B2B sales. The right way.
One of the readers asked me about a frequent inside sales problem – clients wanting to meet before they close the deal. Inside sales teams work using phone, e-mail and social media first and do very little of anything else. So what should they do? Meet their clients? Hide from them?
80% of our clients never met anyone from our team in person. Around 80% of remaining fifth saw our team members less than 3 times. We’ve worked with 100+ clients in 14 countries so it would be logistically challenging if we would win them over using travelling.
“I work in inside sales. Why the hell would I travel?”
Michael Ovitz answers this question in Ben Horowitz’s “Hard Thing About Hard Things”:
“Gentlemen, I’ve done many deals [..] and through that process, I’ve developed a [..] philosophy if you will. Within that philosophy, I have certain beliefs. I believe in artificial deadlines. [..] I believe in doing everything and anything short of illegal or immoral to get the damned deal done.”
Inside or outside, phone or eye-to-eye – these are just tools to achieve your ultimate goal: SELL. Still don’t want to travel?
After this bit of sales motivation, let’s get real. You obviously can’t (and shouldn’t!) meet all your clients.
The way I dealt with it, is I’ve developed a framework for deciding whether to meet a client. Now there’s almost no decision making involved and I handle the issue quickly.
It’s going to be small if you just started your company. Your opportunity cost is close to zero, no-one knows about you yet, so you grab every opportunity possible to connect with a client.
Customer acquisition costs aren’t important early on – creating personal relationships with your first clients will let you benefit from network effects. (Learn more about mastering network sales from a post by our CEO, on SalesHacker courtesy of Max)
Once your hustle starts paying off you need to start managing your opportunities. So if the impact of a meeting is below X$ value – you’re simply not going.
Don’t forget to consider profit margins – a freelance consultant’s margin is close to 100% of revenue, so the number would be lower than a software development specialist, who’s margin is about 15%.
Kate Moss famously said that she refuses to get out of bed for less than 10.000 dollars. Do the same – pick your amount. Try to increase it over time.
If you travel to close a deal, the Customer Acquisition Cost (CAC) of that client increases. And numbers tend to add up.
Say you have 2 salespeople travelling once a week. They watch out for expenses – one journey costs 125 dollars in total (about how much we spend on travelling). That’s 13.000$ a year spent on travel.
4 salespeople travelling to clients twice a week? 250 dollars per every trip, and 104.000$ yearly spent on trips. Quite a sum, eh?
What about when you sell low-cost things? Your default answer should be “no” to travelling, because your CAC will probably be higher than your Customer Life Time Value (LTV).
So here’s a simple rule of thumb if travel expenses are a big factor: if travel costs exceed 1.000$, you should think twice before going (in a typical IT Software Development company, only a fraction of your pipeline is worth spending 1000$ + time + opportunity cost to get a chance of closing).
My default answer is “yes”, obviously. We don’t have many clients near-by, so it’s always good to get to know them. Before you agree though, make sure the meeting will be valuable. Sometimes it’s better to skype / e-mail them first, so you can get the context and meet with more information (especially important if you sell consulting). Last thing I want is someone spending money to meet me and regretting it.
If I’m the one who has to travel, it gets a little more complicated.
They’re over the amount you don’t travel below, and want you to come over. I try to say yes, sometimes you have to wait for the right moment in the sales process.
But, if you’re in a software development company where the smallest deal value is 50.000 USD, it’s not unlikely that over 50% of your closed deals will require meetings – and that’s OK.
They might not generate a whole lot of revenue, but they add value differently – they might have a huge network you’d like to tap into, or know something that might help you deal with company issues. Maybe the client is dissapointed, doesn’t understand your product and needs help? Go as fast as you can – if you succeed in helping him, he’ll be forever grateful and your brand will stay untouched – you’ve dodged a bullet.
Just make sure there’s always value involved.
Remember to be lean about it (Lean Start-up anyone?). Here are a few golden rules for travelling salespeople:
That’s why you shouldn’t travel more than 2 days a week. Unless you have an assistant that does all this stuff for you. Otherwise you’ll be spending too much money, and not working on qualified opportunities. (The “travelling salesman” problem comes to mind)
Some of you are now probably saying “Riiight, but my clients are very conservative and need me to come if I’m the one who gets their business”. I get it. But even among conservative clients, you can find a portion of those that are respectful of your time, so focus on acquiring more of them.