Posted by Bob Apollo on Wed, Jun 09, 2010
BP has been getting a great deal of adverse publicity for the recent massive leak in their Gulf of Mexico oil pipeline. It’s taken an age to address the underlying problem. The clean-up operation is clearly going to take ages and cost billions. The fortunes of the Bubba Gump shrimp company and many others like it may never recover.
Those of us who manage sales pipelines know that they rarely run freely. Many are clogged with deals that are going nowhere and which only serve to slow the progress of more promising opportunities.
But slow-moving pipelines aren’t the only problem. Sales pipelines also leak, as prospects either decide to buy something else or do nothing. Worst of all, many deals leak late in the process – towards the end of the pipeline - after huge amounts of sales effort have been applied.
My observations of high-value B2B sales suggest that clogged and leaky sales pipelines are often the norm and that much of the effort that sales teams expend on trying to move deals forward is wasted. So it’s no surprise that CSO Insight’s annual report on sales performance optimisation has recorded some of the lowest sales win rates on record.
It’s time for a massive clean-up operation – let’s just hope we can do better than BP. But what is it going to take?
Clearly define the key stages in your sales pipeline
Let’s start with the basics. Your pipeline stages must be clearly defined, consistently applied, and reflect meaningful steps in your prospect’s decision making process. The progress of each opportunity must be based on observable evidence of your prospect’s behaviour and intent, and not just on your sales activities. These are the essential foundations for any successful sales pipeline clean-up operation.
Carefully measure flow and leakage
Once you’re sure that the contents of your sales pipeline are being reported accurately, your attention should turn to measuring flow and leakage. Flow is about measuring how long it takes for successful deals to pass from one stage to the next in the pipeline, and using this as a benchmark to identify deals that have been “stuck in stage” for too long. This is important because of one simple fact: it inevitably takes you longer to lose a deal (or recognise it is lost) than it does to win.
Leakage is the other key metric. At what stage do deals fall out of the pipeline, and what is the real percentage of deals that ultimately convert to wins from each stage? I use the phrase “real percentage” deliberately. More often than not, CRM systems apply percentages to stages that have no relationship to reality, have never been reviewed or adjusted, and are precisely and dangerously wrong. It’s no wonder that average forecast accuracy rates (as measured by whether deals close as predicted) is now below 50%. If you’re still using the percentages that came out of the box with your CRM system – or if you haven’t reviewed them against reality recently, deal with it now. You can’t afford to wait.
Establish benchmarks
Once you have good underlying data and good metrics, you can establish benchmarks and start comparing the performance of your sales team members. Look at recent sales successes. Establish the cadence of their progress from stage to stage. Set deal flow benchmarks. Isolate deals that are taking longer than these winning benchmarks, and carefully re-qualify them to make sure they are real. If not, remove them from the pipeline. Review your sales strategy for deals that still seem promising but are stuck in stage. What can you do to help the prospect move forward to the next stage with you?
Look at the shape of your sales team’s pipelines. Are they qualifying out early, or losing late? Winning sales people seem to follow a consistent pattern – they take time over qualifying, qualify more deals out early in the pipeline, and successfully close the remaining opportunities faster than their also-ran peers. Conversely, average sales performers often have a habit of “losing late” – deals are either lost or qualified out late in the journey, after huge levels of effort have been wasted. You need to understand why, and take remedial action to help them embrace the winning behaviours of your top performers. But most important, if you’re going to lose, lose early!
Qualification should be a continuous process
Another common reason for opportunities getting stuck in the middle of the sales pipeline is that the prospect’s circumstances have changed. Even if the deal appeared well qualified initially, something’s happened – maybe the prospect now has other priorities – and progress has stalled.
Qualification is not and cannot be a one-time event. In fact, I recommend that at each stage in the sales pipeline that you identify and assess key qualifiers that are relevant to that stage in the buying process and which can alert you to these changing circumstances and either give you the chance to react to them or to qualify out before any further sales effort is wasted.
Avoid putting rubbish in your pipeline in the first place
My final recommendation is to avoid filling the pipeline with rubbish in the first place. Make sure that you establish “ideal prospect” profile, target your marketing towards them, and qualify inbound enquiries against them. Be careful to distinguish between interesting, important and urgent needs, and ensure that you are working on opportunities where the problem is already urgent or can be elevated to an urgent need.
