The prospecting challenge is real.
Sellers face it every day when making the choice to go after prospects that appear to be low-hanging fruit or quick sales — or pursue prospects with greater spending potential that will take longer to close.
Sales Prospecting — Rabbits OR Elephants
There are two types of prospects — rabbits and elephants — here’s a description of each:
- Rabbits — small-spending prospects that appear easy to sell. While these prospects are easier to close, they rarely have significant revenue potential.
- Elephants — large-spending prospects that are tougher to find and close. While these prospects might be more difficult to close, they represent significant revenue potential.
Too many sellers and managers make the mistake of thinking that closing rabbits will lead to sales performance improvement and exceeding revenue goals. I hear this all the time, “We need the little accounts… they all add up and help us reach our revenue goals.”
In reality, these small amounts rarely add up to much AND rarely help sellers and organizations reach their revenue goals. Here’s why: The Pareto Principle.
The Pareto Principle states that for many outcomes, roughly 80% of consequences come from 20% of causes. Applying this well-known and proven principle to sales looks like this: 80% of an organization’s revenue comes from 20% of its customers. Repeat: 80% of an organization’s revenue comes from 20% of its customers.
Applying this to elephants and rabbits — 80% of an organization’s revenue comes from elephants that make up only 20% of the customer base, AND only 20% of an organization’s revenue comes from rabbits that make up 80% of the customer base.
Following this principle is essential to sales performance and exceeding revenue goals.
Four Important Elements Needed to Close More Elephants
The burden of building a foundation and strategy using this concept falls on sales management, not on the shoulders of sellers. Here are four things world-class managers do to help sellers close more elephants.
1. Employ an Account List Management Strategy
The best managers use their account list as the cornerstone or foundation of their sales plan and classify accounts in these categories:
- Key Accounts that represent around 80% of the organization’s revenue (elephants)
- Secondary Accounts that represent around 20% of the organizations revenue (rabbits)
- Target Accounts that represent the best, qualified new business prospects (future elephants)
- Leads that represent unqualified prospects that will move to target accounts if they have key account (elephant) spending potential.
High-performing sales organization update their accounts lists on an ongoing basis and use it to make strategic decisions for the organization and individual sellers.
2. Qualify Prospects
Managers and sellers should use a system to qualify target prospects. This is where the rubber meets the road. Simply put, chasing low-hanging fruit (rabbits) that appear “ready to buy” should not be used as the only factor to qualify accounts. Here are three better factors to consider:
- Dollar Potential—can the prospect spend like an elephant?
- Access—can the seller gain access to the decision maker?
- Fit—are the prospects goals aligned with your organization's products and services?
If you skip this step, you skip exceeding revenue goals!
Sellers do what they get paid to do. Therefore, it's important that managers create a compensation plan that includes a target to key account incentive.
If you want sellers to stop wasting time with the wrong prospects (rabbits), pay them to hunt elephants!
4. Avoid the New Seller Rabbit Myth
Many managers set new sellers up for failure because they believe the New Seller Rabbit Myth that looks like this: because a seller is new and inexperienced, they should only pursue small accounts (rabbits) until they develop their sales expertise.
Believing this myth and employing this strategy usually leads to new seller failure and a high rate of new seller turnover. Unfortunately, all the rabbits closed by a new seller rarely add up to enough to keep them on the team.
It looks like this, “We let Jimmy go after a year because only sold $75,000 and this wasn’t enough to cover his guarantee. He closed a lot of new customers, but did not generate enough money to pay his way.”
Attention sales managers: if your organization has high turnover of new sellers, do you believe this myth?
The Burden is on Sales Managers
If you're a sales manager who is missing revenue goals—and you want sellers to stop wasting time with the wrong prospects—the burden to fix this problem falls on your shoulders. Ownership of this fact is the first step to fixing this problem and exceeding your revenue goals.
- Own it.
- Fix it.
- Exceed revenue goals.
It’s that simple.