Drive New Sales In Your Company in March 2024
Sean O'Shaughnessey
I help company owners realize the maximum value of their company by improving their revenue generation capability. I help owners enhance their sales management, methodologies, processes, teams, and messaging.
March Madness is almost here! I am a massive fan of the NCAA Men’s Basketball Tournament. You can be confident that I will be glued to a TV as much as possible from March 21 through 24!?
Who is your favorite team this year? My wife graduated from Purdue University, so I would be a fool to pick another team this year (especially considering the embarrassing loss in the first round last year).
Company leaders can also learn a powerful lesson about sales management from basketball. I describe this further in this newsletter.
I hope that you enjoy my latest newsletter.
Sean
Drive New Sales In Your Company
March 2024
The High Cost of Discounts
In most companies, the sales team cannot change the COGS or SG&A for any deal. The only thing salespeople can typically control is the Selling Price; from that Selling Price, the costs have to be deducted to calculate the Net Profit.
Let’s dissect the financial dynamics further. Assume a service in the B2B sector is offered at a standard rate of $100,000, with a COGS of $60,000, rendering a gross profit of $40,000—a 40% gross margin. With the 20% SGA and other operational costs factored in, the net profit might settle at $20,000 per sale, constituting a 20% net margin on the transaction.
Assuming the costs in the company are static, introducing a 10% discount drops the service price to $90,000. While the gross profit shrinks to $30,000 after we take out the $60,000 in COGS, the net profit is disproportionately affected. The fixed nature of SGA expenses means they remain constant, dramatically squeezing the net margin. In this example, the net profit after the 10% discount drops from $20,000 to $10,000.
The critical question then becomes: How much additional sales volume is necessary to maintain or increase overall profitability post-discount? The revelation often shocks: a minor discount demands a significant upsurge in sales volume to compensate for the reduced net profitability—a challenging feat in the B2B landscape, where sales cycles are longer and client acquisition efforts more intensive.
Let’s assume that the above company only sells products with a $100,000 list price and they do 100 deals in a year. That means if all of the deals are at least price, they will achieve a gross revenue of $10,000,000 and a net profit of $2,000,000.
If the company gives everyone a 10% discount and the company’s stockholders want the same net profit, they will have to do $2M divided by $10K deals. That is 200 deals or a 100% increase in the number of deals. This means that a 10% discount means the sales team has to close twice the number of deals to contribute the same amount of net profit to the shareholders.
The solution:
- Reframe the Sales Conversation Around Value, Not Price
- Introduce a Value-based Commission Structure
- Establish Strict Discount Approval Processes
- Cultivate and Empower Internal Champions
- Align Sales Goals with Strategic Business Objectives
The Continued Reading link below provides far more detail about this. You can also watch me deliver an interactive presentation by attending Beers & Biz on March 28. You can register a little further down this newsletter.
Taking the Sales Agility Assessment is a great starting point for improving your current sales process. Use the unique report to help you implement new procedures to accelerate growth, revenue, and new sales.
Are You Coming To Beers & Biz?
Beers & Biz is an excellent opportunity to connect with other business leaders in the Cincinnati area and join some relevant conversations about today's business challenges. It is probably the best networking event in Greater Cincinnati.
If you want to meet other B2B professionals and understand how to solve targeted business problems, this is the event to put on your calendars and attend.
There is no cost to the B2B professional networking group featuring topical roundtable discussion groups, open networking, and a featured charity. The group meets on the 4th Thursday of the month. We typically talk about business, have a drink (water, soft drinks, beer, and bourbon, too), and learn from each other. We stress networking with business-to-business professionals trying to expand revenue and offer great products and services to businesses.
As I noted above, I will present at 3:30 in the Revenue Generation breakout. My presentation title is “The High Cost of Discounts: Navigating Sales Strategies for Maximum Profitability.”
Our next event is at Warped Wing in Mason, OH - 5650 Tylersville Rd, Mason, OH 45040.
The charity this month will be Make-A-Wish.
Please register at https://www.eventcreate.com/e/beersandbizcincinnati
Sales Managers Need to Act Like a Coach, Not a Player/Coach!
As I alluded to in my opening comments above, March brings March Madness. March Madness is the college basketball tournament where 68 teams battle to find out who is the best college basketball team of the season.
While you are watching your team this year, I would like you to learn a lesson that every basketball coach has had to learn. The easiest way to learn this lesson is to do a little analysis. I would like you to count the number of times when the game is tight, one team is on the free-throw line, and the coach makes a substitution – himself.
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Yes, count the number of times the coach doesn’t trust the player he has been coaching all season and puts himself on the line to make that winning shot.
I can already tell you the number: zero.
During a game, the coach can rant, rave, coach, and cajole, but he cannot play the game. He has to trust that the athletes he has coached all season will take his instruction, remember the skills they have practiced, and execute those plays as they were taught.