Resist the temptation to add more poorly qualified prospects to the pipeline – you’ll only make matters worse, and have an even more expensive clean-up operation to perform later on. Focus on managing quality, velocity and leakage and encouraging winning behaviour, and you’ll have the foundation for a smoothly flowing sales pipeline. And by eliminating all that wasted effort, you’ll be doing your bit for the environment as well!
Posted by Bob Apollo on Tue, May 25, 2010
Alec Baldwin’s performance as Blake in the film Glengarry Glen Ross immortalised the “Always Be Closing” attitude that for many has come to exemplify everything they hate about pushy, predatory sales people.
In any sort of complex, high-value sale, particularly one that involves multiple stakeholders, decision makers have become immune to this sort of Neanderthal behaviour. But what are we to replace the “Always Be Closing” mantra with?
Vote with your wallet, or vote with your feet...
Pushing aggressively for the close at least had one advantage: it may have caused many buyers to vow never to deal with the vendor again, but at least it forced a conclusion. In an ABC world, prospects quickly vote with their wallet, or vote with their feet.
I come across many situations where the opposite is true; sales pipelines that are clogged up with deals that are going nowhere. As my friend Donal Daly has pointed out, it takes 150% longer to lose than win. So clearly just waiting and hoping for nature to take its course isn’t a great alternative.
The discipline of winners...
From what I’ve observed, top-performing sales people rarely suffer from clogged pipelines. They have the discipline to qualify accurately, and the confidence to politely turn away from deals that are never likely to close or they have a slim-to-no chance of winning.
Contrast that with the behaviour of all too many middle-of-the-road people: they hang on to opportunities that are long past their sell-by date in the mistaken belief that abandoning them will reduce the value of their pipeline.
Of course, the opposite is true: the real-world value of their pipeline, and their chances of beating quota, is diminished rather than enhanced by holding on to these non-win deals. Better to set them aside, and go looking for better qualified opportunities.
From Always Be Closing to Always Be Qualifying...
In fact, I’m going to suggest that the new mantra ought instead to be “Always Be Qualifying”. And by that I don’t mean just the classic BANT criteria (Budget-Authority-Need-Timescale) which is hardly relevant in many opportunities where the need has to be created before it can be satisfied.
And I don’t see qualifying as a one-time act at the start of the sales process, either. My observations of top-performing sales people suggest that for them, qualifying is a continuous process rather than an event.
The art of continuous qualifying...
Let’s accept that the status quo rarely prevails. Opportunities that looked promising to start with can fade away. Leads that seemed poorly qualified can be nurtured into winning deals. But at the end of the day, I’ll suggest that you need to keep on top of two things above all: will they buy, and can you win?
Will they buy is all about whether the problem they are facing is so painful that they have to act. You need to be continuously qualifying for the economic impact, who else might be affected, and what the consequences of inaction might be. If the problem turns out to be merely irritating, can it be elevated to important? And is resolving the problem still a top priority - or has it been overtaken by events? What would it take them to move forward to the next stage? And what might hold them back?
Whether you can win is about whether they trust you, more than any other option (including “do nothing”), to deliver them the results they need. Have you got the support of the people who matter when it comes to making the decision? How can you elevate your value, and mitigate any risk? And are you sure that you know what sets you apart – and why it matters to your prospect?
Coffee is for qualifiers...
According to Alec Baldwin, “coffee is for closers”. But I’d be happy to buy a coffee (or send a Starbucks gift card) for anyone who contributes to this thread with their ideas about great qualifiers.
Posted by Bob Apollo on Tue, Apr 20, 2010
Let’s face it, in almost every b2b sales organisation, there’s far too much valuable selling time going to waste. It’s being wasted on pursuing poorly qualified opportunities that are never likely to buy from you - and even in well-qualified opportunities, it’s all too often wasted on activities which are going to have no impact on your prospect’s buying process - or your chances of winning.
Think for a moment about your sales pipeline. How many opportunities are required at the top of the funnel in order to close one sale? However well your team is performing, the end to end conversion rate is almost certainly at a level that no operations manager could accept in a manufacturing plant. And if they did, they wouldn’t be keeping their job for much longer.
The analogy is a useful one, because although I understand very well that there’s a world of difference between building a standardised product and selling a complex solution, some of the ways in which we measure manufacturing performance have useful parallels in the sales environment.
Manufacturing companies have a real focus on getting things right first time. They go out of their way to engineer scrap and rework out of the process, through measures like rigorous raw material quality standards, templates, standardised machine setups, and so on. And if a component is going to fail, they want it to be rejected early, before a great deal of value has been added to it.
