The Lost Sale
The Lost Sale
It probably happens because one of the top three least favourable sales activities is cold calling. When we get an inquiry that did require knocking on a hundred doors or we finally find someone who engages with us after 35 other people said "not interested"-- we usually jump out of our skin. But according to a recent poll, there was one sales activity that beat out the cold call as the least favourable activity-- tire kickers-- those people who inquire with no real need, not enough money or just can say no to a salesperson until it is time to close. I wonder if there’s a study out there that’s put a figure on the global revenue that’s lost to deals that were never going to happen in the first place and could have been identified with some quick advance qualifying.
Do salespeople and sales managers had a written set of qualifying criteria for prospects? My guess is that 95% of those who answered "no", realise they should but like we know we should do a lot of things, sometimes we don’t. We say we get to it when we have some spare time but go on wasting valuable selling time with "opportunities" that with some quick advance analysis, we had no longer pursue. And then after sending material, preparing presentations, playing phone tag and having the decision maker switched on us at the last minute (rarely a reality-- usually we missed it up front), we get aggravated when the deal doesn't close or we lose it to our competitor. "That’s sales you cannot close them all." True, but you can increase your close ratio and bring in more total sales by eliminating (or at least minimising) the time sink of tire kickers or unqualified prospects. You can put them through your qualification criteria at each stage of the sales cycle and close down your activities once they begin to prove unlikely customers. This doesn't mean you burn a bridge once they fall into the "unlikely" category. It means you close off your direct sales activities with them until they move back into your "likely" category. But how do you know for sure? You really never do because there's a lot of gut instinct in selling but you can minimise it with some advance qualifying analysis. And while the organisation of such an activity likely falls within the sales managers realm, it really requires a team effort with the sales professional. In most cases, only the salesperson has experience with every detail and prospect interaction that exists in a selling opportunity. But in order to formalise the qualifying process, it's likely that it needs prompting by management. If you have a sales team or team member that’s proactive in formalising a qualifying process, be sure to service them- head-hunters are everywhere.
Historical analysis
Determining your specific qualification criteria begins with an analysis of your historical results. The time period you should review depends upon the length of your average sales cycle from initial contact to close. If you’re in a business where the sales cycle is relatively short (one month or less), one to four quarters should give you a good amount of beginning information. If your sales cycle is six months to a year (or longer), it will be necessary to examine a time period of three to five years (if you have the data). If you have no records or memory of past activities that led to a sale or where the business was lost or never closed, its time to begin tracking that information with some sort of win/lose review. You’re in this for the long haul and sales analysis is one of your primary responsibilities as a sales manager.
Your three categories for examination are closes (the business you won), slow death (the business that never really was business) and losses (the business that went to your competition). You’ll likely have data or at least memory of business that fell into each one of these categories. Now, its brainstorming time. If you don’t have specific records of each sales opportunity being examined, it will require that your sales team be involved immediately. Even if you do have documented activities on specific sale opportunities, its still a good idea to get the reps involved for future buy-in of this process.
Prepare a one-page analysis for each historical sales opportunity being analysed. Choose as many opportunities that you can in each category for the given time period you’re examining. Lets assume the number of opportunities you’ve had over the examination period allows you to look at ten prospects in each category. Take your one-pager for each opportunity and title it with the prospects name (company or individual). Beneath the title, state in which category this opportunity fell (i.e. close, slow death or loss). Now begin to list the generic information about the prospect that should be known for most sales opportunities. For the purpose of creating your qualification machine, addresses, phone numbers and the like are not really necessary but might be good information to have for inevitable turnover or future sales and marketing campaigns. You likely have some contact management system in place now (automated or not) where you’re tracking all this information now not, its time to get started. Remember, the process we are discussing here is only to better qualify future opportunities and to determine where to spend your time. A sales and customer/prospect management process is a much more involved topic. Some ideas to start with:
1. Date of initial contact
2. How initial contact came about (e.g., cold call, inbound inquiry, etc.)
3. Initial contact names, title, phone, fax and Email
4. Initial contacts first reasons for inquiry (e.g., need for faxing software, poor service from current supplier,
5. Stated timeline by contact for need to be fulfilled
6. Stated budget by contact for fulfilling need
7. Current supplier/Past suppliers
8. Current budget/Past budget
9. Where you came into the sales opportunity
(Were first, second or twentieth company on the playing field?)
