VSOs – Why They Matter

A validated sales opportunity is a target company that matches up with your company’s solution or offering. They are companies with the right problem or situation, with access to budget, a strong driver for implementing the solution your company offers and a serious interest in your value proposition. VSO’s can benefit a company in a number of ways, but why should they matter to you?

Valuable Components of a VSO:

1. Increase yield on Sales Capacity:

Based on our research, VSOs are a sales organization’s biggest lever for increasing the Yield on Sales. VSOs increase time selling to closable sales opportunities, accelerate sales cycles and have the potential to increase transaction values. By targeting the right companies that have a potential need for your solution and effectively mapping the value elements of your solution to the requirements of their respective business processes, you will increase sales process efficiency. By streamlining sales process efficiency, companies can then also increase their average order size and their yield on sales.

2. Time Savings:

A recent study conducted by VizQuest and a team from Harvard Business school, analyzing daily activities, found that the average sales representative spent about 30% of their time researching leads and non‐validated opportunities, and only 40% of their time actually selling to a VSO. In addition, it was determined that for every 1.6 additional hours spent selling to a VSO, sales representatives were able to increase their revenue by 10%. There is only so much time in one day and the time a sales representative can spend selling is limited. Sales managers often compensate for this lack of time by building up their sales capacity, but this strategy is inefficient. A more efficient and cost‐effective approach is to spend less time on poor sales opportunities and more time on selling to prospective customers.

3. Resource Savings:

Many companies think that by increasing the size of their sales force, they can more effectively penetrate the market and sell their products; however, this approach has the potential to cause more problems than it solves. An increase in sales resources often results in higher demand for sales opportunities. Marketing and Business Development then must produce more opportunities, while still using the same budget and resources, resulting in lower quality leads. The close rate of a lead is typically around 1-5%. With close rates so low, sales resources then must consume more time qualifying leads. A larger sales team is supposed to be able to process more leads and increase sales, but if only 1‐5% of all leads convert to revenues and sales resources are wasting 30% of sales capacity qualifying leads, then the cost of sales increases significantly while yield on sales capacity plummets.

4. Increased Revenues:

VSOs can help companies drive revenue growth by improving close rates and minimizing sales cycles. They increase the efficiency of sales representatives and yield on sales capacity through increased revenue production in a smaller amount of time. Sales representatives save about 12 hours per week because they do not have to qualify VSOs. This then allows them more time to focus on the actual selling, advancing and closing of deals and should result in an increase of 75% in revenue. The 1-5% close rate then increases to about 40% of VSOs converting to closed deals. This reduces the amount of VSOs that marketing has to generate and also requires a smaller amount of resources, which creates a better ROI on business development investments.

To read more on this topic, visit the sales insight section of our website and be sure to check out our VSO portal.

 

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