Don’t always be closing

Glengarry Glen ross…

Looking past some of the problematic 70’s era workplace language and toxic masculinity, it’s an iconic movie in the sales profession. What budding sales exec hasn’t identified with the desperation the characters experience when short of target at quarter’s end? The film popularised the phrase ‘Always be Closing,’ or ABC, which is still parroted in current sales methodologies. Unfortunately, this is terrible advice for B2B salespeople these days. 

The concept of ABC is that a salesperson should constantly be trying to close every deal on the table. While this can sometimes work in a product-led sales process, in our increasingly services-led economy, this is a really bad idea. The issue with closing every deal possible is that it works on the assumption that all customers are good customers for your business. This is simply not true. In fact, acquiring a customer that is a bad fit can cost your business a lot. 

Acquiring bad fit customers can lead to significant costs for your business, including:

• Wasted time on customer acquisition

• Higher spend on support (and an unhappy support team!)

• Lost revenue from credits needed just to keep the customer happy

• Lost revenue due to customer churn

• Impacted reputation leading to lost future deals

This last one is the biggie that many people overlook. We all know that people talk about their bad experiences more than their good ones. Some studies suggest that up to 95% of people will share a bad buying experience they’ve had. And the last thing you want, is an unhappy previous customer talking to your good potential prospects and killing future deals before they even start!

Creating value vs closing

In my last article, I talked about how the B2B sales model is broken and we need to rethink how we approach it. Well, the first step is to get rid of the notion of ABC. An alternate acronym might be ABCV (Always Be Creating Value). Ideally, what we want is for our sales teams to be bringing in a steady stream of new customers which are a good fit for our business. We need to be thinking about customers as a source of value, not just as revenue. 

If our source of value from customers is only revenue, then any customer with enough money to afford our product is a “good customer.” However, if we start thinking about customer fit as being the source of value, with a good fit customer being more valuable, then other factors come into play. These will be specific to your business but may include factors such as:

• Technology - Will your offering work with their technical environment?

• Financial - Do they have the budget to pay for your offering?

• Value - Do they value the benefit your offering brings?

• Commitment - Will you have the right level of support within their business?

• Ethical - Does this company align with your company’s values?

• And other factors…

Some of the factors that define your ideal customer are things that you can directly influence. For example, if the prospect does not currently value the benefits your offering brings, it’s possible that they don‘t yet realise they have a problem. In this scenario, you can maybe educate the prospect to improve the alignment. However, this increases your time to acquisition, so you need to critically weigh whether the prospect is high enough value to justify the cost. 

The factors that define your ideal customer will be specific to your business, so it’s not exactly a ‘one size fits all’ approach. But, once you define what a good fit customer looks like for your business, you can start applying metrics to this to assess the potential value of prospects.

Defining your fit criteria

How do you identify your specific customer fit criteria? Well, the easiest place to start is with your current clients. The good news is that with some basic analysis, you can get a handle on this pretty easily. The bad news is that it's gonna require some data. 

Step 1

Start by looking at the total lifetime revenue of your clients, this is usually an easy one to identify, but remember that revenue isn’t the only metric we’re looking at. Next up, you’ll want to look at factors such as the support and customer acquisition costs. What we are looking for here, is to get a view of the total cost of ownership to service a particular customer. We can then subtract the total cost of ownership, from the lifetime revenue to find out what this customer is truly worth to your business. 

Step 2

If you get that far, then you’re likely already ahead of your competitors! But we can take it a step further. We can also look at how a customer helped us acquire new customers through referrals, testimonials, etc. These are hugely valuable to a business and factoring them in can change the value of a client significantly. Once you have done this analysis, you should then be able to rank your clients in terms of “value” to your business. 

Step 3

The last step is to look at your most valuable customers and identify the commonalities among them using your customer fit framework. This isn’t an exact science and will be slightly different for each business, but one way to start is to assemble an internal focus group and get them to define what they think the fit criteria should be. Then, look at each of your most valuable clients to see how well they are aligned with what you’ve identified. This is an informative process as it can also uncover areas where you’re adding value to specific audience groups and sub-verticals that you might not have identified previously.

Once you have completed the full analysis, you should have a list of criteria that defines a good fit customer for your business. For bonus points, you can also take a look at your lost deals and churned customers. If your fit criteria is accurate, then these customers should generally be missing one or more of the key things that would have made them a good fit. 

Once we know what type of customers are the most valuable for our businesses, we can start aligning our sales teams to focus on acquiring those types of customers. How do we do that? Well, that’s a topic for my next post, so make sure to subscribe below and follow along on our LinkedIn page to be the first to see it. 

In the meantime, start thinking about how you currently define value in your customer base. Can you identify a valuable customer or do you need to get more clarity in this area? If you’d like to set up a free call to discuss how to apply this to your business you can reach out to us via the contact form here.