11 minute read
When opportunity knocks
OPPORTUNITY MANAGEMENT: PART 1 In this first feature in a two-part series, GARRY MANSFIELD explains some practical steps to winning more of your pipeline
This first article will provide a structured approach to opportunity management, to help you choose where to focus your efforts. In the next edition, I will explain how to select the right strategy for each opportunity. Together, the two pieces will provide a simple approach that will maximise your success and help you emulate the best sales performers. WHY CARE ABOUT OPPORTUNITY MANAGEMENT? Effective opportunity management is hugely important for all salespeople, regardless of their situation. After all, winning business is the main purpose of a sales team. This is especially true for business-to-business (B2B) companies, where sales cycles are typically longer and decision making less transactional.
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At my consultancy firm, we recently researched opportunity management across both small business and large corporations. The research reinforced what I had become aware of in my work with companies to improve their sales performance: the best-performing companies do things differently from the rest.
The research revealed the startling fact that for the average company, 59% of all opportunities are lost, in one way or another. This is hugely wasteful – working on lost deals is the single greatest waste of a salesperson’s time. As a result of these low win rates, a mere 60% of salespeople in average companies achieved target in 2014, while the best-performing companies only perform slightly better.
Without doubt, something needs to change. WINNERS ACHIEVE FOCUS In the 25 years of working in B2B sales, sales management and sales consultancy, I instinctively knew that the best performers ruthlessly focus their efforts. With detailed insight on each deal, you can choose accurately where to invest your effort. You can be more confident in making no-bid decisions more often, something that the best-performing companies do nearly three times more than average.
A structured opportunity management approach helps engage buyers more effectively, aligning company resources to each opportunity. Those companies that do this best are over 80% more likely to use a consistent way of selling.
Focus requires courage. You need courage to make choices, especially when under executive pressure to increase the size of your pipeline. It is worth the effort, as large, unqualified pipelines do not often deliver the best results. You must push back, and do so armed with the information needed to explain why certain deals are not worth pursuing.
Let’s look at a simple, step-by-step approach to assessing each of your opportunities. If used consistently it can help you to win a greater percentage of your pipeline. STEP 1: GIVE SLIPPAGE THE SLIP Do you want to spend your time working on deals that the prospect is never going to buy? Of course not. You want to pursue deals that will help you to deliver your quota. 59% OF ALL OPPORTUNITIES ARE LOST
Some deals never happen at all as they are lost to a “no decision”. The prospect is not ready to buy and these opportunities typically contribute most to pipeline slippage. By slippage I refer to the “bow wave” of opportunities that never reach a decision and move out month to month. This is a major headache for many of my clients, especially as many of these slippage deals are eventually lost to a no decision. The bestperforming companies are able to control slippage nearly all of the time, through the use of a structured assessment. Know the buying team I see an increasingly risk-averse approach to decision making in organisations and our research shows that, on average, 5.8 people are involved in a typical B2B opportunity. With so many contacts, it is important to know the people involved in the customer’s buying team and how they influence the decision. Some customers will not buy anything at all. Some meet with you because they are too polite to say no. Others lack “A mere 60% of salespeople in the ability to make a average companies achieved buying decision or influence colleagues that target in 2014, while the best- do. Are you dealing with performing companies only the right people? perform slightly better” Understand the customer’s approach to project approvals, because without this understanding you risk losing out on deals. Help them build a business case Consider how we make a major buying decision in our personal life. We don’t often do this without first understanding why we are spending the time on a particular purchase. A significant purchase will often require change and, without good reason, we often stick with the status quo. Your prospect is no different. You should understand their business goals and the things that encourage and discourage their attitude to change. Knowing how they build a business case for change can help you to accelerate their decision process. A strong business case requires a clear set of benefits (improvements, productivity gains, growth etc.) that are quantified specifically for their situation and outweigh the cost of change. To progress, it must be more compelling than other options under consideration, otherwise it risks being relegated down the priority list as a “nice to have” and will slip in your forecast. Create urgency Why should they act now? This is an important question that is often overlooked. It is not enough to have a good business case – your prospect must understand the consequence of
a ‘do nothing’ decision in terms of cost or lost opportunity to their performance. Without this, it will be harder to overcome resistance and inertia in their business.
Create urgency by quantifying the “cost of do nothing” (CODN) for your prospect. Help them to see the issues, challenges, problems and risks of delay. Where the CODN is low, opportunities are at higher risk of slippage. Customer readiness I have seen client projects fail because, despite a strong desire to do something, they lack the ability to buy, implement and sustain change. They require a clear funding route, either through capital or their operational budget, because without the money to pay for a purchase the opportunity is unlikely to close.
To implement change successfully demands enough people with the right skills available and focused on the project. Do you know where these
skills will come from? This may offer a chance for you to mitigate any perceived risk inside the prospect by providing them with more expertise.
Consider again your prospect’s situation – do they have the ability to execute?
If you systematically assess each opportunity against these areas you can identify those that have potential for slippage. If they fail to hit the mark, consider qualifying out and invest time in opportunities with a better chance of closing. STEP 2: WORK ON ‘WINNABLES’ We have all lost deals and we know there is a fine line between winning and losing. While each buying situation is subtly different, I have found common areas for many B2B situations.
