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Sorting Fact from Fiction in the Sales Pipeline

The Big Deal

Every sales manager, business owner, general manager and CFO, at some point in their careers, have been entertained by the overly-enthusiastic sales person describing the ??????Big Deal?????? that was about to close. And unless those managers were completely na????ve and inexperienced, a twinge of skepticism should have arisen. Was what they were hearing, in fact, real?

When hearing about a ??????Big Deal??????, managers must confront the challenge of what to do about it ???????? ignore it, or prepare. Preparation may comprise some or all of capacity planning, inventory commitment, equipment capacity increases, cash planning and workforce planning. Failure to anticipate these factors can result in an inability to deliver to the customer what they want, on time, should the deal actually break. On the other hand, a kneejerk financial commitment based on the potential of the deal, can leave the firm with a lot of unusable inventory should the deal fail to materialize.

So, how does a manager judge the reality of the ??????Big Deal???????

Here????????s an old joke that serves as a guideline for the most skeptical.

Question: How do you know when a sales person is exaggerating?

Answer: His lips are moving.

While this approach may appear easy, it is not dependable. There is a better way to sort through the reality of the ??????Big Deal??????.

Ask Six Basic Questions:

The likelihood of closing a ??????Big Deal???????? can be assessed by answering six basic questions. As you answer these questions, keep in mind is that the answers to the first five are only valid from the customer????????s perspective.

Question 1: Compelling Need

To what degree is the prospective customer confronted with a real, compelling problem or challenge that needs to be addressed quickly or can the customer do nothing?

Research has shown that between 30% to 50% of all opportunities in a sales person????????s pipeline never actually close. The customer simply never buys anything. These are called ??????No-Decision?????? outcomes. The sales person seems to be the only one convinced that there is a customer compelling need that will result in a buy. No matter how convinced your sales person may be that the customer has a need, the only opinion that counts is the customer????????s.

To further pursue this line of inquiry, you might continue by asking: Is there a deadline by which the customer problem must be fixed? Is there a significant economic penalty, safety consideration or other obvious consequence if the customer problem isn????????t fixed? Another revealing question is, ??????Can the customer do nothing??????? Or, ??????What is the economic or other consequence to the customer of doing nothing???????

The lack of a compelling need, leads to the large number of ??????no Decisions?????? in a sales persons pipeline.

Question 2: Economic Benefit

To what degree is there a significant economic benefit to the customer if the problem / challenge is resolved or the need filled?

Businesses, too often evaluate the economic value of a sales opportunity only from their own perspective. How much revenue or commissions will it bring to us? While this is a good way to evaluate attractiveness in terms of the bottom line, how much money your firm can make is completely irrelevant to the likelihood of the deal closing. In most business-to-business environments, decisions to buy are made by customers based only on the degree to which ??????they?????? believe that ??????they?????? will make money. In other words, there must be a significant economic benefit in their favor, well beyond the cost of purchasing your product or service, for the deal to close. The economic balance must be disproportionate in favor of the customer. This is the basis or all ROI.

Question 3: Match

To what degree do your capabilities (products and services), precisely and completely meet the needs of the customer?

As convinced as you may be that you have a significantly well matched solution which solves every dimension of their challenge, you only score closing points if the customer believes it.

Question 4: Competitive Position

To what degree does the customer believe your solution is the best of all the alternatives available?

While a number of competitors may provide a reasonable match to the problem or need, all alternatives are rarely equal. Let me repeat for emphasis. Convinced as you may be that you have a significantly advantaged solution, you only score points if the customer believes it with the same conviction. And unless you can translate that differentiated position into a differentiated economic benefit to the customer, you miss a great opportunity to solidify your advantage in the customer????????s eyes.

Question 5: Champion

To what degree do you have a high-level, influential and authoritative decision maker believing your solution is best?

A ??????Champion?????? is a person in the customer organization that likes your solution, believes it is in the best interest of their company to select it, wants it to win and is working toward that end. All Champions are not equal. The only Champions that really count are those with the highest composite score on three dimensions: Influence, Power and Affinity.

Influence is the degree to which they can influence a decision. The degree of influence may arise from technical expertise, seniority, family influence, organizational rank or some other source. Authority is the degree to which they can unilaterally make the decision and Affinity is the degree to which they are attracted to your solution.

Champions that are likeable, who like you, and are always willing to have lunch with you, are not ??????real?????? Champions unless they score high on the Influence-Power-Affinity scales.

Question 6: Leverage:

To what degree does winning this opportunity bring additional benefit to your company?

This is the only one of the six criteria that; a) doesn????????t increase (or decrease) the credibility of the opportunity and b) is only important from your perspective, not the customer????????s.

Leverage may exist in several forms: straight out earnings, a new first-time market capability, a first-win at a new account or a technological breakthrough that can be leveraged to other customers.

Even though it????????s not customer-centric this factor is good to evaluate, so you can assess the benefit of concentrating and/or redeploying assets to winning this ??????Big Deal??????

Getting to Reality:

The word confrontation can have a bad connotation, but for purposes of analyzing the ??????Big Deal??????, let????????s agree that confrontation simply means getting to the reality of it in a respectful, yet determined, way.

Some managers find it difficult to confront a sales person about the reality of a ??????Big Deal??????, particularly when others are in the room. Presumably this is out of respect, to avoid the embarrassment of seeming confrontational, or to avoid appearing not to trust an employee. One way or another, these emotional barriers to assessing reality need to be overcome.

A highly respected local CEO was participating in panel on Performance Management recently. He was asked how he avoided hesitating and how he handled the discomfort associated with confronting these and other kinds of important issues. His response, ??????I was always more afraid of the consequences of not confronting the issues.??????

There????????s typically a lot riding on a ??????Big Deal??????. The six areas of inquiry listed above will help you and your organization stay focused, concentrate where the opportunity is truly best and allocate scarce resources appropriately.

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Jerry Vieira, CMC is a Certified Management Consultant, President & Founder of the Portland, OR-based QMP Group. Jerry can be reached at 503-318-2696 or [email protected] He’s happy to take your calls and answer questions.

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