In my 14 years of consulting, I’ve rarely met a company that doesn’t want to grow. To be fair, there was one or two that couldn’t expand to new markets because they were a monopoly, so instead they grew by creating new products to sell to their existing accounts. In every other case, the companies I work with aim to take business from competitors and score new clients.
What’s interesting to me about growth, is just how often they’re unclear about what growth entails.
What do I mean by this? I mean that they don’t fully understand the relationship between their total addressable market, the visibility they have to that market (and vice versa), and what they actually close in new business.
Consider this process visual:
At the base of the pyramid, we have your total addressable market often defined as the entire universe of your ideal prospects. It’s not every company in the market, just the ones you want a shot with.
The next level up is the percentage of your addressable market that you’re actually visible to. There are three questions you need to consider about visibility:
- How many of these prospects are aware your company exists?
- How many of them do you know about?
- Based on visibility, what percentage of your addressable market is actually available to you today?
Finally, the top of the pyramid is the percentage of visible prospects that you’re converting to clients. For example, if your total addressable market is 100 companies, and 50 percent are visible, and you are closing 30 percent of your visible prospects, you will close 15 of those 50 leads.
Enhance closing ratios
My new clients typically assume their failure to grow comes from a closing problem. They tell me that can’t seal the deal with enough businesses to move their organization forward. If you’re highly visible to your addressable market and you attract a high number of leads, but your closing ratios fall below 30 percent, then closing is obviously the problem. To remedy the issue, I’d recommend reading my article, Closing Practices Engineered to Sell More in Less Time.
What happens more often, however, is I go over a new client’s numbers and discover their closing ratios are fine. Average, or even above average. In other words, they work the leads in the bottom of the sales pipeline very effectively! For example, one company I’m working with has a closing ratio of 45 percent. As average closing rates for North American sellers are 30 percent, 45 percent is exceptional!
At the same time, this client’s visibility number is only 10 percent of their total addressable market. The problem isn’t their closing ratio ̶ it’s that not enough of the right prospects know they exist! It’ll take increased visibility and more access to available leads in order to make a significant impact.
Once I analyze the numbers, and it’s obvious that closing isn’t the issue, we consider the client’s visibility to their addressable market.
See and be seen
Often the obstacle to real growth lies between the number of clients in your addressable market and the percentage you’re actually visible to/aware of and are attracting into your sales pipeline.
Another Engage Selling client, for example, is trying to shift their growth from 3 to 5 percent a year to 10 to 15 percent. The company has a strong closing ratio, but is simply not attracting enough of their addressable market. They have 19,000 businesses in the market they could be working with, yet they’re only visible to between 300 to 500.
For a visibility problem like this, you need to ramp up your marketing and prospecting to become more visible in the market. Ask yourself, “what do I need to do to be more visible to my prospects?” And, “who else do I need to meet?”
You must take the initiative to implement stronger and more advanced prospecting techniques in your own markets. Don’t pass the responsibility to your marketing department to do all the work. But, by all means, network at tradeshows and invest more into marketing, too! You can find in-depth tips on how to do this through indirect and direct networking in my article, Control the Info Flow.
Take some time to analyze this overall relationship between your addressable markets, visibility and closing. Use the pyramid visual as a diagnostic tool to help you decide where the growth obstacle lies. Once you know what end of the sales pipeline to develop, you’ll grow more purposefully and much more quickly.