Sales versus Marketing
Sales in its basics: definition and tips for your sales success
What is sales?
Definition of distribution: Sales refers to the entire sales process for a product or service. This begins with the identification of the target group (s), includes addressing and acquiring interested parties, and continues through the actual sale to delivery of the product to the customer. In recent years, the following support for sales has also been increasingly included, as new sales can also be generated from this.
In addition to a sales definition, we explain the different forms of sales such as direct sales, telephone sales or even "passive sales" and show the sales process behind them. So this page is dedicated to all aspects that play a role in the field of sales and always has tips ready to make your sales successful.
The sales process in five steps
Enough of the preface, now it's time to get down to business. The sales process is certainly dependent on the product and business model, but roughly summarized it runs in these five steps:
- Identify prospects
- Address prospective customers
- Convince and sell
- Delivery and support
- New acquisition and after sales
Step 1) Identify prospects
Every beginning is difficult, and it is no different when it comes to identifying interested parties. After the target group has been defined, it is essential to research the first raw data such as addresses and company names, as these should ultimately be converted into paying customers. However, many of the companies find it difficult to identify potential customers, i.e. leads. There are many options in lead generation that, when properly implemented, lead to promising leads. These include:
When generating leads, it is important to check and qualify the data obtained. After all, not all of the information and contact details collected are suitable for further consideration in the sales process. For example, if you have decided to buy addresses from a chamber of commerce, you can assume that some of the companies have no need for your products or services at all. This needs to be filtered out, not only to avoid unnecessary effort for these leads, but also because in times of the GDPR and the Unfair Competition Act (UWG) it can be very expensive to contact them. The situation is different with leads who have already shown a high level of interest in your offer, such as a company that has requested further information via the contact form on your website. With this type of lead, you want to provide the relevant contact with the information they want. On the other hand, you also want to find out more about the associated company - what is its name, how big is it and does the data left in the contact form already belong to the decision maker?
Step 2) Address prospects
Depending on the form of distribution and the type of data generated, the second step is to seek contact with potential new customers via email, telephone or even personally. Since, especially in business-to-business, a contract is often only concluded at a personal meeting, the latter is also one of the major milestones in sales efforts - but more on this in the third step.
The aim of addressing interested parties is first of all to establish contact and then to maintain it in order to be able to hold long-term sales talks and to be able to conclude a purchase. This business initiation and offer tracking can take a long time, depending on the industry, target group or company. Here it is important to remain patient and not to unnerve the potential customer with too much one-way communication, but at the same time to create a regular point of contact. In addition, hasty offers should be avoided, with which one surprised and scared the interested parties. In principle, salespeople should ask themselves two questions before they start writing an offer:
Customer side: Is the contact really interested in a specific offer? Does he already have a more precise idea of his goals and timing?
Sales side: Do you have enough information at hand to be able to write a specific offer that corresponds to the goals of your contact?
An early and poorly thought out offer is usually a shot in the oven and costs not only you but also your potential customers time and nerves. If an interested party is then ready for an offer, the good preparation of this offer decides whether it will be won or lost.
Step 3) Convince and Sell
Regardless of how many potential customers you can find and get them to a personal sales pitch, in the end you have to be convincing in exactly this and ensure that there is not only an interest in your offer, but also a business. For good reason, the acquisition discussion is therefore referred to as the supreme discipline of sales. In general, there are several things to consider for these customer appointments, which have a significant impact on the outcome of these discussions and which we have put together for you here:
Step 4) Delivery and support
There is not much to say here - if the customer is finally won, the service is provided, e.g. the delivery of the product or the execution of the corresponding service. This is followed by further customer care, for example in the form of follow-up meetings or through customer loyalty measures.
Step 5) Acquisition and After Sales
It is well known that acquiring new customers is more cost-effective and effective than finding completely new customers. Satisfied customers like to stay, after all, buying again from the same provider involves less effort than researching new options. For this reason, maintaining existing customers is so important and is firmly anchored in sales in more and more companies. A clean customer relationship management or customer relationship management (CRM) helps to strengthen existing business relationships and to successfully design the sales process - especially in the context of customer loyalty.