It’s not so different from running a sales pipeline. We want to be working well qualified opportunities and to prevent unwinnable deals from entering the pipeline in the first place. And if we’re going to lose, we want to lose early, before a great deal of wasted effort has been invested. If only we could have the level of visibility of what’s really happening from stage to stage that the leading manufacturers have of the products that are flowing along their production lines...
Then there’s the issue of time. Plant managers watch stage times like a hawk. If work in progress is taking longer than expected to move from one stage to the next, or showing unnaturally high failure rates, they will often stop the line in order to fix the underlying problem. Imagine how much more effectively we could manage sales pipelines if we better were aware of deals that were getting “stuck” at a particular stage without moving forward...
So what can we learn from the manufacturing experience? Firstly, even the sale of complex solutions will benefit from having a well defined sales process that draws upon the winning habits of your top performers, together with the best practices that can be observed in other high-performing sales organisations. CSO Insights concluded that companies with a defined, dynamic sales process outperformed their peers by a third or more in factors like the percentage of reps making quota.
Next, we need to instrument the pipeline so that we can measure deal velocity and stage to stage conversation rates, and see how performance is affected by factors like the product, salesperson and lead source involved. We need to take steps to diagnose and deal with the root causes of poor performance. And we need to trigger an alarm when a deal falls outside desirable performance standards.
And finally, we need to use the information to systematically identify the bottlenecks and constraints that are slowing sales or restricting our win rates, set high standards, and perpetuate winning habits. You might want to start with your CRM system. Does it truly embrace and encourage best practice, and is it providing you (and your sales people) the data you need? And if not, is the problem really with the software, or how it is being used and managed? It might be time to re-engineer your sales production line.
By the way, if you are interested in other techniques that can make the leap from manufacturing to selling, you might want to learn more about the Theory of Constraints and Lean Six Sigma.
Posted by Bob Apollo on Thu, Apr 01, 2010
In Bill Clinton’s successful 1992 presidential election campaign, a sign famously hung in his Little Rock campaign headquarters with the following simple message: “it’s the economy, stupid”.
In today’s risk-averse buying climate, the message to ambitious B2B sales professionals seeking to win the votes of their prospects might have a familiar ring: “it’s the economics, stupid”.
Rational, emotional or financial?
I don’t mean to suggest that rational or emotional factors are irrelevant to high-value B2B sales, but the involvement of multiple stakeholders and the nature of the decision making process means that economic factors - and financial language - play a central role in justifying most buying decisions.
If companies are to invest in resolving them, issues need to be associated with economic consequences, and by and large this revolves around avoidable costs or incremental revenues. Until and unless it is compellingly obvious that organisations can make or save significant amounts of money, they are unlikely to spend money on making a potentially risky change.
Return on Investment isn’t enough
Even believing that there is a strong return on investment (ROI) isn’t enough to ensure that the need to change will be accepted or that the buying decision will be approved. No matter how strong the project ROI appears to be, it never exists in isolation. It will always compete for funds against other (often completely different) projects or the attraction of simply keeping the money in the bank.
ROI models are based on assumptions that bias the conclusions (whether the assumptions are good or bad may depend on whether the vendor or the prospect calculated them), but they rarely take account of the execution risk that is associated with any change. Some projects deliver the desired outcomes, some exceed their goals, but many fail to achieve anything like the promised results, and your stakeholders are factoring this – whether formally or informally, consciously or unconsciously – into every significant decision they are called upon to make.
The least risk option
There’s a significant body of research suggesting that B2B buying decision teams are strongly influenced by the desire to mitigate risk when deciding if and how they need to implement change programmes (which, let’s face it, are what most significant purchases of complex solutions involve).
So it’s not enough for an organisation to emerge as the favoured vendor – they also have to be perceived as the least risk of all available options, including the all-too-popular decision to “do nothing” about the problem – at least for the moment.
The consequences of inaction
So it’s clear that having a compelling ROI – though necessary – isn’t going to be sufficient to win deals in today’s climate. In addition to strong benefits, vendors have to ensure that they help the prospect’s stakeholders identify, articulate and elevate the consequences of inaction. The consequences of inaction are all about what is likely to happen if the status quo was allowed to prevail.
So some of the most important questions your sales people can and must ask include “why is this issue important to you now?”, “have you tried to address this issue before, and what were the results?”, “what would happen if you failed to resolve this problem now?”, and “who else would be affected if the current situation continued?”.
