It’s interesting how many salespeople don’t know how much their prospective dream client spends in their category. Some are afraid to ask. They believe that the question means that they are not customer-oriented, and it may sound to their prospective client as if they are concerned instead about their commission. This is a mistake.
There are good reasons to ask, and even better reasons to know.
What Spending Means
In all likelihood, you can usually make a pretty good guess as to spend without asking. But asking can confirm your estimate, and it can inform how you pursue and serve your client.
The amount of money your dream client spends is an indication of what their needs are and how you might help them. If they spend far more than you guessed, the products or services you sell may be a much more strategic purchase, and it may have a far larger buying committee. It may mean that you have to spend more time in discovery, working with more of the client’s team.
The amount of money spent can also be an indication of the complexity of the client’s needs. They may be spending more in your category because it is difficult to produce the results. It’s almost always a safe bet that the more your dream client spends in your category, the more important it is that they produce the result that they need.
Spending is also an indication of what your dream client will expect of you and your company. The more they spend, the greater their expectations. It’s likely they will require modifications to make what you sell work, that they will expect you to have a greater presence and, undoubtedly, they will expect greater ownership from you when it comes to owning and managing the outcome that you sold.
The amount of spending can give you a wealth of information as to what is expected of you and how you should behave as a salesperson.
One of the most important and underestimated metrics in sales occurs after the sale has been made. That metric is wallet share. Of all the money your dream client spends, how much of that do they spend with you? To calculate wallet share, you have to first have a good idea of what is being spent.
Wallet share is your ultimate goal.
Gaining wallet share means that you are working towards becoming a strategic partner. If you continue to grow your wallet share, it means that creating more and more value for your client, and that value is being recognized and rewarded.
Losing wallet share means something else. It means your competitors are beating you. It means they are beating you for the business, beating you for the relationships, and beating you when it comes to value creation. This is why you need to know and measure your wallet share.
Think of it this way. Your client spends $250,000 with you in year one. The following year, they spend $300,000 with you. That’s good news right? Your business grew by 20%. But what if there is more to the story? What if in year one your dream clients spent $1,000,000 in your space, and in year two they spent $2,000,000? Your wallet share dropped from 25% to 15%. You are losing ground.
You may not be creating enough value. You may not be investing enough time in serving the client. You may be ignoring some of their needs that your competitors are doing a better job of serving. They may be unhappy with you, and sometimes when you don’t ask, they don’t tell.
How to Ask
You don’t have to make asking about spend about you. You can simply say something like: “It’s important that we understand your needs and build the right solution for you and your team. That means we have to dedicate the right resources to the project. Based on what I know, I would guess you spend around $1,000,000 annually? Is that correct?”
Some people won’t like to talk about what they spend. But, you only need to be in the ballpark. As you gain their trust, you will be given greater access to more specific numbers. Other people will be anxious to share the number with you as a way to leverage their spending, and to ensure you understand what their expectations are going to be and why.
Either way, knowledge is potential power.
How does knowing what your dream client spends help you understand their needs?
Why is it important that you know and monitor wallet share?
What do you have to do to improve wallet share?
How do you ask about spending without making it sound like it’s about you?
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Filed under: Sales 3.0