There are various CRM systems of this kind on the German market alone. Most are aimed at a target group from corporations and larger medium-sized companies. CentralStationCRM, on the other hand, is specially designed for small companies, self-employed people and startups and is therefore much simpler and more flexible. If you want to test such a CRM system for your own sales department, you can try the software at any time without obligation on the website.
How do you measure sales success?
In the various process steps, potential buyers are (unfortunately) repeatedly lost, which means that their number can be represented well as a “sales funnel”. In practice it could look something like this: A car dealership determines its target group in a city. This includes all households that do not yet have a car or one that is very old and that they probably want to replace (10,000 people). The dealership has advertising brochures distributed to these 10,000 people to draw their attention to its offer. About 10% of recipients read the prospectus and come to his shop (1,000). Of these 1,000 visitors, 10% agree to take a test drive (100) and ultimately 10% of the test drivers buy a car (10).
The numbers are purely hypothetical, of course, but show two of the most important levers in sales
Reach - reaching as high a number of potential interested parties as possible
Conversion - the conversion from visitor or prospect to actual customer
In order to increase sales at least theoretically by 100% from 10 to 20 cars, the population could either be doubled at the beginning (to 20,000 people) or the proportion of those who continue to stay in the process must increase at each stage. This ratio is known as the conversion rate (CR, also conversion rate or conversion rate). In our example, the percentage per level would have to increase by around 3 percentage points to 13% in order to arrive at a similar result (10,000 people -> 1,300 interested parties -> 169 test drives -> 22 cars sold).
Our example now hides the fact that there are still essential measures before and after the actual sale, without which the sales process would not run. A target group can be defined in this way, but these people must first be identified. Specifically, this means names, addresses and contact details. The more appropriate and detailed this data is, the higher the chance that it will also become a customer.
After the sale, on the other hand, the delivery of the product or the implementation of the service or, under certain circumstances, even the support. In addition to pure sales, sales also include aspects from marketing and logistics.
Sales forecasting, i.e. the planning of expected sales, is closely linked to the measurement of sales success. In this planning, the aspects just mentioned, such as sales opportunities and sales funnel, must be taken into account in order not to be confronted with an order gap at some point where it is too late to counteract. In our article "Sales: Sense and Nonsense of Sales Forecasting", we deal with the determination of purchase probabilities and frequent sources of error in the forecast, for example.
Direct sales versus indirect sales
In terms of the types of distribution, a fundamental distinction can be made between direct and indirect distribution:
Direct sales means that the producer or supplier sells the goods or his service himself, often directly at the customer's location. Well-known examples are Vorwerk (vacuum cleaner, Thermomix) or, in the B2B area, the screw manufacturer Würth. However, hardly any company still relies exclusively on pure on-site sales, but combines this sales channel with its own stores or with telesales and online shops. If you are even more interested in the subject of direct sales, we can recommend the article "What is direct sales? - Definition and examples of traditional sales channels".
In retail, indirect sales are usually carried out via stationary partners such as retail stores or department stores. No manufacturer of detergents or shampoo would run its own shop, but always rely on being included in the range of drugstores or discounters. It looks a little different in the clothing market. More and more brand manufacturers are relying on so-called “flagship stores”, on the one hand to bypass the middlemen and increase the margin, but on the other hand also to have more influence on branding and the shopping experience.
In the B2B area and in industry, one often relies on regional commercial agencies or sales partners. In plant engineering, for example, there are various small but highly specialized companies that plan and, if necessary, assemble the plants with customers. These systems are then obtained from the manufacturer and passed on for a certain surcharge. In addition to planning (and possibly assembly), support and maintenance are then carried out by the sales representative and his partner.