This doesn’t happen in sales. It is almost commonplace for the coach (the sales manager) to step in and drive the conversation. He puts his athlete, whom he has been coaching perhaps for years, on the bench.
So, let’s explore what would happen if suddenly you were required to stay on the sidelines while you watched your salespeople sell, and you couldn't take over the sale.
Click on the link below to explore this issue in more depth.
Two Tall Guys Talking Sales Podcast
Two Tall Guys Talking Sales comes out every week on Tuesday at 4:30P ET. Please subscribe on your favorite podcast player.
Two Tall Guys Talking Sales – Uniting Sales and Marketing: A Masterclass with Chris Spanier – E76
This episode of “Two Tall Guys Talking Sales” is a must-listen for anyone involved in the intricate dance between sales and marketing. Chris Spanier sheds light on the significance of unity and collaboration for achieving common business goals. Through a blend of personal anecdotes and actionable advice, Chris, Kevin, and Sean explore how storytelling, shared objectives, and regular feedback can transform the relationship between sales and marketing into a dynamic partnership. Whether you’re a sales manager, marketing director, or CEO, this conversation offers valuable insights on aligning your teams for success.
Listen to this episode here: https://newsales.expert/2024/03/two-tall-guys-talking-sales-carving-success-chris-spanier-on-sales-marketing-synergy-e77/
Two Tall Guys Talking Sales – From Stories to Sales: Leveraging Narrative Power with Jeff Clair – E75
This insightful episode of “Two Tall Guys Talking Sales” dives deep into the transformative role of storytelling in the sales process. With his rich experience in sales leadership, Jeff Clair shares why stories captivate, how to craft them effectively, and the importance of salespeople seeing themselves as guides for their prospects. Through role-playing and practice, Jeff underscores the significance of confidence and personalization in storytelling, ensuring that each story resonates deeply with the intended audience. This discussion is a must-listen for anyone looking to harness the power of storytelling to not just sell but to connect and inspire action.
Listen to this episode here: https://newsales.expert/2024/02/two-tall-guys-talking-sales-from-stories-to-sales-leveraging-narrative-power-with-jeff-clair-e75/
Driving New Sales: Transforming Small Businesses into Sales Powerhouses
Crafting a Sales Process Flowchart: Visualize the stages in your sales process for consistency – Driving New Sales: Transforming Small Businesses into Sales Powerhouses – Episode 9
This episode will arm you with the knowledge to construct a Sales Process Flowchart that is the backbone of a successful sales strategy. Implementing the discussed actionable strategies will refine your sales process, making it a powerful engine for business growth.?
Listen to this episode here: https://newsales.expert/2024/02/crafting-a-sales-process-flowchart-visualize-the-stages-in-your-sales-process-for-consistency-driving-new-sales-transforming-small-businesses-into-sales-powerhouses-episode/
Segmenting Target Market: Categorize potential clients to tailor strategies effectively – Driving New Sales: Transforming Small Businesses into Sales Powerhouses
This episode provides valuable insights into market segmentation, demonstrating its critical role in a successful sales strategy. Implement these actionable steps and witness a transformative impact on your business.
Listen to this episode here: https://newsales.expert/2023/12/segmenting-target-market-categorize-potential-clients-to-tailor-strategies-effectively-driving-new-sales-transforming-small-businesses-into-sales-powerhouses-episode-7/
Sean O'Shaughnessey
New Sales Expert LLC helps SMB companies accelerate their revenue growth by helping them setup systems and best practices to bring products to market more effectively and develop new sales.
If the COVID-19 pandemic has greatly affected your company’s sales, you are not alone. As a veteran sales leader, I utilize my expertise to help companies in times of trouble by building the sales systems, processes and accountability you need to create record-breaking growth. If the past has taught me anything, it is that those that develop a plan-ahead strategy will far surpass their competitors once the crisis is over.
My goal is to drive sales growth. I do this with Sales Xceleration’s proven system that focuses on creating record-breaking sales for your company, defined in these 3 steps:
My book: Eliminate Your Competition
Most salespeople lose the deal before they ever get started! It isn’t uncommon for the customer to have already made a decision before most salespeople even learn of the opportunity. Most salespeople must beat the preferred competitor by a significant margin just to be considered equivalent. Don’t you wish you could be the preferred vendor for all your opportunities?
Selling is a difficult career in which to make a living; it is not uncommon to have the commission check denied before the salesperson even gets a chance to win. Analysis of thousands of sales situations has made it phenomenally obvious that most salespeople begin their sales campaign so late in decision-making that they are virtually guaranteed to lose the order. To make matters worse; when they do start the campaign early enough, most salespeople do not know how to control the prospect adequately so that they can guarantee their victory.
You may purchase my book Eliminate Your Competition from your favorite book retailer. The ebook version is available at the most popular retailers, such as Apple, Amazon, and Barnes & Noble. The paperback version is also widely available at retailers like Amazon, Barnes & Noble, and Books A Million.
Student at Arkansas State University, majoring in Business Marketing.
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