Where’s the value?
These are thoughtful questions, and frequently stimulate the prospect to think differently about the issue they have described to you. They often help you gain access to other stakeholders. But you should consider it a huge red flag if despite your help and after due consideration your prospect is still unable to articulate significant economic consequences of failing to address the issue.
Even if they are keen to continue the conversation, unless you can use the consequences of inaction to elevate their need from merely interesting or important to urgent, there’s little likelihood – no matter how positive your conversation – that the deal will close any time soon.
Of course, this is not a reason to abandon the prospect – simply to recognise that there is still work to be done to educate them, and/or that you may need to wait for, or try to create, a trigger event that will serve to establish clear economic benefit, urgency, and the need to take action.
Final thoughts...
Take a critical look at your sales pipeline? How many of those opportunities are associated with a clear economic impact that has been acknowledged by the prospect? How many of them are associated with clearly defined consequences of inaction? What does this understanding do to your sales forecast? And how can you help your sales people, and your prospects, to eliminate risk and create an unimpeachable (back to Bill Clinton again) case for change?
Posted by Bob Apollo on Tue, Mar 09, 2010
In today's business climate, useful or important needs might help to get a vendor considered or evaluated, but only urgent needs will get them bought. So it's become critical that sales people are able to elevate the prospect’s need for their solution. This ability to identify or create urgent needs makes all the difference between successful and unsuccessful sales people, and between companies who lead their markets or follow as also-rans.
In fact, I’ve observed that the inability to distinguish between useful, important and urgent needs, or to elevate a prospect’s need for the solution from useful or important to urgent lies at the heart of many sales pipeline challenges.
Why not just look for urgent needs?
Given this, why wouldn’t sales people and vendors concentrate solely on trying to find prospects with urgent needs? There are a couple of reasons why this is not an effective strategy – first, prospects with urgent needs are often already in an active sales cycle with another vendor’s fingerprints all over it and second, urgent needs often have personal, painful and emotional dimensions, and getting prospects to acknowledge this in a first contact may be challenging.
Distinguishing between useful, important and urgent needs...
Useful needs drive curiosity, generate interest and can be helpful in initiating buying processes. Important needs drive consideration, cause evaluation and can be helpful in stimulating evaluation. Urgent needs drive action, lead to purchase and are essential to concluding the sales process. A key way of distinguishing between the different levels of need is to get the prospect to describe the potential impact of not dealing with them.
Useful needs are often irritants without clear economic consequences. Important and urgent needs typically have some measurable economic impact, but the things that differentiate urgent needs include escalating economic impact the longer the issue remains unresolved, the number of people affected, and explicit linkages to “top of list” personal or corporate goals.
The consequences of inaction...
Clearly defined consequences of inaction are an essential foundation for urgency. Faced with an acknowledged prospect need, sales people must establish how the prospect may have tried to deal with the issue before, why now is the right time to address it, who else within the prospect organisation is affected by the issue and – most critically - what would happen if they fail to deal with the issue soon.
It’s rare for needs to be elevated to urgent status unless the economic consequences of not dealing with them have been acknowledged by a sufficiently powerful champion within the prospect. These economic consequences don’t just revolve around the opportunity to reduce cost – they can also relate to missed revenue opportunities.
Qualifying for urgency...
So, with a very few exceptions, if the pain cannot be monetised, persuading the prospect to invest in solving the problem is going to be an uphill battle. In fact, a growing number of our clients have adopted the approach that sales opportunities cannot be valued and should not be forecasted unless and until the pain has been monetised and acknowledged by the prospect.
This has interesting consequences: applying the rule at first reduces the perceived value of the sales pipeline - but in the absence of urgency the affected opportunities were almost always overvalued anyway. It also forces the sales person to think carefully about how to elevate the urgency of the prospect’s need or (if this cannot be achieved) to accept that a longer-term “nurturing” strategy may be more appropriate. Either way, forecasting accuracy inevitably rises.
Consider this...
What proportion of the prospects in your current pipeline have acknowledged urgent needs, and are you able to help them to monetise the consequences of inaction? Are your sales people able to accurately distinguish between useful, important and urgent needs? What are you doing to help elevate your prospect's need for your solution, and how are you dealing with opportunities that seem to have no current urgent need? And does your current sales forecast include prospects who have not yet acknowledged the cost associated with preserving the status quo?
