If there’s one goal all businesses have in common, it’s profitable growth. But, while we all work towards that goal every day, we all know it doesn’t just happen.
While the goal is elusive and challenging in its pursuit, it is a simple formula that drives the results.
(X)(Y) + Z = Profitable growth
Where the variables are: X = Ideal opportunities, Y = Volume, Z = Velocity
If you fall short on any one of the variables, you will fall short of your goal.
- Take out the ideal opportunities and you will never be profitable.
- Take out volume and you will never achieve growth.
- Take out velocity (the ability to move prospects through your pipeline) and you will never achieve profitability or growth.
The “X” factor of opportunities
Not every account is a good one and nothing will derail you faster than working on the wrong accounts.
When we analyze producer books of business, we find that the bottom half of these books (the smallest 50% of accounts) only produces, on average, 6% of their total revenue. But here’s the real kicker. The top 5% of accounts produces, on average, 30% of total revenue.
Theoretically, you should only allow opportunities in your pipeline that have the opportunity to deliver a reasonable profit margin. But, when we analyze the typical book of business, it’s not uncommon to find that, at best, half of the book is either “break even” or flat out unprofitable.
But revenue shouldn’t be the only determination of an ideal opportunity. Your definition should also take into consideration their philosophy of their benefit program, their buying style, what kind of relationship they want to have with you (vendor vs. advisor), etc.
At the end of the day, you need to like and respect your clients. It’s a privilege to have access to you, your team, and your resources. This privilege should be reserved only for those who you deem to be ideal opportunities.
Gut check question – As you look at your pipeline and your existing book of business, can you honestly say that each account can produce a reasonable profit and that your business is (or will be) stronger because of the relationship?
“Y” you have to have volume
Without the right volume of opportunities, you will never achieve growth. You must maintain enough opportunities in your pipeline to ensure your ability to hit your net growth goals.
We all know that selling is a difficult and scary job and, most would agree, prospecting is the scariest, most difficult part of that difficult and scary job. Because of that, most producers will do everything they can to avoid prospecting.
If you are serious about achieving profitable growth, you have to make prospecting a priority, which means committing time on your calendar every week (if not every day) for prospecting activities.
Gut check questions – On a scale of 1 to 10 (Ten being there is not a single doubt in your mind that you will hit your sales goal and one sounding like the breeze over the top of an empty beer bottle), how would you rate the health of your pipeline? On a similar scale, how would you rate your discipline in blocking out time to improve/maintain your current score?
“Z”zzz – No sleeping on the job
The one thing that is more dangerous than an empty pipeline is a full pipeline that is stagnant. It’s more dangerous because of the false impression it gives. The pipeline may look good, but if the opportunities aren’t moving forward, nothing good is going to happen.
You will never have controlled velocity until you have a defined sales process through which you take your prospects.
You initially take control by defining the standard you need to hit in order to earn the business. This may seem like an aggressive conversation to take to a new prospect, but it’s the absolute right first conversation.
If they are willing to meet with you, and if you are going to take time to meet with them, it should be safe to assume that there is a target that, if hit, will result in you doing business together. If that target doesn’t exist, move on.
But, once there is an agreement on the target, your systematic sales process provides the step-by-step journey that will allow you to predictably move the prospect toward that target. Of course, there is no one sales process that makes sense for everyone, but everyone should have their one sales process to follow.
Here is a suggestion of what should be included.
- Step 1 - Get agreement on the “standard to earn the business.” I suggest you hold yourself to a standard where you won’t ask for their business unless two things happen during the sales conversation: 1.) You both agree that you see an opportunity for meaningful improvement to their current situation. And 2.) You are both confident in your ability be the partner that can drive that improvement.
- Step 2 – Help them define what their definition of success is in terms of their HR/Benefit or risk management program.
- Step 3 – Evaluate the various areas of their business (insurance program, compliance, technology, communication, etc.) that impact their ability to achieve success as defined in Step 2 to determine what is working and what isn’t working in their current situation (Pointing out the obvious-- this corresponds directly to the first half of the Standard)
- Step 4 - Present them with the solutions you will put in place to address any needs identified in Step 3, including a detailed plan of implementation to give them confidence in your ability to truly drive results (Pointing out the obvious – this corresponds directly to the second half of the Standard)
- Step 5 – Get their agreement that the Standard has been met and, once agreed, get their commitment to git ‘er goin’.
Gut check questions – Do you have a similarly clear, buyer-focused sales process to follow? Collecting a census and getting quotes is NOT an acceptable process. When you look at your current pipeline, do you (and your prospects) know exactly where you are in the process, what you will discuss next, and when that discussion will take place? If not, you need more velocity!
Sure, the math may seem easy, but the execution is anything but. Don’t make it any harder than it needs to be.
Be disciplined about only allowing the right opportunities into your pipeline, obsess over maintaining the right number of right opportunities, and then apply steady pressure to keep them moving forward.
Keep doing this and your efforts will all add up to the profitable growth you need and desire.