, great. Um, before I send a proposal, can we get a call with person X. And how we found, first of all, the person X, we asked the question, is there anyone else that you're gonna need to take this over the line? And then normally they say, oh yeah, yeah, I need to chat with this person. And you say, oh, what, what's that person's role? And then they tell you there's this user example, it's the ceo. Is there a possibility now we can, before we send the proposal, we can get a call with the CEO and yourself to make sure that any questions are answered and the moment that happens and if they get the decision maker into the room, very, very high, um, success rate. If they don't, if they like kind of stored or they, um, avoid or they, um, provide excuses, it literally goes down to. 1% of the time, we'll actually then convert that deal because there's no decision maker that we have direct contact with. Thank you so much for joining I hope you found this our value. If you did, um, please, you know, include it in the comments, um, that would be great. And then please, if you haven't done so already, check out the, the first, second, and third episode around. Explaining the overview and then the first and second stages of of demand. If there's anything that you know, you ever have any questions on in future, reach out to us, either via our website or directly even on LinkedIn. Um, you more than welcome to contact us and DM us there. Thanks so much and chat soon.