Minimizing Painful Losses
Sales Tips: How to Minimize Painful Losses
By John Holland, Chief Content Officer, CustomerCentric Selling® – The Sales Training Company
A comment made by a CEO attending one of my sales training workshops years ago summed up one of his major frustrations:
“My salespeople have the terrible habit of losing slowly.”
It struck a chord because it touches on two of the most critical metrics in selling:
1. Length of buying cycles
2. Seller win rates
Should CFO’s multiply their cost of sales by 1 minus the decimal equivalent of their loss rate to approximate the cost of competing and losing sales? I suspect it would be a disturbing calculation.
Nobody likes to lose. The most painful losses occur when sellers go the distance, spend time and resources, have opportunities in the forecast for months, issue proposals and are told another vendor was awarded the business or the committee made no decision. A core concept of the CustomerCentric Selling® sales methodology is: Bad news early is good news. I’d like to reinforce the concept that qualification is an ongoing process rather than a one-time event.
It’s astounding to see the degree to which vendors collect data to grade website visitors in trying to migrate them to becoming leads. This is possible because software objectively grades visitor activities by monitoring frequency of visits, pages that were accessed, if they signed up for a newsletter, if they downloaded a white paper, etc. Over time vendors learn when and how it is appropriate to proactively contact prospects. The cost of website visits is negligible. Buyers self-serve and have no contact with sellers.
Once leads are passed to outside reps:
1. Significant costs are incurred as sellers follow up via phone and email, make sales calls and engage in buying cycles with prospects.
2. Grading opportunities becomes less objective. Sellers make qualifying decisions as they hope to add prospects to their pipelines and ideally into their forecasts.
Once sellers get involved, opinions are introduced into qualification. This is especially true when sellers are below quota and have weak pipelines. The stringent grading done with Website visitors at little or no cost evolves into subjective grading despite the high cost of having sellers involved. This is analogous to a manufacturing company counting individual nuts and bolts in inventory, but not monitoring quantities of expensive subassemblies critical to shipping products.
As with Web visitors, within the CustomerCentric Selling® sales process there are ways to base ongoing qualify and disqualify decisions upon buyer actions. For those of you that have attended one of our sales training workshops this will serve as a review of our suggested sales approach.
After making calls by executing Sales Ready Messaging®, sellers should be able to answer the following debriefing questions:
1. Company name and the name/title of the buyer
2. Buyer goal(s)
3. For each goal, reasons they can’t be achieved in their current environment
4. Capabilities that offset the reasons
5. Potential value to the buyer/organization
6. What other titles will be involved in the buying decision
Sellers should then document these answers in emails or letters that go to their potential Champion. In those emails sellers request that the buyer give them access (downward, upward or laterally) to the Key Players that would have to be called on to sell, fund and implement the offering being considered. Sellers should then gain agreement to the content of letters or emails and request access to call on the Key Players. After doing so sales managers can review the emails, verify access has been granted and grade this opportunity as a “C” (Champion).
We suggest sales managers take a “trust but verify” approach in grading opportunities in the pipeline from “C” forward. Verification will unfold over the coming weeks or potentially months as managers should see buyer actions that confirm the opportunity is further qualified:If a month goes by and sellers have not spoken with the Key Players requested, managers should have a conversation to understand where the opportunity lies.
For Key Player calls there should be letters or emails embedded with answers to the first 5 debriefing questions (it shouldn’t be necessary to ask Key Players for access as it has already been granted).
After interviewing all Key Players sellers should be able to gain consensus that the committee wants to go further in their evaluation of the offering. If successful, sellers would negotiate a Sequence of Events (SOE) with agreed upon activities and dates that would lead to making written recommendations or proposals. The date of the issuance of proposals should be based upon the buyers’ timeframe.
In order to grade opportunities as “E’s” (Evaluating) sellers must be able to show their managers agreed upon SOE’s. After reviewing them and asking any clarifying questions, managers can assign a grade of “E.”
Once again there are buyer actions to be measured and monitored. Over time the SOE is updated and sales managers should see that activities are being completed to verify that opportunities are moving forward. We suggest having “Go/No Go” decisions – points where both buying committees and vendors decide if they want to continue on with the SOE. An example of such a step would be completion of a cost vs. benefit where the buying committee and seller have to reach agreement the savings are sufficient to warrant continuing the process.
Typically, SOE’s will be updated monthly. This affords managers the opportunity to assess progress on an ongoing basis. If activities are moving along as planned, there is no need to take a closer look. A good indicator of getting a favorable buying decision is when evaluations move along at a brisk pace. If activities bog down or lag, a conversation with the seller should be had to assess what’s going on and see if things can be gotten on track. Throughout this process sellers and managers are assessing if buying committees are committed and if the opportunities are winnable.
To have healthy pipelines it is critical to ensure they are qualified from the start. Once opportunities enter pipelines, vendors are committing time, effort and resources (cost of sales). That said, there should be an ongoing assessment of buyer commitment, potential value, the fit your offering provides to the buyers’ needs and whether or not opportunities are winnable. Just because a seller starts out being “Column A” doesn’t mean other sellers or vendors can’t displace them from that position.
When sellers can negotiate SOE’s with buying committees, it is a virtual certainty they are Column A. SOE’s typically allow sellers to shorten buying cycles as both the committees and the vendors understand what has to happen and where they are. With ongoing qualify/disqualify decisions win rate should be higher. It nets out to spending sellers’ time and a vendors’ resources on opportunities with high probabilities of success. As sellers have to provide receipts to be reimbursed for expenses, so it is that executives sleep better when sellers provide auditable deliverables (Champion and Key Player Letters; SOE’s) on opportunities in their pipelines.
By auditing deliverables and monitoring buyer actions, sellers and vendors minimize the painful situation of going the distance and not winning the business.