And... I love to sell, I particularly love to sell services. And more particularly - I love to sell services in the < 500k range.
Why?
Because it takes less time to get to a decision (normally) - and - because at that level the opportunities are not always "found" - they are created! (Good healthy fun stuff)
Selling embodies a lot of what is GREAT about the consulting business. You get to meet people with a similar mindset that you have, particularly if you enjoy your field, you get to excite them with the possibilities of what you are doing, and hopefully - you get to sell them something that will improve their condition as a company.
It wasn't until only in the last 8 years that I finally realized that a lot of it was focussed on selling myself! The majority of early books I read on sales were about developing a personal brand, maintaining the pipeline for a one or two person firm, and building relationships based on personal competency.
If you want to develop a successful service consultancy, then you need to be selling a lot more than just you! (Or the guys that you have hired who (strangely) are a lot like you)
You need to be developing the pipeline and managing the engagement size to support a team of consultants in high yield engagements.
At that level there are a lot of factors,(a heck of a lot), but one of the issues that many of the books don't tell you is that the 50K to 500K market space (in my experience) is a numbers game!
Supporting a team of tens of consultants needs, first and foremost, a professional sales and HR team. One to create the opportunities and one to fill them with talented individuals.
Pipelines for services
The entry point for your services pipeline is networking and developing leads. This is an entire skill set unto itself and one that we won't go into here. But siuffice to say, you need to be GREAT at picking up leads.
Published RFI's (Requests for information), cold calls, marketing funnels, conferences, public training courses - the list goes on.
You should expect (based on my own experiences) to be able to turn around 40% of your active leads into "Warm Leads". What's a Warm Lead? One who will accept a quotation from you.
Warm leads are funny things. They can go cold for dozens of reasons, some of which you have no control over. But the most important issue with Warm Leads is for you to make sure that they are really ready to become a warm lead.
This is another of those unwritten rules regarding sales. "No" doesn't mean "No" forever... It just means "No" right now. However, if you get a "No" because you tried the hard sell, made your prospect feel uncomfortable, or tried to rush them without convincing them of the need for whatever you are offering - then it could be a "No" forever!
So now we have some Warm Leads, your goal now is to convert those into contracts. My experience (again) tells me that a conversion rate of around 30% is pretty standard. Should you do better - of course! But this is a ratio I have observed a lot.
So if you started with 100 leads, then 40 of them would become Warm Leads. At a 30% conversion rate 12 of these would turn into Contracts.
Of these 12, you can be 97% sure that they will convert into money in the bank. But even here things can go awry. For the sake of this post we will say 100% make it through.
If you are at $30K average revenue for each Contract then you have $360K revenue from this batch of leads. If your profit margin is 20% then your profit would be $72K.
Your challenges now are in 2 dimensions. Improving conversion rates, and improving time to revenue. (There are a whole heap of other challenges around increasing yield rates and leverage - but we will deal with that another time)
Some thoughts on Conversion Rates
- Number of meetings between Lead and Warm Lead?
- Structure of sales engagements? When to produce product? When to produce testimonials or client sites? When to introduce them to the company President.
- Reasons for lack of quote acceptance?
- Quality of leads? Effectiveness of qualifying processes?
- Value of Lead generation channels?
- what is your correct entry point?
- what is your value proposition? Is it the compelling offer you think it is?
Time to revenue can be dealt with by looking at a lot of the same issues. However, instead of asking "how can we do it better", you need to ask "how can we do it faster".
This means strategies to:
- Reduce the number of meetings between phases
- Create greater access to what Alan Weiss calls "The Economic Buyer"
- Commercial engagement strategies (EG making the terms easier for companies to say "Yes" to)
- Reduce phases if possible
Each person within the TEAM will need to have the required skills to make this happen. And, the TEAM will need to be managed, directed, focused and incentivized in a controlled and systemic manner.
We need to get to consistent positive outcomes, consistently improving conversion rates and times, and consistently higher revenues - regardless of the environment!
This takes a TEAM, and it takes SYSTEMS, not just sweat and hope.
So What? Sounds complex, why can't I just work on selling? After all that's what I do best!
There is another angle here (of course). If we can get a pretty solid understanding of our conversion rates, and our time to revenue - then we can predict the future!
Our pipeline can be forecast out in front of us based on active leads, telling us what our expected revenues will be, and giving us a lot of power over the direction of our company.
More than anything else - being able to forecast revenue gives us something additional - inherent value! Forecastable (is that a word?) revenue, if it is accurate, gives a prospective buyer or investor an idea of the earning potential of the company - and therefore an idea of its worth.