In the media or digital business, there is now more and more a kind of mixed distribution. Publishers, for example, often sell their online products themselves and directly, but still rely on classic outbound for advertising, i.e. telephone sales with call centers. The large software providers also usually have their own online shop, and service providers take care of sales and, above all, installation and maintenance. In order to illustrate the proximity of the company to its service providers, they are often allowed to refer to themselves as “silver” or “gold partners” and attach a plaque from the software manufacturer to the website. In principle, however, these sales agencies work legally completely independent of the manufacturer.
So-called software as a service (SaaS) providers play a certain special role in sales. They not only develop their software, but also operate it on their own IT infrastructure and make it available to users via the Internet for a kind of monthly rent. While sales initiation is partly carried out via sales partners or affiliates, operation, delivery and billing are carried out entirely by the provider.
So you can see that a strict separation between direct sales and indirect sales can hardly be maintained. Most companies rely on different forms and channels of sales in parallel in order to balance aspects such as customer proximity, margins and a large reach as well as possible.
Sales of B2B versus B2C
The distribution of a product is ideally based on the target group for which it is intended. If the potential customers are other companies, one speaks of “business-to-business sales” (B2B), as indicated above. If the target group consists of private customers, this is referred to as “business-to-consumer” (B2C).
Although some sales experts argue that ultimately you always sell to individual people and that the two are therefore not so different, the path to closing a deal is very different.
While customers organize themselves in a targeted manner in the B2B area, for example in associations, at trade fairs or industry events, in sales to private customers, anyone who only has the relevant interests or needs can be considered. This is evident from the very first steps in marketing. Hardly anyone would rely on TV advertising in B2B sales, while only a few consumer brands invest six-figure amounts for a trade fair stand. If so, then because there is usually a mixed calculation, such as for hi-fi or camera fairs. Private customers can take a look at the coveted technology, while business customers bring the deals.
The difference between B2B and B2C is also reflected in the level of prices that are called for the products and services. While providers of real estate or cars seem to earn high amounts from private customers, the really high deals in these sectors are only achieved business to business. As a result, the target group is defined as well and as closely as possible, that sales to private customers are ultimately always a mass business. In B2B sales, on the other hand, individual orders can be so lucrative that they justify a much higher cost per customer. As always, exceptions confirm the rule - the sale of a villa to private customers is certainly associated with some distribution costs, but also offers the potential for a high volume of orders.
Sales to new customers versus existing customers
The difference between B2B and B2C is also relevant for addressing or acquiring potential customers. While it is forbidden for private customers, at least according to German case law (UWG, in particular Section 7 (2) and (3)), to contact them unsolicited for advertising purposes, measures such as cold calling are still permitted for business customers in individual cases. Call centers therefore only offer classic cold calling for business customers; independent sales agents also rely on the B2B area for telephone calls. Contact by post is allowed both B2B and B2C, as is contact by email after a confirmed double opt-in. In fact, the GDPR has changed little in this regard, apart from the penalties for violations of the law.
Warm acquisition, i.e. sales to already known people or existing customers, also takes place with private customers. An example would be cell phone providers who offer their customers new contracts after the end of the term. We have listed more about the two types of sales in the article on the difference between warm and cold calls
Basically, sales to existing customers or at least good contacts are always much more efficient than sales to new customers. One speaks of a factor of 5, i.e. it is up to five times more likely to sell to an existing customer than to win a new customer. Good documentation of the joint contact history in the CRM system is essential for existing customer management, because this is the only way to understand when there is likely to be a need again, contracts expire or who was the key contact person on the customer's side.
Sales and CRM
Since sales refers to the entire sales process, the job as an employee in sales is extremely varied. In addition, there is not such a high division of labor in SMEs as in corporations, for example, where there are separate departments with correspondingly high budgets for each form of sales. Thanks to cheaper and improved technology such as rental software (Software as a Service, SaaS), even small companies can offer professional sales.In the past, for example, it was hardly possible to target individual customer groups, but the advertising was distributed with a watering can and hordes of salespeople then moved from house to house and company to company. To the delight of customers and salespeople, such an approach has long been a thing of the past.