10. Which of your competitors made it past the initial round of inquiry
11. Which of your competitors made it to the final round before closure or no action
12. Other influencers and decision makers to the sales opportunity
13. All contact details (e.g., when you made the initial presentation, left messages,
with whom you spoke at each stage and about what, etc.)
14. Prospects given reason for action taken (e.g., closed with you, a competitor, took no action)
15. Real reason for prospect's action taken could be the same reason given by prospect
Analysis
It would be difficult to provide definitive assistance to you here. Much of this analysis will be very specific to what it is you sell and in which industry you work. Generally, though, you (and your team) are looking for consistencies in the deals you have won, lost and the ones that went nowhere. Some things to look for
1. There was/wasn’t a timeline for fulfilling the need.
2. There was/wasn’t an established budget.
3. We had/didn’t have access to all influencers and decision makers in the buying centre.
4. We were first/second/twentieth to the playing field.
5. We were knocking out a current supplier with a performance problem.
6. We were knocking out a current supplier with a strong relationship.
7. We were the first to create or find the need.
8. The opportunity began with a cold call/an inbound inquiry.
This process helps to evaluate the beginning of your sales process. It reviews historical cases in order to help you determine whether or not you should pursue an opportunity or take other action with it before you spend valuable selling time (e.g. take no action, put the prospect on a mailing or telemarketing list or encourage your worst competitors to spend time with it (a joke of course-- maybe), etc.). It should be done quarterly, semi-annually or annually depending on the length of your sales cycle. The process itself should be reviewed annually to be sure you include new qualifying characteristics that may enter as your industry and business evolves. Upon completion, a list of the top qualifying characteristics of a "likely to close" prospect should be created and given to each sales person. Additionally, it should include the top characteristics of business that is "unlikely to close" so the sales team can avoid costly time sinks. If you’ve hired well and don’t force call activity for the sake of numbers, your people will make the right decisions, close more business make everyone more money
The Lost Sale - To learn more about this author, visit Colly Graham's Website.
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Many of us are guilty of giving away our time. I’m not suggesting you keep from contributing time to worthy causes but your sales day is not time for charitable concerns-- time for revenue generation. Sometimes, we forget.
It probably happens because one of the top three least favourable sales activities is cold calling. When we get an inquiry that did require knocking on a hundred doors or we finally find someone who engages with us after 35 other people said "not interested"-- we usually jump out of our skin. But according to a recent poll, there was one sales activity that beat out the cold call as the least favourable activity-- tire kickers-- those people who inquire with no real need, not enough money or just can say no to a salesperson until it is time to close. I wonder if there’s a study out there that’s put a figure on the global revenue that’s lost to deals that were never going to happen in the first place and could have been identified with some quick advance qualifying.
Do salespeople and sales managers had a written set of qualifying criteria for prospects? My guess is that 95% of those who answered "no", realise they should but like we know we should do a lot of things, sometimes we don’t. We say we get to it when we have some spare time but go on wasting valuable selling time with "opportunities" that with some quick advance analysis, we had no longer pursue. And then after sending material, preparing presentations, playing phone tag and having the decision maker switched on us at the last minute (rarely a reality-- usually we missed it up front), we get aggravated when the deal doesn't close or we lose it to our competitor. "That’s sales you cannot close them all." True, but you can increase your close ratio and bring in more total sales by eliminating (or at least minimising) the time sink of tire kickers or unqualified prospects. You can put them through your qualification criteria at each stage of the sales cycle and close down your activities once they begin to prove unlikely customers. This doesn't mean you burn a bridge once they fall into the "unlikely" category. It means you close off your direct sales activities with them until they move back into your "likely" category. But how do you know for sure? You really never do because there's a lot of gut instinct in selling but you can minimise it with some advance qualifying analysis. And while the organisation of such an activity likely falls within the sales managers realm, it really requires a team effort with the sales professional. In most cases, only the salesperson has experience with every detail and prospect interaction that exists in a selling opportunity. But in order to formalise the qualifying process, it's likely that it needs prompting by management. If you have a sales team or team member that’s proactive in formalising a qualifying process, be sure to service them- head-hunters are everywhere.
Historical analysis
Determining your specific qualification criteria begins with an analysis of your historical results. The time period you should review depends upon the length of your average sales cycle from initial contact to close. If you’re in a business where the sales cycle is relatively short (one month or less), one to four quarters should give you a good amount of beginning information. If your sales cycle is six months to a year (or longer), it will be necessary to examine a time period of three to five years (if you have the data). If you have no records or memory of past activities that led to a sale or where the business was lost or never closed, its time to begin tracking that information with some sort of win/lose review. You’re in this for the long haul and sales analysis is one of your primary responsibilities as a sales manager.
