The following Q & A is from the June 2009 Drilling Down Newsletter.
Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection? Just ask your question. Also, Feel free to leave a comment. Want to see the answers to previous questions? Here’s the blog archive; the pre-blog newsletter archives are here.
Q: I received this article (Norms of Reciprocity, measuring value of Social Marketing) via a friend’s Twitter account. Very interesting.
A: Glad you enjoyed it!
Q: It has made open up my ACT! database, and my Outlook databases and add the metric of Growing / Strong / Weakening / Failed to my normal Sales and Business progress metrics. If I group those categories and correlate to traditional metrics, it’s impressive how they reflect each other.
A: Yes, most people are surprised. It’s a very, very simple idea that seems to work across just about any human activity including crime, attendance, and so forth.
The more Recently someone has done something, the more likely they are to do it again. Conversely, the longer since an activity last took place, the less likely the person will do it again. Often called Recency in Psychology and studied quite a bit.
Q: Now I have to think about how I really use and apply this. : )
A: Well, if I can guess you are in Sales from your title, typically one of the best applications is in what Strategic Marketing folks might call “allocation of resources”, which probably translates into “lead nurturing” for you.
Most experienced people in Sales have a sort of “sixth sense” when it comes to thinking about the likelihood of a close happening. They worry about certain prospects more than others, and a sort of “ranking” or “scoring” happens in their mind. One of the triggers that frequently comes up in this is “how long” it has been since there was any contact activity with the prospect, and the feeling the longer it has been without sales activity, the less likely the sale is to close. Sales Managers will often allocate resources based on these kinds of “feelings” they or salespeople have.
The problem with all this “gut feel” is, newer sales people don’t have it, and so probably are not as productive as they could be. The other is since a lot of this is not tracked in any way, there aren’t any firm “guideposts” and it may be that sales are lost that otherwise could have been made due to a lack of urgency or misdirection.
So, given limited resources, a sales force would generally like to focus on the leads most likely to close, and not work on the less likely leads until the most likely leads have been addressed. This is the idea of scoring, let’s rank all of our prospects by likelihood to close.
Now, as far as what you might do in ACT! or similar (and knowing nothing about your business), here is what I would do. Just start informally comparing prospects that close and those that don’t close in terms of these timing issues, “how long since contact” or “how long between contacts” for each case.
Typically you will start to see patterns of some kind, for example:
1. “Prospects who have not made it to 2nd sales appointment within 30 days of 1st contact are less likely to close”
2. “Prospects who take longer than 25 days to respond to proposal are less likely to close; prospects who take less than 10 days to respond to proposal are very likely to close”
and so forth. Look at important events in the sales process and note the “time since” or “time between” and look for such patterns.
Now, as I said, many salespeople, especially experienced ones, have some sense of these ideas, but they have never been quantified. The advantage to quantifying them like this is you can move to a “triggered contact system” based on them, which I think you can do in ACT! if you have the data. This conserves salesperson resources and helps them always be focused on where they are most likely to close the business.
So, for example, salespeople (sales managers, if more appropriate) receive a communication each day about any prospects who are coming close to any of these triggers above.
In scenario 1 above, a counter starts on 1st contact and if another sales call has not been scheduled within 20 days of 1st sales call, a reminder goes out saying “you have 10 days to get a 2nd appointment or you may lose this sale”. In scenario 2 above, sending the proposal triggers the counter, and a sales contact is suggested at 7 days later and 15 days after that.
The optimal timing of these contacts is something discovered over time, and of course depends on the business. But having these triggered messages available to guide salespeople towards which contacts they should be most focused on that day or week is a lot better than nothing.
So instead of a salesperson thinking this:
“Gee, it’s ‘been awhile’ since I talked to prospect George. Maybe I should call him”.
you get this thought:
“I sent the proposal to prospect George 7 days ago, and I need to close him in 3 days, or he becomes less likely to close at all.”
The difference in those two thoughts and the action taken can be a lot of sales – especially with newer sales people, who don’t have enough experience to understand the “rhythm of the sale” in this specific business yet. If you’d like a more detailed example, there’s one here: B2B Software – Latency Tripwire.
Spreadsheets are usually a great tool for this kind of discovery work.
Hope that helps!
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