Do You Start Prospecting At A level Lower Than Your Decision-maker and Work Up? Or Go Right To The Top Dog?
If your economic buyer is an Executive Vice President, what is the pro and con of targeting a Director or Manager and working up?
What if the CEO is the only one that can approve your check? Are you better off to get the ear of a VP and work your way up or go directly for the top dog?
Getting this strategic question right is often the difference between sales success and failure.
The danger to avoid: Being lulled by activity volume in the short term but seeing conversion rates, the average size of sale and renewal rates on the low side.
Particularly in a long sales cycle sales process. Those sales conversations and discovery calls with lower levels of authority give you warm fuzzies, but it could take you six or nine months of effort before you realize that those great opportunities are just not converting and your efforts have been mostly a waste of time and resources.
Let me share a rule of thumb for the relationship between sales prospecting authority level and relationship to closed deals.
If you start your sales process one level below your economic buyer, you will sell six times less than if you started your sales process with that ultimate decision-maker.
So if the CEO needs to make the decision and you start at the Executive VP level, you will six times less.
If a VP has to OK your check and you start at the Director level, it means six times the effort for the same level of sales.
And if your economic buyer is a VP and you start two levels below, at the manager level maybe, you are selling in lottery ticket land. If you sell anything, it is due more to randomness than solid strategy and skills.
You are six times less probable to make a sale if you start your sales process one level below your economic buyer. How can you be so sure Scott?
Many many years ago when I was starting out, I did a project for a national management consulting firm. The model was to book an appointment in the C-Suite and sell a first stage pilot project. One in six meetings converted to a $25,000 pilot project. One in three of those pilot projects converted to a much larger longer-term project worth between $500k to $1.5 million.
Over many years, thousands of meetings and hundreds of projects, this management consulting firm studied their sales process. The data proved that they were six times more likely to make a sale when they started at the CEO level. Drop down even one level, start the process at the executive VP level, and sales results were six times less.
So for the appointment setters, the rule was very simple. Book a meeting with the CEO (or the person with ultimate profit and loss responsibility of a distinct business unit with at least $500 million in sales) or don’t get paid. No exceptions.
Over the years that six times the sales rule continues to ring true
I have never had a company that studied this as thoroughly as that management consulting firm. But over the years and many many projects, that rule rings true to me.
When salespeople or companies start their sales process too low, conversion rates, the average size of the sale, renewal rates and lifetime customer value suffer.
Don’t let a lot of meetings with lower level people lull you into thinking you are in good shape
Over and over again I have seen companies “get meetings and have a lot of discovery calls,” yet sales closing percentages are awful. Many times the core of the issue is that they started their sales process at too low a level.
In my world, I deal mostly with clients that sell in the C-suite or with top VP’s. I would never, never, recommend or suggest to a client that they prospect Director level decision-makers.
The “Rule of six” continues to ring true
If CEO’s are your economic buyer, learn how to get to them.
If VP’s are your ultimate decision-maker, learn how to get a meeting or discovery call with them.
Ya, it’s not easy. But cracking that code is easier than starting one level below and selling six times less for the efforts made.
Your Economic Buyer Thinks Differently: Prospect Directly to Them
Your economic buyer thinks different than the rest. They are responsible for the strategic direction of the firm and overall profit and loss. They are thinking strategically, short-term and long-term. They are not working within budgets and doing what they are told. Economic buyers are setting the budgets and allocating funds for best results.
Even if you are perfect for a firm and introduced by a lower authority person, it is my personal opinion that in the majority of cases you get discounted. Why? Because the economic buyer “knows better” and will favor a vendor they know. I believe that.
If an economic buyer sneezes in your direction, lower levels of authority will fall over themselves to agree with what they think their boss favors. You are helped tremendously when top dogs even hint in your direction.
The messaging that wins over the economic buyer is not what moves lower authority levels. In fact, change is scary at lower levels. They are entrenched in current practices. If you are successful, they have to learn new things. Their relationships with current vendors and service providers would be at risk. They might “check you out” to justify their salaries, fill up their calendars and maybe learn something from you that benefits them, but you never really have a shot at serious consideration. At lower levels, they are implementing the strategies, not setting them. They are more focused on the short-term. Plus, lower levels of authority fear rejection.
Is it ever advisable for you to prospect lower levels of authority?
Sometimes, it makes sense to start at lower levels. But they are true exceptions.
– You are learning. It’s OK to spend a little time practicing at a lower level.
– Sometimes, if you are selling major projects and your margins are sufficient, after your efforts to reach the top dog have failed, you can go low knowing that your odds have lessened but the effort can still be very profitable.
Start your sales process with your economic buyer for best sales results
Work the system that will get you the best results over the long haul. Don’t let a lack of patience or lack of confidence in your system derail you.
You need to have the confidence and ability to stick with a winning process during the slow spots.
You might have fewer meetings or discovery calls, but your conversion rates, the size of the average sale and volume of net new business booked will be much higher with less effort.
Message to Management: Know What Converts
At times, callers will book lower level meetings to meet quota. It’s easier. Management has to set standards for what level of authority the sales process is to start and what meetings will be compensated.
If management lets the team call too low too often, a ton of prospecting money will be spent now with little or nothing to show for it.