Posted by Bob Apollo on Tue, Sep 01, 2009
Most sales organisations have some sort of CRM system in place. Many have made significant investments in the system. Yet simply implementing CRM – just like just running a sales training course – offers no “magic wand” for improving sales performance. In fact the energies expended on them are often wasted.
Time after time, we come across Customer Relationship Management solutions that bear little or no relation to how a vendors’ most promising prospects actually buy, or what the vendors’ top performing sales people actually do.
There are 5 danger signs that indicate that a CRM system is actually behaving as a sales prevention system:
1. Unhelpful Stage Definitions
CRM deal stages (often implemented “out of the box” using CRM system defaults) are based on sales person activity, rather than tangible evidence of what the prospect has done or committed to do. Deal status is often based more on hope than reality. The resulting mismatch between sales perception and what’s actually going on in the prospect’s decision process is a primary source of inaccurate sales forecasting.
2. Give – Get Imbalance
Sales people are expected to give far more in terms of data entered than they ever get back in terms of feedback received. The problem is frequently compounded by the data falling into a “black hole” with no evidence it is ever subsequently used by management for any practical purpose. Sales people need to believe that the information they enter is used by management to help them improve their chances of winning.
3. Poor Forecast Accuracy
Sales forecasts - particularly at the detailed level - are all over the map. Even if the projected headline revenue number is achieved, the way in which the number is made up bears little relationship to the deal by deal forecasts, and relies on heroic selling rather than intelligent use of resources. CSO Insights estimate that detailed sales forecast accuracy for the average company is now less than 50%.
4. Static Sales Process
The sales process and stage definitions that are reflected in the CRM system are static rather than dynamic, haven’t been reviewed or changed for ages, and have failed to take account of changing market conditions, buyer behaviour and sales best practice. This failure to adapt to changing conditions is often particularly striking at the bottom of the funnel, during the prospect’s decision making process.
5. Failure to Reflect Prospect Decision Making Process
Many CRM and associated sales forecasting systems have failed to capture the nuances of today’s risk-averse prospect decision-making process. Even after a vendor has been told they are the chosen solution by the decision team, most organisations now submit proposed expenditure – even if already budgeted – to a rigorous review process that all too often results in a decision to do nothing or to spend the money on a completely different area judged to be of higher priority. CRM systems must reflect the difference between being chosen and the subsequent steps involved in approval.
Avoiding Sales Prevention
How have successful CRM users managed to avoid these issues? By basing their CRM process around a clear understanding of who their best prospects are, and how and why to buy - and by embedding the customer decision journey (example below) into the system.
In addition to having the discipline (and the common sense) to only collect information that is of clear value in tracking the buying process and managing sales efforts, these CRM champions have established clear stage definitions and dynamic sales processes, and many of them have benefited from (amongst other initiatives) well researched prospect profiles, systematic opportunity scoring and sales playbooks.
As a consequence, they can boast near-universal levels of sales adoption of the CRM system - and are getting real payback from their efforts in terms of shortening sales cycles, increasing win rates and improving forecast accuracy.
Posted by Bob Apollo on Tue, Jan 20, 2009
Deals seem to be taking longer, more decision-makers are getting involved, and more deals just keep slipping from quarter to quarter without ever coming to a decision. As a result, many sales pipelines are getting clogged up with deals that are going nowhere fast - and have been for ages.
At first glance, it might appear comforting that at least the deals haven't gone away or worse, been lost to a competitor. But all these go-nowhere deals are hardening the arteries of sales pipelines and making it difficult to move the fast-moving deals through to completion.
Most organisations would benefit from a rigorous re-qualification of every deal in the pipeline based on a evidence-driven evaluation of their true potential. What should we be looking for? Evidence of buyer intent, expressed through actions that take their buying process forward, and clear championship within the buying organisation.
Establishing evidence of buyer intent is a key element of proactive pipeline management. In these risk-averse times, one of the most powerful signs of buyer intent - in addition the their observed behaviour - is an identified and acknowledged "cost of inaction": what would the potential costs, consequences and risks be to the buyer if they made a decision to do nothing at this stage?
If it's proving difficult to get your champion to articulate this clearly both to you and to their colleagues on your prospect's buying team, it may be time to focus your energies on others that show greater promise.
Almost every pipeline would benefit from moving the faster moving deals into the middle of the flow - where they can enjoy the best attention - and gently moving the slower moving projects to the side where they are less likely to stand in the way.