Here are some sobering statistics for entrepreneurs. In 2011, more than 400,000 new business entities were launched in the United States, but 34% (that’s 136,000 businesses) of those companies are now out of business. Two years from now, less than half will still be around. By 2018 only 30% (120,000) will have survived.
What’s behind these failure rates? In many cases it’s a lack of salesmanship. These entrepreneurs all think they have something unique to offer the market, but they often fail to grasp that selling is the heart of any commercial enterprise. It’s simple: without sales, there is no income and no way to keep a company alive.
When entrepreneurs do tackle sales, they often do so indirectly, by investing time and money into activities they believe will be enough to bring in customers and profits. They create a trade show exhibit, for example, or put money into key-word advertising, or they might spend late nights perfecting a press release. Those activities may make potential customers aware of the product, but they do not constitute selling. There’s more to sales than pitching products or services.
Selling is the process of building a relationship with the customer. It’s the opportunity to understand the needs of the marketplace in order to improve merchandise, programs, and services to meet those needs. Selling establishes and extends an entrepreneur’s network of people and contacts, laying the groundwork for early orders and trial customers. Selling is different than marketing.
Marketing is what you do to get potential clients to notice you and your product. Selling, by contrast, is the one-to-one conversation a business has with a potential customer that determines whether the business has a product that solves a problem for the client. It’s also what a company does to move a prospective customer to make a purchase. You cross the line that separates marketing from sales the moment you engage with an individual potential customer.
How much time, budget, and energy to devote to selling depends on the way a business goes to market. There are five go-to-market models: relationship, retail, internet, channel, and embedded. Each requires a different sales-to-marketing investment ratio, defined as the amount of resources that should be devoted to each.
Here are simple steps to sell regardless of your specific go-to-market model:
First, select the right group of people to target. Most entrepreneurs believe that every person on the planet could benefit from his or her products or services, but this lack of focus can be fatal. So target the right people! The ideal customer!
Second, engage and qualify a prospective customer by talking directly with the potential buyer. Once engaged, potential clients need to be “qualified,” which is how an entrepreneur determines the seriousness of a prospective customer while politely holding his or her interest. A seller needs to find out who the decision-maker is, how long it can take for him or her to make that decision, and what kind of budget is available. Identify as quickly as possible if there is a potential fit.
Third, make a match between the seller’s value proposition and the needs of the client. Before having a conversation, research the prospective customer. Allow that potential client to articulate their needs, budget, timeframe, and goals. Then determine if the needs match up with what you, the seller, have to offer.
And finally, close the deal. It’s surprising how many new business-owners miss this critical step, assuming that a conversation that went well will automatically produce a sale. If a proposal has been well-researched and carefully constructed, politely ask whether the prospect is ready to move forward (even place an order or sign an agreement). If the answer is no, don’t get discouraged. Instead, ask more questions, and leave the door open for a later conversation.