Remote Sales & CS, Sales Process, Sustainable Growth

The mathematics of enterprise sales to drive sustainable growth

Jacco van der Kooij

Written by Jacco van der Kooij

Founder, Winning by Design

10 MINUTE READ

Quotas are being missed. Targets are being reset. Benchmarks are out the window.

For sales teams using all types of go to market strategies — whether product-led growth, or field sales, or enterprise account sales — the fundamentals are breaking down.

Figure 1. Where sales is breaking down

Figure 1. Where sales is breaking down

Reply rates on volume-based outbound emails are down the tubes. Technical difficulties are happening as companies convert road shows and conferences to online events. Even talk to your SEO expert, they will tell you that the entire internet is behaving differently.

The sales cycle is slowing down.

So the question is, why is this happening? There are a lot of drastic changes happening in the world right now, but the world needs solutions and frameworks to help us work through this change.

The black box of sales.

In order to do that, let’s look at things through a different lens to start realizing why these changes are happening.

Here’s our point of view, all in one simple image:

Figure 2. The mystery box of sales

Figure 2. The mystery box of sales

Sales is still a black box! We have sophisticated tool stacks, tracking mechanisms, and forecasting platforms, and yet we’re still seeing issues happening in companies at all stages of growth. We have to recognize that reliance on our current ways mean that the sales process is still a black box: we need to diagnose why that’s the case, so that we can solve these issues and drive sustainable growth through times of change.

How do we solve the mystery? Answer: We use science. Ready? Here we go…

Let’s examine a typical enterprise sales opportunity. Think about an opportunity, and instead of visualizing it in a certain sales stage of your sales process, think of it instead as a series of calendared meetings:

Figure 3. The sales cycle as a series of calendared meetings

Figure 3. The sales cycle as a series of calendared meetings

In order to get to a win, each meeting has its own conversion rate (so if a meeting converts, then you move ahead to the next meeting). Then, it follows that the opportunity win rate becomes the aggregate of all of the individual meeting conversion rates. And then it follows that the sales cycle becomes the aggregate of the time between all of the meetings:

Figure 4. The sales cycle, visualized in meetings

Figure 4. The sales cycle, visualized in meetings

Now then…let’s apply a scientific approach to this model. This is where magic starts to perform!

The anatomy of a $100K deal.

Let’s look at the anatomy of a $100K deal, in the context of the visualization above.

Figure 5. The anatomy of a $100K deal

Figure 5. The anatomy of a $100K deal

In this example, for an enterprise rep to be successful, she would need to achieve about 6 wins per year, with the benchmarks of 28.5% win rate, sales cycle of 150 days, and 12 calendared meetings to get to a win.

Now if you map out what those 12 meetings are, it would look something like this:

Figure 6. Meetings in a typical enterprise deal

Figure 6. Meetings in a typical enterprise deal

And backing into the math, you would need 21 opportunities in order to get to the 6 necessary wins.
Now let’s take a look at each of those meetings . . . in order to hit the 28.5% win rate, you would then need to convert each meeting at a certain rate…which works out to be 90%.

Figure 7. 90 percent conversion rate

Figure 7. 90 percent conversion rate

That’s a really high conversion rate, yikes! This means that our rep essentially needs to perform on every single meeting in order to be successful. We can now easily see how crucial this concept is to the success of our sales process and our ability to meet our targets.

So the question then becomes — now that we have this understanding, what should we do to deliver the greatest impact on our sales cycle and win rate?

Here’s a hypothetical to start to answer this question: what happens if you’re able to decrease the number of meetings needed to get to a win from 12 meetings down to 10 meetings? Your win rate goes from 28.5% to 36.4%. Just by decreasing the number of meetings.

Figure 8. Fewer meetings, higher win rate

Figure 8. Fewer meetings, higher win rate

It’s just simple math of course, but it’s oh so illuminating. This explains why, for enterprise sales, it’s so important that every meeting be the most efficient use of time — starting the meeting on time, ensuring that the right stakeholders are present, clearly stating the end goal of the meeting.

It’s because every meeting is an opportunity to fail, but also an opportunity to convert.

So now we can see from the cold hard math: a more efficient sales cycle with even one fewer meeting than average has a massive impact on win rate.

And what happens if we make an incremental improvement in not just the number of meetings, but now the conversion rate for each of those individual meetings? Even if it’s a very small change . . . HUGE IMPACT.

Figure 9. Incremental changes yield huge impact in win rates

Figure 9. Incremental changes yield huge impact in win rates

The one thing to know about the math in sales.

Let’s boil all of this down to just one mathematical concept to take away from this:

When we think about success in sales, one of the first places we look is the win rate. And we think about it as the number of wins divided by the number of opportunities. One number divided by another is a linear function.

Instead, now try to think about the win rate as performance of meetings, raised to the power of the number of meetings. That’s an exponential formula.

