Experimenting with process
Entrepreneurs and start-ups often get locked into one business process. As they engage in their markets, whatever sales process gets traction tends to be the go-to process. While it is important to get cash flow, customer feedback, and presence in the market place, it’s also important to keep in mind that certain processes are optimal for certain stages of business growth. How an entrepreneur started a business may not be the best way for them to grow it. A simple five-step plan can be used for experimenting with processes.
Let’s examine a few sales processes as an example of how an entrepreneur can assess their utility. Joanne is an entrepreneur and came up with an idea for a widget. She designed a few prototypes and engaged her professional network for feedback. A few tweaks and modifications later, she’s got a working model of her widget. Her initial sales process is to present her widget to her network and ask them for contacts. The widget solves Problem “A” and referrals for people with this problem are welcome.
These initial sales generate crucial cash flow for Joanne’s new business. She develops a steady customer base but isn’t at the point where she needs to hire personnel. To grow, Joanne needs to evaluate her sales process. She’s asked her existing network for referrals as well as her current clients.
Now she needs to reflect on what other customer demographics have similar problems that can be addressed by her widget. She participates in trade shows, increases her marketing, addresses different audiences, tinkers with her widget to create a solution for Problem “B” and now has two products to sell. She joined an industry association to expand her network, keeps an eye out for requests for problems that are appropriate for her to bid on, and starts thinking about how she can collaborate with other companies to solve larger problems.
Joanne had to be mindful of performance metrics, the degree of her involvement in the process and outcome.
Sales increase and Joanne has to be aware of her time and her ability to monitor so many ways of attracting clients. She had to criteria that evaluated how many leads she was generating from each of her activities. Some of the measurements included:
- Lead time to sale to determine the amount of effort and expense required to acquire a new client
- Quality of client in terms of purchasing power
- Service of the client in terms of how much time, effort and energy was needed to maintain cordial relations with clients. Joanne learned the hard way that some clients, even those with deep pockets, are simply too much maintenance to be profitable accounts
- How much of her time and resources were spent engaged in the activity? Did she have to purchase access to a website that had requests for proposals? Did she have to purchase access to a purchasing system in order to sell to her clients? How much did it cost her to have a booth at trade shows? How much did it cost her to attend networking events?
- How active did Joanne have to be in order to engage in the sales process? How much time was spent finding and responding to appropriate requests for proposals and how many of them did they win? How could she automate the process of finding proposals?
- Which sales process generated the greatest returns on investment?
With this information at Joanne’s disposal, she began refining her sales processes. She realised that she was spending quite a bit of money on trade shows that were not the right fit for “Problem A”. However a yearly trade show was a great fit for her to prospect customers tackling “Problem B”. She refined her trade show strategy to only focus on approaching those customers. She bought a programme that helps her fine tune her search for requests for proposals thereby cutting her search time by nearly two thirds. She had a template for responses and that further reduced the amount of time she needed to put in a solid proposal. Joanne regularly asked customers for feedback and for testimonials. Instead of taking up a lot of her face to face time, she automated much of the product evaluation. She still maintained regular face to face time with customers but they focused on gathering customer perspective and a greater appreciation of the other kinds of problems they clients were facing. Maybe Joanne could design a product to solve Problem “C”.
Joanne kept detailed information on the amount of time and money spent on networking. When leads for a certain event dropped off, she’d attend fewer of those events and more of other events.
Sum of its processes
As Joanne’s sales processes became fine-tuned, she was mindful that she would have to reassemble them periodically. She would compare her different processes to one another as well as their relative performance over time. Even if an approach was yielding good returns, she would intentionally introduce another sales process to see if that one would perform better. Maybe the timing or making conditions were ripe for an online sales campaign that would have better results than her networking, or trade shows, or responses to requests for proposals. She didn’t know until she tried.
By following these five steps of process development, Joanne was able to identify the optimal process for her business at that particular time. She was aware that as her business grew, another process may be better suited. By experimenting with process Joanne got a better understanding of her market and of her business and through this deepened knowledge, she’s more able to respond to market conditions.