I'm writing an ebook that will cover a lot of how to do this. I've adapted parts of it to address your question. The advice below will cover your sales process, but you can and should apply it to any part of your business. Hopefully you and others will find it useful.
If you can measure it, you can improve it.
There is a danger in getting lost in meaningless statistics, so I’m going to give you two metrics against which you should measure your sales processes. These are the only metrics that really matter when it comes to business: time and money.
Ultimately, you can reduce or convert everything (including time) to one metric. Money.
It’s easy to quantify the time of your employees, but it’s not just their salary that you need to count. You must also take into consideration their benefits, the taxes you pay for them, and any overhead including office equipment, supplies, rent and insurance. Project total costs for an entire year and then break it down to an hourly rate and you’ll get an idea of the true hourly cost of your employee’s time.
While that’s a good start, it isn’t enough. The whole reason behind measuring everything is so that your business can improve with the information you receive. If you’re not performing any sort of analysis and taking action on it, there’s absolutely no point in wasting time measuring.
You should be looking at the cost of performing certain actions and weighing it against the benefit received. It will quickly become obvious what’s working and what isn’t.
Once you’ve weeded out the obvious profit-draining candidates, start looking for bottlenecks in your business processes, even if they’re profitable. If you break down a business process into its constituent parts, chances are that you’ll spot a part of the process that is inefficient. You can measure inefficiency by looking at the time and money a part of the process takes versus the impact it has on the process as a whole. Highly inefficient sub-processes will take a lot of time and money but have little impact on the eventual outcome; highly efficient sub-processes will do the opposite.
The point of identifying bottlenecks in a profitable business process is so that you can increase your margin. If you’re able to optimize or even eliminate a bottleneck, that particular process will cost less, but still produce the same outcome.
Even if you have efficient and profitable processes, you still might be able to improve them to make them more efficient and more profitable.
If you can measure it, you can improve it. If you test it, you will improve it.
Testing sounds intimidating, but don’t let it scare you. In a business context, testing is measuring the ROI of two or more different business processes that accomplish the same task. The application of the test results means that you simply choose the method that is most profitable.
Here are some general principles for testing and improving your sales process:
- Test everything - You can test any
aspect of your business process, from
scheduling to marketing to
development and distribution. The
possibilities are endless and nearly
every aspect of any business can be
improved in some way.
- Each test should be simple - If it’s
too complicated or difficult, the
test results may be affected and the
success of the test is at risk. Also,
if the goals of the test aren’t
clearly communicated with those
involved, it’s easy to run into a
situation where employees don't understand what is going on and resent the tests.
- Use cost-based measurements - The key
to a simple test is to find the most
relevant and objective measurement.
Usually that measurement is cost
because almost every business process
can be reduced to a monetary value.
Measure absolute cost.
- Measure first, test second - It’s
vital to have a base set of data from
your current way of doing things
before you start testing changes to
your business process. If you don’t
know where you are, you’re never
going to be able to get to where you
want to go.
- Measurement should be easy -
Measuring should be quick, automatic
if possible. The cost of performing
your test should not exceed the
benefit you gain from its results.
- Simple tests produce easy analysis -
Your test results should be apparent
at a glance or with minimal analysis.
If it takes longer than a few minutes
to perform your analysis, chances are
that you have too many measurements
or that your test is too complicated.
- Test smart - Start testing with your most obvious inefficiencies or where you have the most to gain in terms of ROI.
- Fail fast – Review your results
periodically throughout your test. If
it’s clear that the changes you are
implementing in your testing are
producing obviously inferior results,
stop that particular test. There’s no
reason to waste money needlessly.
- Failure doesn’t mean quitting – If
your test fails to produce positive
results, try to figure out why that
particular change was detrimental.
Form a hypothesis and perform another
test using your newfound knowledge.
At the very least, you have
discovered a method or business
practice that shouldn’t be used.
- Apply your test results – The whole
point of testing is so that you can
refine your business processes and
ultimately improve your bottom line.
If you don’t take what you’ve learned
and apply it, you’re just wasting
your money and time.
- Expand what works – If 80% of your
profit comes from 20% of your
activity, do everything you can to
expand that 20% of your business.
Concentrate on and expand the
activities that bring you the most
- Eliminate what doesn’t work – By the
same token, if only 20% of your
profit comes from 80% of your
activity, why is that 80% such a
large part of your business? Too many
people keep doing the same thing,
expecting to get a different result.
If your measurements and testing
reveal an area that is inefficient or
unprofitable, first try to improve it
through testing. If it can’t be
improved and isn’t essential
supporting infrastructure, be
ruthless in eliminating it.
- Look for patterns and principles – As
you test and refine your business,
patterns should begin to emerge that
you can apply to other areas of your
business and life. You can save a lot
of time and effort by looking for
abstract patterns and principles. Be
aware of them, but don’t apply them
blindly to new areas without testing
- Systemize and automate – As you
refine a business process through
testing, look for ways to integrate
it into a system that can be easily
executed. Document your system so
that anyone can do it with minimal
supervision or instruction. Wherever
possible, automate your system so
that it can be run with the least
amount of effort as possible.
In summary, look at what you are currently doing now for your sales process. Don't change anything yet, but measure everything to get a good grasp on what works and what doesn't. Then begin testing, one variable at a time, to see if you can improve your ROI. Once you find an improvement, adopt it as your standard practice and test again.
You'll find that if you can foster a culture of testing and change, your business will be far more agile and will be able to continually improve itself. If you're able to apply this principle of testing to your business, it will be worth more to your business than any pre-made marketing plan or sales process because it will be tailored to your business, your industry, and your employees. That's not to say don't look at other sales processes, definitely use them as inspiration, but make sure that they actually work for your business rather than just blindly applying them. Measure everything. Test everything. Best of luck!