Figure 10. The math of sales as an exponential function

Figure 10. The math of sales as an exponential function

Here’s where you can see the power of all of this come to life. Wouldn’t you rather have exponential growth instead of linear growth? Of course. If you focus on the elements of sales where math tells us that you can have an exponential impact, it will lead to very real impact for your top line.

100% remote selling.

Hopefully we’ve now shown you why this math works. And that if you focus on the performance of meetings, and the number of meetings, you’re on the right path to achieving sustainable growth. But we can go further . . . what would happen if we move all of our enterprise sales to 100% remote selling? Some of that is already happening, but it’s happening because companies feel like they are being forced into it due to events out of their control. What they don’t realize is that 100% remote selling will actually yield the results they have been chasing all along.

As you know we love to do, let’s look at this from a mathematical point of view.

Here we take our same sales cycle as before, and we add in the element of the in-person meetings that are happening – in this case, there are 5 in-person meetings. With each of these meetings, there is travel time associated: getting to the airport, flying or driving, arriving at the client, holding your meeting, rinse and repeat to get home. So there’s a travel delay associated with each meeting; as enterprise sellers, we’re all quite familiar with being road warriors. And not pictured here is the effect of corporate travel policies and how this can add even more to that delay: many companies require or encourage their employees to book their flights at least, say, 2 weeks in advance, in order to get better prices on flights.

If you have 21 total opportunities, you can easily spend about 5 hours prepping for each opportunity – doing background research on the company, reading through company public statements and press releases, calling colleagues in the industry to provide advice, and so on.

With a few modest assumptions, we can quickly see that a lot of time is spent preparing and traveling for these meetings.

Figure 11. Time spend to prepare for enterprise sales meetings

Figure 11. Time spend to prepare for enterprise sales meetings

Here, with a sales rep working 21 opportunities in a year, we see that 1,303 hours of the year (that works out to about 65% of their total capacity of 2,000 hours per year) is spent on converting these 21 opportunities to 6 wins. The rest of the time is spent on internal meetings, reporting, admin, etc.

Now what happens if we eliminate the travel time?

Figure 12. No in-person meetings means less time preparing

Figure 12. No in-person meetings means less time preparing

Our time spent preparing drops from 1,303 hours down to to 912. Everything is now conducted online. All that time spent waiting on the tarmac for your flight to take off, or waiting in the airport because of weather delays – poof! GONE.

So what do you do with these newly freed up glorious 391 hours?

Here’s where things get fancy. Instead of simply saying that now the rep can do more of the same discovery calls (you thought we were going there, didn’t you?!), we’ll do you one better. What if instead of doing more of the same online demos, we convert some of our online meetings to meetingless interactions? Here are a few examples of meetingless interactions:

  • Recording a video where you demo a particular feature that you know one stakeholder at your target company is interested in. You no longer need to convene a meeting of all 6 stakeholders and find a common time on the calendar 5 days from now. Instead, you record that video, and send this email: “Hey Tom, you had mentioned on our last call that you were interested in seeing how integrations work in our platform. I’m showing you here in this video exactly what this looks like. Have a look and I would love to hear your thoughts and questions?”
  • Reviewing a proposal over a video, and sending it to your champion for them to share internally with the rest of their team. Same pattern here: instead of convening a meeting to review a long complex proposal where you inevitably run out of time because everyone has many different questions, you can record a video where you walk through the key elements of the proposal that your prospects should draw their attention to. This way they can get a solid sense of what’s important, and even if they don’t actually read the proposal before the next live meeting with you, there won’t be any surprise about its contents because they’ve already seen this overview (for tips on how to create that high impact proposal, check out this playlist).

So with the same number of opportunities, but converting just 2 of those 12 meetings to meetingless selling, the number of closed won deals jumps from 6 to 7.2. In this example, that’s an instant $120K added to closed-won revenue by one rep.

Figure 13. The effects of meetingless selling

Figure 13. The effects of meetingless selling

On top of that, the rep now has more time to focus; she can focus more, prepare more strategically rather than prepping last minute while she’s in an Uber from the airport on the way to the client meeting (because we’ve all done that before!)

Remember that mystery box we were talking about, where you have inputs and outputs but you don’t know exactly what was happening in our sales process in between? If you apply these mathematical principles to your sales process, it’s no longer a mystery – you can see exactly what’s going on.

The truth about the future of sales.

The next generation of sales professionals are going to be more scientific, and use more data o to make key decisions and inform what to do next. For a team to be successful, it can no longer rely just on their sales operations team to provide centralized data to reps. Each Account Executive on the team will have to master how to look at the data around their accounts.

So as you are looking at your metrics, and perhaps wondering how to improve your numbers and hit your targets and quotas, think about applying these principles.

Because for sales to drive sustainable growth, it’s not about gut feel, about relying on a few superstar reps, or about assumptions based on loose correlation.

It’s about data, science, metrics and math.

Videos you should watch

The Mathematics of Sales

The Power of Remote Selling

How To Structure the Perfect Remote Meeting

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