Your three categories for examination are closes (the business you won), slow death (the business that never really was business) and losses (the business that went to your competition). You’ll likely have data or at least memory of business that fell into each one of these categories. Now, its brainstorming time. If you don’t have specific records of each sales opportunity being examined, it will require that your sales team be involved immediately. Even if you do have documented activities on specific sale opportunities, its still a good idea to get the reps involved for future buy-in of this process.
Prepare a one-page analysis for each historical sales opportunity being analysed. Choose as many opportunities that you can in each category for the given time period you’re examining. Lets assume the number of opportunities you’ve had over the examination period allows you to look at ten prospects in each category. Take your one-pager for each opportunity and title it with the prospects name (company or individual). Beneath the title, state in which category this opportunity fell (i.e. close, slow death or loss). Now begin to list the generic information about the prospect that should be known for most sales opportunities. For the purpose of creating your qualification machine, addresses, phone numbers and the like are not really necessary but might be good information to have for inevitable turnover or future sales and marketing campaigns. You likely have some contact management system in place now (automated or not) where you’re tracking all this information now not, its time to get started. Remember, the process we are discussing here is only to better qualify future opportunities and to determine where to spend your time. A sales and customer/prospect management process is a much more involved topic. Some ideas to start with:
1. Date of initial contact
2. How initial contact came about (e.g., cold call, inbound inquiry, etc.)
3. Initial contact names, title, phone, fax and Email
4. Initial contacts first reasons for inquiry (e.g., need for faxing software, poor service from current supplier,
5. Stated timeline by contact for need to be fulfilled
6. Stated budget by contact for fulfilling need
7. Current supplier/Past suppliers
8. Current budget/Past budget
9. Where you came into the sales opportunity
(Were first, second or twentieth company on the playing field?)
10. Which of your competitors made it past the initial round of inquiry
11. Which of your competitors made it to the final round before closure or no action
12. Other influencers and decision makers to the sales opportunity
13. All contact details (e.g., when you made the initial presentation, left messages,
with whom you spoke at each stage and about what, etc.)
14. Prospects given reason for action taken (e.g., closed with you, a competitor, took no action)
15. Real reason for prospect's action taken could be the same reason given by prospect
Analysis
It would be difficult to provide definitive assistance to you here. Much of this analysis will be very specific to what it is you sell and in which industry you work. Generally, though, you (and your team) are looking for consistencies in the deals you have won, lost and the ones that went nowhere. Some things to look for
1. There was/wasn’t a timeline for fulfilling the need.
2. There was/wasn’t an established budget.
3. We had/didn’t have access to all influencers and decision makers in the buying centre.
4. We were first/second/twentieth to the playing field.
5. We were knocking out a current supplier with a performance problem.
6. We were knocking out a current supplier with a strong relationship.
7. We were the first to create or find the need.
8. The opportunity began with a cold call/an inbound inquiry.
This process helps to evaluate the beginning of your sales process. It reviews historical cases in order to help you determine whether or not you should pursue an opportunity or take other action with it before you spend valuable selling time (e.g. take no action, put the prospect on a mailing or telemarketing list or encourage your worst competitors to spend time with it (a joke of course-- maybe), etc.). It should be done quarterly, semi-annually or annually depending on the length of your sales cycle. The process itself should be reviewed annually to be sure you include new qualifying characteristics that may enter as your industry and business evolves. Upon completion, a list of the top qualifying characteristics of a "likely to close" prospect should be created and given to each sales person. Additionally, it should include the top characteristics of business that is "unlikely to close" so the sales team can avoid costly time sinks. If you’ve hired well and don’t force call activity for the sake of numbers, your people will make the right decisions, close more business make everyone more money
The Lost Sale - To learn more about this author, visit Colly Graham's Website.
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Colly Graham Video - Colly Graham discusses Creating Customers on the Telephone -The importance of the telephone in selling is now well documented. This training DVD focuses on getting in front of more prospects by teaching the skill of telephone appointment setting. The workshop demonstrates the connection between daily activities, the sales cycle, and the number of sales necessary for a consistent flow of qualified appointments. Based on practical skills that get results fill your diary with qualified appointments.
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