One of the critical metrics that all sales organizations should measure is sales velocity. By sales velocity we mean the revenue that can be achieved in a given period, whether that is a day, month, quarter or year. No matter how complex your business, there are really only four levers that you can pull to impact your sales velocity.
These are: Number of Deals, Win Rate, Average Deal Size and Sales Cycle.
To increase revenue in any period, you need to grow the values above the line and reduce the value below the line. Increasing each of Number of Deals, Win Rate, andAverage Deal Size by 10% and reducing Sales Cycle by 10% results in an overall improvement of 47%.
Account planning is obviously a powerful mechanism to grow the number of opportunities – as you identify ‘white space’ in the account to up-sell and cross-sell your solutions. Equally important are the improvements in the other three sales velocity levers. According to the recent Account Planning Book of Evidence Study (1,043 participants, 62 countries), account planning makes a real difference.
The study assessed Win Rate in bands of 0-25% win rate, 25-50%, 50-75% and 75-100%. Based on the submissions from the participants, we were able to separate those who win more than they lose; i.e. those who record a win rate in excess of 50%. For companies who use account planning, the frequency of those with a win rate of greater than 50% is 59 percent greater than companies who don’t use account planning.
In addition to measuring the impact of account planning on win rate, Deal Size was the next factor we evaluated to determine the efficacy of account planning in improving overall revenue achievement. Practitioners of account planning have a Deal Size improvement of 14 percent. In practice, this means that instead of having to win seven deals to make a revenue target, these winning sales professionals only need to win six. This is a tremendous boost to sales productivity.
Negotiations with customers with whom you have developed a trusted relationship tend to be more collaborative. Price is not the single arbiter of the purchase decision. As sellers gain a deeper understanding of their customer’s business, they can also better augment their customer’s understanding of their business problem to design the optimum solution for their customer. Remember, the seller can’t call their product a ‘solution’ until the buyer sees how it meets their need and solves their business challenge. With effective account planning in place, both seller and buyer sit on the same side of the table working together on how to create value – rather than engage in a fractious conversation about how to reduce cost.
The Sales Cycle typically lengthens or deals slip from one quarter to the next when the focus of the seller is misaligned with that of the buyer. Less experienced sellers are singularly focused on when they can get an order from a customer, but of course the customer gains no advantage by just signing a contract. The customer cares about when their business sees the benefit from the solution.
When sellers collaborate with their customers on their account plan, both parties focus on when the customer needs to see the impact of the solution, not when the order will be signed. This allows the seller to align selling activities with their customer’s buying activities, get early insight into any potential roadblocks or barriers that may delay the deal, understand any real or perceived risks their customer might be worried about, and corral the necessary resources across the account team to address those concerns.
Based on analysis of the data submitted by the participants in our study, when account planning is in place, the sales cycle is reduced by 26 percent on average. This means that an effective seller, using the principles of account planning, can now sell four deals in the time it would normally have taken to sell three deals. This is another dramatic boost to sales productivity and a key driver towards increased revenue achievement.
The data from the participants in the Account Planning Book of Evidence Study is clear. Account planning materially impacts sales velocity.
While not all study participants will see the same improvements in each of the sales velocity levers, and not all of a company’s revenue can be impacted this way, it is a reasonable correlation to make that each seller, or account team, can achieve these gains in a specific strategic account or number of accounts.
When you can actually achieve a 59 percent increase in win rate, and a 14 percent improvement in your average deal size and a reduction of 26 percent in sales cycle, you can, within any given period, improve the return from your strategic accounts by 145 percent. Also, though not explicitly measured in this study, our evidence would suggest that sales forecast accuracy is also improved because of the greater visibility that you have into your customer’s business.
You can download a copy of the full Account Planning Book of Evidence Study here.
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Donal Daly is Executive Chairman of Altify having founded the company in 2005. He is author of numerous books and ebooks including the Amazon #1 Best-sellers Account Planning in Salesforce and Tomorrow | Today: How AI Impacts How We Work, Live, and Think. Altify is Donal’s fifth global business enterprise.