At a time when CEOs are in a constant quest for growth, there is a promising but often overlooked opportunity available close to home: presales. Distinct from marketing and sales operations, presales provides a specific set of activities that lead to qualifying, bidding on, winning, and renewing a deal. In our work with leading companies around the globe, we have found that companies with strong presales capabilities consistently achieve win rates of 40–50% in new business and 80–90% in renewal business—well above average rates.
Presales requires a dedicated team of experts split into roughly two-thirds for technical activities (crafting solutions to customers’ problems) and one-third for commercial activities (managing deal qualification and bid). These activities have two to three times more impact on revenue generation than generating leads. Souping up the presales engine can yield a five-point improvement in conversion rates, a 6–13% improvement in revenue, and a 10–20% improvement in the speed of moving prospects through the sales process. Despite this level of potential impact, presales doesn’t get much airtime in the C-suite—even though it gets a significant chunk of company resources, typically accounting for 30–50% of overall commercial headcount.
If you’d like your organization to take better advantage of presales and reap the advantages that result, here’s how to do so—at each stage of the sales journey:
Opportunities have exponentially increased for salespeople, thanks to digital innovations, more systematic RFPs, and the pervasive use of inside sales for lead generation. But more does not equal better. To achieve the ideal qualification rate of roughly 50%, today’s best-practice organizations rely on advanced analytics to identify opportunities early in the sales cycle and prioritize the most desirable ones. They use techniques such as propensity-to-buy modeling, micro-market targeting, account-level opportunity assessment, and churn prediction to separate the high-quality, high-probability opportunities from the rest.
One presales team helped a building materials supplier improve its qualification rate by using order histories of existing customers and analyses of prospective markets. From this data, they developed a list of prospective “ideal customers” most likely to buy the company’s products. Identifying which customers to pursue helped increase bid and bid conversion rates, resulting in a 3–5% improvement in win rates.
The root cause was inadequate presales allocation. The company’s technical presales experts were not assigned to the highest-opportunity bids, and there were frequent disruptions to their assignments (e.g., being reassigned to the priority du jour).
To turn things around, the company developed a staffing approach that gave an at-a-glance picture of the availability and skillsets of presales staff a quarter out. It redesigned and simplified its bid review and approval process, and instituted a mechanism that allowed key account managers to provide suggestions and recommendations to the presales team immediately following a bid submission.
This new approach helped the company staff 15 percent more deals with presales resources and anticipate 30 percent more “must win” deals (for the same number of total presales resources). Sales reps’ time on proposal development was cut in half.
The key to closing deals is presales’ ability to shape conversations with the client to position the company’s solution as the ideal one. This approach is not about developing a “smoke and mirrors” pitch, but rather investing the time to have a deep understanding of the client’s needs (met and unmet) and then highlighting those elements of the solution that can address them.
This is precisely what a European telecommunications company did when it merged its mobile and fixed-line store networks to increase cross-selling opportunities. The company assigned presales “store rangers” (experts in both mobile and fixed-line options) to roam the stores and speak with customers. This had the dual benefit of increasing sales with individual customers and providing training for the full-time store salespeople. On days when a ranger was not on site, stores used videoconferencing to patch in a live presales expert to answer questions, help configure a new service, and even fill out paperwork. After a year, this approach resulted in an increase of 30% in overall sales for the store network.
While “presales” might imply that their work is finished once a sale is made, the best companies have presales teams that are active after the sale as well. Great sales reps have always tried to anticipate customer needs and to deliver on them consistently. But top-notch presales teams can help advance from anticipating customer needs to predicting them with greater precision, recommending what the sales force should sell to specific customers, and providing expertise.
Such tactics helped one U.S. insurance company improve customer retention rates by 20%. On presales’ recommendation, the company implemented a new call-center system that went beyond displaying a customer’s history (e.g., tenure and claims record). Additional analytics also assessed the customer’s real-time emotional state and predicted the likelihood of keeping or losing the customer if the issue was not resolved immediately. The system also recommended the conversational style the agent should use, such as a “soothing” or a “just the facts” approach. This helped bridge cultural differences between American customers and
call-center agents based in the Philippines.
Presales can also accelerate sales pipeline velocity by anticipating what will trigger a renewal, standardizing tools to ensure best practices across the sales team, and automating processes to send alerts and recommendations in advance of a contract’s renewal date. Companies that do this well can recommend special offers and promotional deals that will encourage a quick renewal—and even close the deal before an RFP is open to competitors.
When it comes to driving sales growth, quality trumps quantity. And that requires companies to improve the quality of their presales engine.