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The Velos Group Newsletter JANUARY 2013


 
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Find Lost Revenue

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Find Lost Revenue: Uncover Hidden Causes to Common Sales/Marketing Problems

Contributing author Mark Friedman spots, diagnoses and solves revenue issues confronting businesses.

 

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Effective Sales Lead Management Can
Increase The Value of Your Company

Managing your sales leads, leveraging the value of your customer base and using your Sales Force Automation (SFA) Customer Relationship Management (CRM) software more effectively all contributes to increasing a company's true value.

 

While some people we have talked to consider these areas to be mostly tactical in nature, many others are recognizing the strategic importance of implementing best-in-class Sales Lead Management techniques.  re are three popular methods used in determining the value of a company:

  1. Market Replacement Value - the value of comparable businesses
  2. Income - historical, current and projection of company's profits
  3. Asset Value - the value of the company's assets

One of the important factors considered when evaluating the worth of a company common to each of these methods is the quality and performance of the management team.  

 

Repeatability, consistency, process, procedures and proven systems are all signs of a superior management team and contribute to the increased buyer/investor valuation of a company.

 

In traditional manufacturing, the business value of "process" is well understood. People appreciate that the value of an automobile manufacturer is not in the ability to produce a single car. It's in the reliable and repeatable ability to create high-quality cars at a predictable cost. Companies that apply the same discipline to their Sales Lead Management/CRM process experience significant sales and profit growth and regularly outperform their competition.

 

Over an extended period of time, a company with proven Sales Lead Management processes, procedures and systems demonstrates the following benchmarks:  

  • Increased sales results
  • Increased sales productivity
  • Increased predictability of revenue and profits
  • Increased consistency of revenue and profits
  • Growth of customer base
  • Accurate, tightly-controlled Central Database of customers and prospects (Managed as a company asset, company not held hostage by sales reps - what if they leave the company?) 

To Illustrate My Point:

During recent conversations with several companies that specialize in corporate valuation, one international corporate investigation and due diligence organization serving investors, entrepreneurs and bankers indicated that as part of their evaluation of a company to determine its value, they ask the following standard questions:

 

Sales Management Process

  • Is there a formal process for managing sales activity?
  • How are leads managed? What happens to "dropped leads?"
  • Does the company understand of its cost of leads?
  • What marketing activities have the lowest cost of leads?
  • What marketing activities produce the most qualified leads?
  • What tools are used to manage the leads?
  • What metrics are documented and reviewed? Frequency? Audience? 

Pipeline / Lifecycle

  • Does the sales pipeline provide an adequate forecast of future sales?
  • How long is the sales cycle? What does it cost to produce a sale?
  • Is the pipeline realistic given our review of accounting and customer support?
  • What is the percent variance of forecasted sales versus actual? 

The answers to these questions help determine the quality of the company's systems and management team.

 

A principal at another company involved in company valuations (David Martin, Burge Logistics, confirmed that when evaluating the worth of a company, these factors are excellent indicators (among others) of the quality of the management team. Not only can a higher quality team command a higher valuation, the well-run company can also serve as a foundation company for future acquisitions.

 

Conclusion: 

Effective Sales Lead Management and CRM process can be used to increase corporate valuation by contributing to increased consistency and predictability of profit flow. Additionally, it is an excellent indicator of a superior management team.

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