A sale, even a big one, can mean very little for your company if your customer feels unsatisfied, or if it wasn't actually profitable for your business.
Not every sale is good for your customer, and not every sale is good for your business.
Too many product returns, tiny profit margins, and customers who disappear into the wind are just three common reasons your company must constantly evaluate and reevaluate the sales strategy. And this is true across the board: whether your company offers professional consulting services or hand-made tea kettles, the key component to maximizing your business's profits will be understanding the types of sales that make your customers happy—as well as those that make your company grow.
Before looking out to your customers for the answers, you must first look inward, says Russ Lombardo, a sales consultant and president of PEAK Sales Consulting, a firm based in Cary, North Carolina. "Few companies do a post-mortem on a sale when it's lost," he says, and "pathetically fewer do a post-mortem on a deal that was won."
According to Lombardo, most companies don't spend enough time piecing together all of the elements of the sale—where it went wrong, where it went right, and how to improve.
"It's not often that you win a deal and ask 'What did we do right?' and say 'OK, let's do that again.'"
But you should. A good salesperson or manager, says Lombardo, will always be asking himself the same two questions: Was it good for the customer? And was it good for us?
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How to Evaluate the Success of a Sale: Is the Customer Happy?
Part of making a "good" sale is trying to understand what the customer is trying to achieve. First, recognize that the customer is always in "Situation A," and, by buying your product or service, they're trying to get to "Situation B." If it's a professional service, they'll likely be buying your product or service to increase revenue, decrease costs, or increase their market share.
By gleaning specific information from the customer before the sales process, you'll be able to evaluate, specifically, if you were able to meet the criteria. "When you do the post-mortem, you can go to the customer and say 'These were the problems we set out to solve: how did we do?'"
One trick to achieve a positive response, says Lombardo, is to assume every sale is going to be a case study for your company. That way, if you think in terms of "how will this look as a case study a year from now," then you start visualizing what you're trying do.
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How to Evaluate the Success of a Sale: Maintain an Open Line of Communication
In order to evaluate the sale, you'll need to keep an open line of communication with your customers. To do this requires a bit of manpower, but also a bit of tact. Blasting out general e-mails to your customers probably won't elicit the type of response you need in order to determine if buyers were satisfied with the product or service.
Consider, for instance, GemKitty, an online retailer of custom jewelry, which is based in Portland, Oregon. GemKitty's founder, Arwa Jumkawala, allows users to design their jewelry, and, once satisfied with the desired online look, GemKitty's artisans make the product in the studio. When the product arrives, it contains with a it a handwritten note from the artisan who made the piece, with some additional information about what was happening while the product was being made, such as the type of tea the artisan was drinking at the time. Then, a few weeks later, the team sends a survey to the customer from the jewler who initially sent the note. "That way, they instantly recognize who it is," Jumkawla says. "It's like, 'Oh, it's Arwa." Once the customer completes the survey, she or he recieves a $15 gift certificate.
"We make an effort to respond to people, and I want acknowledge them," she says.
Lombardo recommends starting the information-gathering process slowly. In other words, you don't want to ask for too much information initially, he says, because you risk annoying the customer—with one side-effect being that they might just not respond. But, if you ask the right questions and offer some kind of discount on the next purchase, they feel a little bit obligated to respond, he says.
Asking the right questions in these types of surveys is essential. "A lot of time those questions or surveys are useless, because they rank things on a scale of one to 10," he says. "People are lazy so they throw a line down all the tens." The better questions are always open ended, such as "would you refer us to a friend or colleague?" or, Lombardo's favorite: "Given what you now know, would you do this again?"
If answer is no, you ask why. More often than not, they'll tell you, Lombardo says. Even if the answer is negative—they were pressured too much or they felt threatened by the sales process—the key is to start the dialogue to understand how you can improve the next.
'You'll never get that dialogue if you don't ask the right questions,' Lombardo says.
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How to Evaluate the Success of a Sale: Mind the Margins
While customer satisfaction will be crucial to the long-term success of the business, more immediate concerns focus on profit margins. Even if your business appears to have healthy sales, the company can be struglling due to shrinking margins or increasing costs.
"You can be selling like crazy and still be going out of business," Lombardo says. "It's foolish if you don't know what your profit margins are on every single sale. If you realize you don't have good margins, then you must look back and ask, Why? Are you discounting too much or costs too high?"
Either way, it's a matter of education and discipline. If your company is discounting too much, it's probably embedded within the corporate culture to offer these low (and too low prices). "In a small business, it usually starts at the top," says Lombardo. "It's the owner who's usually doing that. I always say 'what's the first and best way you can give yourself a raise? Everyone kind of looks at me and they say, 'ask the boss?' I say 'No, stop discounting!'"
In order to restore profit margin, you'll need to increase your company's value proposition. By finding the strongest elements of your company, you'll be able market those advantages to the customer.
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How to Evaluate the Success of a Sale: Dealing with Disagreements
Inevitably, your business will deal with difficult customers and harrowing transactions. Jumkawala recalls a time when a customer mistakenly gave the wrong ZIP code. According to Jumkawala, when the order was shipped to the wrong address, she called Jumkawala screaming, arguing it wasn't her fault, and demanded to get the product immediately.
According to Lombardo, your company will lose more money in the long run if you don't budge on these types of issues.
Operating under that philosophy, Jumkawala overnighter another piece of jewelry to the woman, despite taking a loss.
More generally, it's important to get approvals before billing on projects. If there's ever a disagreement about timing or deliverables, you'll be able to point to an e-mail or form that the client had signed off on. "Say, we delivered this, can you confirm that you accepted it?" Lombardo explains. "That way, you reduce your exposure."
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