In addition, it was previously hardly possible for small companies to use knowledge about customers in the long term and keep it in-house. If the sales representative went, so did the knowledge of the customer. CRM tools specially designed for small businesses make this transfer of knowledge easier. Precisely because the efficiency of sales to existing customers (warm acquisition) has been recognized, efforts are increasing not to surprise customers with a sale, but to retain them in the long term by means of sophisticated customer relationship management.
Appropriate CRM software, in which all contact details, but also emails, notes, tasks or products that have already been purchased are noted, ensures that all relevant information about all customers is properly documented. Only a complete customer history can ensure that, even after months, you will still know which offer you have spoken to a customer about when and where - and thus not only offer your existing customers better service, but also make your entire sales department more efficient.
Corporations and large companies control their sales practically exclusively through numbers and therefore also need CRM software that integrates various departments, connected warehouses or merchandise management and translates them into key figures. Smaller companies and the self-employed, especially in the service sector, need the exact opposite. They usually still know their customers personally and therefore tend to focus in sales on a long-term customer relationship that is valuable in terms of content. In an agency with 100 customers, constantly counting calls or appointments would only produce a mere sham accuracy anyway.
For small companies we have developed CentralStationCRM, a CRM system that manages with 10% of the functions and key figures of complex group software and is therefore much easier and more pragmatic to use. Nevertheless, the essential functions of a CRM system are all included. You don't need a call or appointment for a test, just an email address. Then you will be ready to go in 60 seconds.
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Push versus pull sales or outbound versus inbound
Outbound in general stands for all forms of sales that are actively aimed at the customer. Often, however, outbound is also used synonymously for classic cold or telephone acquisition.
In contrast to outbound, with inbound you rely on the customers finding you. The idea behind it is, in contrast to the classic push methods, to be perceived as less annoying (for example in comparison with advertising, spam mails or “cold” phone calls). At the same time, it is hoped that there will be fewer wastage, as the people have already shown a fundamental interest. This can be done, for example, by producing very interesting content (e.g. videos, blog posts or eBooks) and making it available to potential customers free of charge. Interested parties can find this search engine optimized content (SEO) either via Google or the posts are so valued by visitors that they share them via their social media channels. Along the way, companies collect interested parties and, even more valuable, addresses. As an example, an eBook could be offered for download free of charge if you leave your contact details beforehand. The data from this sales channel then flows into the normal sales process from e-mails, phone calls, etc. Inbound is therefore also a kind of indirect sales, which is sometimes also referred to as "passive sales".
Most companies offer their customers a telephone hotline that you can call if you have any questions about the product or service. This form of telephone advice is also defined as inbound and is generally assigned to customer service first, but in a broader sense to sales.
Telesales or telephone sales
Telesales is the classic, usually cold, telephone acquisition. This can be carried out externally, e.g. by call centers, or in-house, i.e. by your own employees.
Call centers are used by many companies to create an initial contact or to “qualify” contacts. Since calls through call centers to private customers are forbidden in cold calling, at least in Germany, they are mostly aimed at corporate customers. The point here is to make the customer aware of the product in the first place and to inquire about a general requirement. Call center agents are very experienced in an initial approach, but of course do not have the detailed knowledge of the product. So if there is an interest in more information, the potential customers (now referred to as “qualified leads”) are referred to an internal employee of the company.
So that the call center agents even know who they are calling and what they are talking about, there is a training or setup phase for the agents beforehand by the company. It is therefore not worthwhile to simply have a handful of customers called through a call center as a test, because this setup phase at the beginning is quite expensive and only pays for itself over the course of many telephone calls. For example, if a management consultancy would like to arrange appointments through a call center, the consultancy will certainly pay a mid four-digit amount for the setup and then between 200 to 500 euros for a sales appointment. If you consider that even with good sales employees, every appointment does not turn into an order, you can quickly calculate that the use of such a call center is only worthwhile in the sale of high-priced products or services.
