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Take Control of the Sales and Marketing Cycle
by: Chris Anderson
The Cash to Cash Cycle: Part Three of Series
Part One: Inventory
Part Two: Accounts Receivable
Part Three: Sales and Marketing
Part Four: Accounts Payable
Part Five: Effective Policies and Procedures: The Complete Cash to Cash Cycle
We’re sprinting toward that $1,000,000 mark…and we’re only a couple strides away…
Decreasing inventory carried us over the first hurdle, and last week reducing Accounts Receivable sped us
through the half-way mark. We’re making great time, so let’s bring on the next mile marker – marketing and
sales.
Increasing Overall Sales and Marketing Effectiveness
If you are an organization spending $500,000 or more on marketing expenses (e.g. advertising, trade shows,
print materials, direct mail, etc.) then STOP! We found it again. Why you ask…? Because marketing has the
greatest potential of being very unproductive.
In fact, many marketing programs struggle to break even, and actually frequently lose money. So if we
increase the overall effectiveness, then we can eliminate 50% or more of your wasted marketing efforts, which
translates into $250,000 in cash.
So now, let’s see how this actually works in a real-life scenario.
Sales and Marketing Case Study
An organization with $500,000 in marketing expenses needed assistance. We examined their sales and
marketing process to understand and quantify the lead flow, follow-up, and demand forecasting issues. Then
we designed and implemented a process to improve their sales cycle efficiency and tie it closer to their
customer’s buying cycles. After the marketing reductions, we then reinvested $100,000 back into new
processes for public relations and Customer Relationship Management (CRM), both of which were suffering
badly.
The metrics we developed reduced their marketing expenses by 60% overall and increased their sales cycle
efficiency from 40% to 60% within 6 months of implementing the new procedures. With these new processes
and reports, the company now tracks sales cycle efficiency and life-time value rather than just sales quota
achievement, as the measure of their sales & marketing effectiveness. The result: an extra $300,000 in cash
plus a 50% increase in process capability (capacity).
As we have seen time and time again, time can be our best friend, if only we let it.
Methods to Design the New Sales & Marketing Process
Take control, Take control, Take control
Improve your sales cycle efficiency. Reduce your marketing expenses. Tie it closer to your customer’s buying
cycles. And take control of your sales and marketing program to let it work for you.
With well-defined processes and procedures in place, you will increase efficiency by reducing ineffective sales
and marketing programs. And, again, we make such improvements to create more cash on hand – all toward
that $1,000,000 goal and to cross the finish line.
Next part, we will hurdle the final $250,000 mark with the Accounting Payable function – so close you can see it.
About the author:
Chris Anderson is currently the managing director of Bizmanualz, Inc. and co-author of policies and
procedures manuals, producing the layout, process design and implementation to increase performance.
To learn how to increase your business performance, visit: Bizmanualz Policies, Procedures & Forms
Next Article
by: Chris Anderson
The Cash to Cash Cycle: Part Three of Series
Part One: Inventory
Part Two: Accounts Receivable
Part Three: Sales and Marketing
Part Four: Accounts Payable
Part Five: Effective Policies and Procedures: The Complete Cash to Cash Cycle
We’re sprinting toward that $1,000,000 mark…and we’re only a couple strides away…
Decreasing inventory carried us over the first hurdle, and last week reducing Accounts Receivable sped us
through the half-way mark. We’re making great time, so let’s bring on the next mile marker – marketing and
sales.
Increasing Overall Sales and Marketing Effectiveness
If you are an organization spending $500,000 or more on marketing expenses (e.g. advertising, trade shows,
print materials, direct mail, etc.) then STOP! We found it again. Why you ask…? Because marketing has the
greatest potential of being very unproductive.
In fact, many marketing programs struggle to break even, and actually frequently lose money. So if we
increase the overall effectiveness, then we can eliminate 50% or more of your wasted marketing efforts, which
translates into $250,000 in cash.
So now, let’s see how this actually works in a real-life scenario.
Sales and Marketing Case Study
An organization with $500,000 in marketing expenses needed assistance. We examined their sales and
marketing process to understand and quantify the lead flow, follow-up, and demand forecasting issues. Then
we designed and implemented a process to improve their sales cycle efficiency and tie it closer to their
customer’s buying cycles. After the marketing reductions, we then reinvested $100,000 back into new
processes for public relations and Customer Relationship Management (CRM), both of which were suffering
badly.
The metrics we developed reduced their marketing expenses by 60% overall and increased their sales cycle
efficiency from 40% to 60% within 6 months of implementing the new procedures. With these new processes
and reports, the company now tracks sales cycle efficiency and life-time value rather than just sales quota
achievement, as the measure of their sales & marketing effectiveness. The result: an extra $300,000 in cash
plus a 50% increase in process capability (capacity).
As we have seen time and time again, time can be our best friend, if only we let it.
Methods to Design the New Sales & Marketing Process
- Improve Follow-up. Only about two percent (2%) of sales occur on the first contact. Eighty percent
(80%) of sales will require five to eight contacts before the sale closes. This means that if you are
contacting the prospect less than five times or more than eight times, then you could have a problem
with follow-up.
- Sales Cycle Efficiency. Time kills deals. The speed at which a prospect is converted into a customer
and the number of prospects required to make that conversion determines your sales cycle efficiency.
So ask yourself, are you taking the right steps to measure and reduce lost sales?
- Life-Time Value. How profitable a given customer is over time defines your LTV or Life-Time Value.
Companies spend ten times more to acquire a customer than to keep a customer. However, existing
customers are more likely to purchase again, spend more money, and therefore become more
profitable. If you don’t know your LTV, then how do you know how much money to spend and on which
customer segment?
- Demand Forecasting. Every customer buys on a cycle. So this means that you should track cycle times
and variance to increase the accuracy of your forecasting and the loyalty of the customer. Do you know
when your customers need to reorder?
- Improve Lead Quality. Do you have methods in place to measure the conversion potential of each
lead? Lead generation activities (i.e. forms) should pre-qualify every new lead so that you can take the
right follow-up actions for the marketing offer. Strong leads produce strong sales.
- Increase Awareness. To keep the sales pipeline full of good quality leads you must continuously
increase the awareness of your company and the solutions that it provides. Public relations is more
efficient at building awareness than advertising, yet many companies spend wildly on advertising and
trade shows while neglecting to fund public relations efforts much at all. Increase your name
recognition, not your budget.
- Reduce Discounting. Discounts represent deficiencies in the sales & marketing processes, which
means that you should use them sparingly. Instead, determine the root cause and then fix the process
that’s causing the need to discount. Show customers the added value, and they won’t focus on price.
- Train Personnel. Provide your sales & marketing personnel with regular formal training. This will arm
them with better product knowledge, as well as presentation, negotiating and selling skills that will
improve effectiveness. This will boost both employee morale and the bottom line – a win-win.
Take control, Take control, Take control
Improve your sales cycle efficiency. Reduce your marketing expenses. Tie it closer to your customer’s buying
cycles. And take control of your sales and marketing program to let it work for you.
With well-defined processes and procedures in place, you will increase efficiency by reducing ineffective sales
and marketing programs. And, again, we make such improvements to create more cash on hand – all toward
that $1,000,000 goal and to cross the finish line.
Next part, we will hurdle the final $250,000 mark with the Accounting Payable function – so close you can see it.
About the author:
Chris Anderson is currently the managing director of Bizmanualz, Inc. and co-author of policies and
procedures manuals, producing the layout, process design and implementation to increase performance.
To learn how to increase your business performance, visit: Bizmanualz Policies, Procedures & Forms
Next Article
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