Some people liken sales to being ‘a funnel’, while others prefer to call it a ‘pipeline’. Whichever metaphor you use to describe the sales process, it is basically the mechanism that businesses use to attract potential clients, get them interested in what they do and ultimately convert them into paying customers. It’s also possibly the hardest thing for a new business to get right.
Why is that? Well, not all potential customers or prospects are created equal. The ideal 82 customer is someone who you talk to about your product or service, they love it and want to implement it straight away. In reality, you’re more likely to find that even if a prospect is really interested they may not be able to do anything about it for weeks, months or, in some cases, even years. There are an infinite number of reasons for this; maybe it’s not on their immediate roadmap or priority list, or maybe they have no technical resource for integration work until six months’ time. Whatever those reasons are, it’s your job as an entrepreneur to make sure that you have a supply of customers ready to convert now, while lining up others who will sign on the dotted line in three months, six months and so on.
Keeping that sales pipeline stocked takes dedication and organisation – and there’s always something else that can be done. The way to keep it manageable is to set clear targets up front. Look at the pricing structure for your product or service, then sit down and work out exactly how many customers you need to bring in to hit your minimum financial targets. Then you have to make a best guess at how many leads you need to bring in to land those customers. It’s also worth keeping an eye on your competitors’ pricing to ensure your own continues to make the most sense for you, as well as for your future clients and partners.
There’s no scientific way of calculating this but it’ll become clear as you go along. To use Dressipi as an example, we have a pretty good lead to conversion rate, but even here we know that we need to talk to four companies for every new retailer we bring in. Some of this is because we sell an enterprise product, so we’re selling to groups of people rather than individuals.
Moreover, implementing our fashion fingerprint technology on an ecommerce site involves integrating that into a retailer’s back-end system, which takes time and often requires them to commit time from their own developers.
The next lesson to learn when building that pipeline is that it’s not enough to bring in leads. A sales lead is just an expression of interest, it’s not a commitment. This is an easy mistake to make and it’s tempting to go in too fast and do the equivalent of proposing marriage on the first date. The key to making this work is learning to listen and empathise with your client. How interested are they – really? Do they have a problem that you can solve for them? Do they have enough money, time or resources to buy what you’re offering and make use of it? This will enable you to categorise whether they’re somebody you should leave for six months or try to meet straight away.
Another lesson we have learnt is that it is really important to make sure you have a real champion within that client business and that this person has committed real time and resource to working with you and promoting your service to ensure its best chance of success. There are often hiccups or teething problems and so it is important to have people who are as invested as you in making the project work.
To use us as an example again, we work with fashion retailers by licensing components of our technology to help them offer a more personalised service. Retailers can be notoriously slow-moving partners. They tend to have very full pipelines, many stakeholders to convince and an overly stretched technical resource. As a start-up, where every penny counts, this can be tough to manage alongside your own cash requirements. We’ve learned to counter this by creating a sense of urgency with our prospects. This is partly driven by the fact that we have a small team so we like to schedule our technical builds in a way that manages their time effectively. This also helps to motivate the potential client into committing to a certain timeframe. It certainly isn’t easy but once you start, you will begin to see regular results.