This year our sister program for heads of marketing ran a study aimed at understanding customer purchase decisions. As part of that study, we asked 1,512 customers from 18 participating companies questions about their decision process.
This survey produced a very surprising finding that not only underlines the competitive nature of B2B sales but also provides an easy way of assessing your sales force’s effectiveness.
First, as background, we asked respondents to indicate how far they had advanced in the purchase process before contacting a supplier’s sales force. It turns out that, across companies, customers are 57% of the way through the purchase process before ever contacting a supplier.
The data also revealed that your average purchaser does not contact very many suppliers. Across companies, customers typically consider no more than three suppliers at the early stages of a purchase (though procurement departments might in order to bring rigor to the process). And by the final stage, the number of suppliers considered falls to 1.7…so not even two companies.
That means that there is essentially a frontrunner and somebody who is being included merely to provide a point of comparison.
A related question was whether or not companies ended up selecting the frontrunner and we found that the incumbent or frontrunner is selected 76% of the time.
This data point provides a very simple rule to assess sales force effectiveness. In situations where you are the incumbent, you should expect to see a renewal 75% of the time. Anything above that speaks to the quality of the account management organization, in particular. Anything consistently below 75% suggests something is wrong with the customer experience.
But it’s the reverse of the previous number that’s most interesting: the frontrunner loses 25% of the time. If your win rates for new business are above 25% then you can be confident that you have the right value proposition and that your sales force is doing a superb job of finding the Mobilizers who can overcome the inertia that prevents a switch.
So, there you have it – you are likely doing OK if you win repeat business 75% of the time and your conversion rates at the final stage of the sales process for new business are at about 25%.
SEC Members, see our latest research on the right customer stakeholders for your reps to engage and the new playbook that your star reps are running.