“While it may seem small, the ripple effect of small things is extraordinary” -Matt Bevin, Governor of Kentucky.
While B2B sales were most likely not on Governor Bevin’s mind when he said this quote, it has powerful and vital implications in the 21-st century B2B sales world. By effecting small changes in sales efficiency, we can create long-term and large-scale success for B2B sales teams and their companies.
So when it comes to large-scale B2B enterprise small changes are the key to long term success. We have spoken to companies that generate less than $10 Million in annual revenue, and even for them, large scale sweeping changes are disruptive and challenging, the degree of difficulty to affect change only increases as you move up the ladder to companies that do $100’s of millions if not $1 billion or more in business each year. While impactful change may be complex there is a silver lining, at such a large volume of scale, even small changes to operational efficiency can produce large scale impact. Let’s dive deeper into the economics of this change, and examine just how impactful the power of Proximate and “5” can be.
Five percent doesn’t sound like much. Let’s examine it from an annual deals won perspective. Take a 1-5 sales rep, that being they win 1 in every five deals that come through their pipeline. Let’s assume that had 100 opportunities last year, and with their 1 in 5 win rate, they closed 20 deals from your company with an average lead-to-close cycle of 60 days. Now let’s make that salesperson 5 percent more efficient and with that efficiency, they win 5% of their deals. This would mean that the following fiscal year the sales rep shortens their lead-to-close time by three days (5% of 60 days), making their average sales cycle length is 57 days, an increase in efficiency. Over the course of a year, if we save that three days on our standard 20 deals, we create an additional 60 days of sales productivity (3 days saved per opportunity x 20 won opportunities = 60 days of sales productivity throughout the year. That productivity can be used to spend time and hopefully close an additional lead than the year before taking our sales reps won deals from 20 the year before to 21 the following year, a 5% increase.
Now you’re probably thinking how would three days of productivity and one more deal a year make much of a difference, for this we will need to look at a Profit and Loss sheet to see how it all impacts Pre-Tax revenue.
This is a very simplified Profit & Loss table and we fully understand that in practicality this isn’t how simple P&L’s are but for the purposes of this exercise it deminstrates the power of increasing your sales efficiency even by just 5%. We can see from the above table that if we are able to shave 5% off of our sales expenses (decrease sales cycle = less time = less expenses) then instantly our pre-tax profit goes up 3%. Remember, this would be taking your average sales cycle down from 60 days to 57 days, nothing crazy here. Then with that increase efficiency and extra budget, if your sales team can go out and use that time and money to generate 5% more sales (21 deals a year instead of the previous 20) diagramed in the next column, even with the time and budget expense returning to normal, the pre-tax profit numbers jump an amazing 20%!
It’s not magic, its not some “playbook to 10x your sales”. At Proximate our goal was to develop a tool and appraoch designed to build long-term, sustainable success. These minor tweaks, combined with a healthier, optimized sales pipeline can help build long-term sales success to ensure you and your entire sales teams hits their sales targets next week, next month, next quarter, and beyond.