In-house telephone sales
Especially when the required specialist knowledge is already high on the first phone call, companies do not rely on call centers, but rather on their own telephone operators who have been comprehensively trained in terms of content. In IT, for example, it is practically impossible to have a call center agent offer more complex software or hardware solutions. Then you prefer to rely on your own strength. When it comes to warm acquisition, companies almost without exception work with their own employees. In telephone sales they use inventory data and a detailed customer history and very few companies want to give external access to their CRM system.
Telephone sales through independent sales agents and partners
An interim solution is offered by self-employed sales agents who often focus on a specific industry. That means they have significantly more specialist knowledge and industry knowledge than the agents of a call center, but still have the routine of telephone sales. This shortens the setup phase and increases the chance that an unqualified contact will convert to a lead or even a deal. The only disadvantage is that you get less “horsepower on the road”, that is to say, you can't even have thousands of calls made in a few weeks, as is the case with large call centers. Especially for small businesses, this is rarely a requirement, but rather the routine in telephone sales that external sales agents can do well.
E-mails such as classic newsletters are actually an instrument that is more likely to be attributed to marketing than to sales. Nevertheless, this is exactly where sales come in. On the one hand, it is about getting the addresses at all (as is generally the case in sales). You can certainly buy addresses (e.g. through the chambers of commerce, from Bisnode / Hoppenstedt, etc.), but in most cases they are either outdated or have already been contacted a thousand times and are relatively "immune" to acquisition attempts. Therefore, you have to either research and / or collect valuable addresses yourself (“inbound”), for example via your own website and a contact form, etc. Real sales by means of e-mails are not only forbidden with cold contacts, but only very much moderately successful. The risk of getting a warning and being disqualified as spam is much too high. You can read about how you can successfully collect addresses for e-mail marketing in our blog post "Nine Methods of Lead Generation".
The situation is different for existing customers or people who have specifically agreed to receive a newsletter, for example. If the content is very high quality and precisely tailored to the target group, email marketing is still very efficient. Good newsletter senders also offer detailed evaluations for their campaigns, so that you can see very precisely which emails were opened, how often and by whom. Here, for example, sales agents can make calls and make calls. If you are thinking about your own newsletter, our article "The Ultimate Guide to Newsletter Marketing" will give you the right tips.
Even today, a good sales pitch cannot always be done online or over the phone. A visit from an employee from the sales department is still irreplaceable, especially in the upscale B2B business. In contrast to the past, however, this is only a large-scale house-to-house sale in exceptional cases, but the addresses are selected beforehand as carefully as possible in order to keep wastage to a minimum. At best, a salesperson builds up a good relationship of trust with his customers and looks after them over the long term over the years. In the case of important customers, one speaks of “key account management”. This lowers the costs of training and increases the chances of repurchases, because the salesperson knows the long-term needs of the customer and can advise them as best as possible. In order to keep the frictional losses of this knowledge about customers to a minimum, for example when the sales representative leaves the company, companies are increasingly relying on the documentation of the customer relationship in the CRM software.
Since traveling to customers is very time-consuming and expensive, companies like to combine personal sales with trade fairs. Interested customers come directly to the company there and many high-quality discussions can be held in a short time with relatively few employees. In addition, the representatives of the trade press are usually on site, so that as a provider one can hope for a mention in the media under certain circumstances.
However, depending on the industry and the size of the stand, the costs for an appearance are immense, so that sales at trade fairs only make sense for high-priced offers in B2B business. As described above, the visitor days that are open to all are usually a nice side effect (e.g. “branding”), since the stand is built and paid for anyway. Hardly any other provider could, however, bring so many products to private customers at a trade fair that a stand would pay for itself. Small and medium-sized enterprises (SMEs) in particular will therefore rarely be seen with large exhibition stands.
A well-documented customer database is the linchpin of any successful sales. CentralStationCRM is the simple CRM system for small teams - it couldn't be more efficient!
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