Knowing what determines your competitive strength will help you to focus on “winnables”, that is, deals that you have a chance of winning.
Some deals you will never win. Perhaps a competitor is a friend of the decision-maker or they simply have a much stronger proposition. In this situation you should walk away early in the process. I have found pursuit costs can be up to 5-7% of the value of an opportunity and a prompt exit can help to control them.
Assess your competitive position early, and throughout the sales process, to see whether it is strong or weak and then act accordingly. Consider some of the following areas: Know the target you are aiming at Where a prospect’s requirements are vague, it is hard for you to position the value of your proposal. It is equally difficult for them to know how they will evaluate proposals. Their requirements would typically capture relative importance to them (criteria) and the approach they will use to reach a decision (process). With a clear set of requirements and understanding of how they will buy, you stand more chance of influencing to your strengths.
You must stand out Just because you can bid doesn’t mean you can win. Does your offer satisfy their needs and can they see why it is different or better? Where solutions are increasingly commoditised through new ways of buying, it is vital to understand how you are offering something distinctive.
Be certain that your commercial offer/pricing is in range when compared to other options or you run the risk of losing on price. Play your A-team Do you know the team you need to win? I don’t just mean to get a bid document submitted, but actually to win for your company. This often requires coordination of subject matter experts, executives, technical, project delivery, support and other resources. If you can’t field the right team, you may fail to engage sufficiently well
with the prospect. The best-performing companies engage clients nearly three times as often through a sales process – your competitor may be taking your customer’s time. Relationships matter Some customers are happy with their incumbent provider, others fear significant cost or risk associated with changing provider. They need a very strong reason to change, otherwise this can be a long road to being a price comparison.
Develop relationships with those who influence the buying decision, learn what is important to them and influence their views to gain support for your cause. Building trust is a key factor in sales success. A prospect who questions your company or personal ability to deliver the promised value, or feels your company is a risky supplier, will find it hard to support you. STEP 3: REVIEW EVERY DEAL When it comes to managing your pipeline, less really is more. If you spread yourself too thinly across many opportunities, you risk poor execution, losing those you could have won.
Where will you invest your effort? To assess each opportunity, develop a core set of questions that position you on each arrow of the diagram below. Create a grid using prospect readiness as x-axis and competitive strength as y-axis. Place each opportunity into one of four quadrants: Quadrant 1 is the ideal place to be, representing opportunities where you have the best potential return on effort. A focus on Quadrant 1 deals means you can invest the time needed to win, engaging prospects more often through the buying process and using each interaction to help them buy your solution.
But not all opportunities are in Quadrant 1, especially early in the sales process where intelligence about the opportunity is less defined. The other three quadrants have potential if you
COMPETITIVE STRENGTH SLIP
H
QUADRANT 2
QUADRANT 4
SLIP AND RISK
QUADRANT 1
QUADRANT 3
RISK
PROSPECT READINESS
CASE STUDY: FRESH PERSPECTIVE
In 2013, Simon was working on an opportunity for a managed communications service with one of his customers. The opportunity was a large one that, if successful, would meet over 75% of his annual quota, deliver a significant step up in revenues for his division, and attract the attention of the board. Simon had invested a lot of personal effort, and that of colleagues, pursuing this opportunity over a sales cycle that had already stretched to over five months.
Simon was pushing hard with the customer, regularly communicating new information on the services offered, service levels, product updates and company news. He had hoped they would have bought it by now and he was becoming more anxious about the situation. So was his boss, Nick, who had already moved his forecast back twice and there was not a lot of wiggle room left before year-end. Simon was coached to look at the situation from the customer’s perspective and he realised that he had been focusing on the wrong things. This was not about his company or his offer – after all, the client liked the solution. The problem was that the customer did not believe that they needed it, or that they needed it now. Simon invested his effort over the following weeks in understanding the business case for change in his customer’s organisation, helping them to see the impact that the absence of his solution was having on their business performance and reworking the financial offer to help them accommodate the payments into their budgets.
After five more weeks of focused effort, he successfully closed out the opportunity without any further slippage.
are early in the sales cycle, though your goal should be to move into Quadrant 1 by the time your client reaches a decision. Quadrant 2 deals are most prone to slippage, so be cautious with your forecast. It’s best not to rely on closing these deals to hit your target. Moving these to Quadrant 1 requires you to help the client address issues identified in Step 1 rather than provide more product brochures. Quadrant 3 deals are where you risk of losing the decision and you should, if possible, mitigate your areas of weakness identified in Step 2. Quadrant 4 shows both of these risks to be prevalent and caution is advised in considering whether to invest in these deals – they are unlikely to offer the best return on effort. YOU CAN’T WIN ‘EM ALL Selling is not about backing certainties. A consistent approach to evaluating opportunities will help you make better decisions and take calculated risks. Choosing the right opportunities to pursue is a significant step towards improved results. The next stage is to deploy a successful deal strategy for the winnables and execute it flawlessly. We’ll look at this next time.
GARRY MANSFIELD is the founder of Outside In Sales & Marketing, a specialist B2B consultancy that blends sales performance consulting with easy-to-use technology applications like DealSheet for better opportunity management. Email garry@oism.co.uk, Twitter @outsideinsales or visit www.oism.co.uk
