The two most common types of sales leads are:
- Prospects who have an immediate need.
- Prospects who are unaware of a need they have.
An example of a prospect with an immediate need would be a customer who’s copier lease is 30 days out from expiration and they are accepting proposals for a new solution.
A prospect who is unaware of a need they may have who has 36 months left on their copier lease.
Its no surprise the majority of sales representatives focus their efforts on prospects who have an immediate need. These types of deals are often competitive and have low margins. Often, the sale can become commoditized because the proposals are reactive. The proposal is a reaction to a customer’s need so the value proposition of each supplier is limited. Sure, each sales professional can point to different functionality of their equipment and even add in some software, but at the end of the day the customer is still picking between Ricoh, Konica, Toshiba, Kyocera, Sharp etc.
Prospects who have an immediate need are an important part of any Sales Professional’s pipeline. However in addition to being low margin, they also have a low percentage of closing due to the level of competition in the bid. A sales rep may have a 20% chance of winning a transaction like this if there are 4 other suppliers bidding for this customer’s account. Some factors may adjust that percentage up or down slightly, but for the most part, the odds are against the sales rep that they will win that net new account.
On average, a copier dealership retains/upgrades (new sale) 80% of their customer base. If a sales professional waits until their customer’s leases are 30 days out from expiration, their odds of retaining that account drop to 20%. This means, the odds of closing a prospect increase as more months remain on their lease.
What is different from the prospect’s perspective at 24 months remaining on their lease compared to 30 days remaining? At month 24, they are not aware of a need to make a change. At day 30, they are. If a sales professional can get a prospect to consider a bid with 24 months left, their odds of closing the transaction are over 80%. That is with their own customer base as well as their competitor’s customers. The closing percentage goes up as well as the gross profit. This is because the sales rep is proposing proactively…not reactively. From the prospects point of view, the sales professional will have researched their business and proposed a solution to them that brings them value.
We can go back and fourth debating actual odds and percentages, but what cannot be debated is the fact that with an existing customer or net new prospect, the odds of closing that deal go up the further out you propose from the end of their lease agreement. It is a difference in prospect types. Typically this is a prospect who is unaware of a need that they have. The key to getting access to this type of prospect is to have something unique that brings immediate value to get their attention.
If a sales rep approaches a prospect with 30 months left on their lease pitching a new copier solution, the prospect will likely not be receptive. However, if the sales rep during the conversation with the prospect, asks how they are tracking the lease that has 30 month left on it, they start to chip away at a weakness. Why is it important they track that copier lease? They have to send in a letter of intent so it does not renew. This opens the door to how they track their postage meter, MPS Agreement, software, etc.
This is a chink in the armor of most companies. The fact is, most companies do not have a process in place on how to track their contracts and assets. Contract Management Software does exist, however it is very complex and expensive. It is designed really for Fortune 1000 companies, Healthcare, and large Government. For any other business, its tracked on spreadsheets or Outlook Calendars. It is highly likely they have had contracts renew and escalate in price. By asking a simple question; “have you ever had a contract you wanted to cancel automatically renew” a sales professional can expose a pain point.
A prospect will listen if you are able to introduce them to something of value. Some people try interesting articles and seminars to achieve this. By referring a product that makes the prospect’s job easier and saves them money, the sales rep becomes a credible resource who delivers value.
RenewAlert is a cloud based Contract Management program that is inexpensive and very easy to use. It is an ideal tool to use because the objection to considering a copier proposal 30 months from expiration will likely be around how many months they have left on their lease and to “call on them in 2 years.” Their copier lease may expire once every 5 years, but a prospect may have 5 to 100 other contracts and time critical tasks expiring every month. No one likes their contracts auto renewing and it does often expose a pain point.
Once a prospect is interested in the solution the sales rep has introduced, they may get to work with the prospect in getting their contracts entered in to the RenewAlert system. This provides excellent insight in to any office equipment contracts, payments, and expiration dates. The sales professional is granted insight to the prospect’s expiring contracts when gathering them to enter in the system and also is setting them up with a solution that will make the prospect’s job easier and will cut their operating expenses.
The most effective way in to a prospect is going where the competition is not at. A prospect with 30 months left on their lease may seem like an impenetrable wall to most when pitching upgrading to a new office equipment solution. The crack in the wall is the prospect does not have an effective way to track their contracts and assets and has had contracts auto renew. Knowing that and having a solution, offers a way in to a prospect that once proposed, has an 80% plus chance of closing.
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