Let me start out by answering your first question: What does a CFO know about sales? In my role as Partner with B2B CFO® I work closely with a variety of business owners. Some are rock stars with their particular product or service, others are incredibly well connected within the industry, while still others are masters of sales and marketing. I’ve learned so much from all of them but I find the sales and marketing types particularly interesting. There is far more on this topic than I can cover in a single post but I’ll get started with this one and cover other sales items in subsequent articles.
One of the most important ideas for owners to understand is that sales is a process. Like any process, an effective sales process requires distinct stages and well defined workflows. Having implemented CRM (Customer Relationship Management) systems with clients, I’m well aware of common gaps in small business sales processes. First, a CRM is a necessary tool for effectively managing the process. While SalesForce is clearly the leader in this space, it is also relatively expensive and is often “over kill” for small businesses. There are many inexpensive, cloud-based tools on the market that will work just fine. If you don’t have one in place, do a quick search on the internet and see what comes up. Most CRMs will have a free version that you can test drive. Once you pick one, the next step is defining your stages. A stage is just another word for how you are classifying your potential customers.
Typical stages include the following:
- Contact – Names which may or may not be likely candidates. All the names you collect from your website or at trade shows go into this bucket.
- Lead – A Contact becomes a Lead if someone in your company has contacted or researched the Contact and determines that they are a likely candidate for your product or service.
- Needs Analysis – This is the first step in an interactive sales process. If potential clients are in this stage, one of your sales representatives has spent some time with the Lead. Your rep is beginning to develop an understanding of what is important and how your product or service can help. Another key takeaway from this stage is identifying everyone that will be a part of the final decision. Depending on your business, this may require a single meeting or multiple meetings over an extended period of time. It may also include meetings “up the line” with your contact’s boss to understand what he or she is looking for.
- Proposal – At this point both parties believe you have a solution that might work, now it’s time to specify the exact products or services, timetable, costs, etc.
- Negotiation – The negotiation phase starts as the proposal is presented. This is where you and the client reach agreement (hopefully) on items in the proposal. Expect some back and forth and try to continue to refine those wants and needs. Again this may be a single meeting or multiple meetings.
- Closed Won/Lost – Pretty obvious what this is but one important step is understanding and categorizing why you lost a deal. This will provide information on changes you may need to make in the process or service/product and allow you to increase your success rate.
Once these are defined, it is vital that your entire sales team understands these terms and builds the common vocabulary into your CRM.
As a Partner with B2B CFO®, I’ve guided businesses through the setup of a CRM as well as developed and documented processes, including sales processes, in a user friendly way. If you think you or one of your friends could use some help, give me a call or drop me a note.