Wednesday, September 14, 2011

Closing the Deal

Qualify sales deals quicker with early preparation

By Lisa Dennis, president, Knowledgence Associates

When is the best time to qualify a sales prospect? The obvious answer is before you invest significant effort in the opportunity. But the reality is that many sales representatives don’t fully qualify their opportunities up front, frequently discovering that the prospect wasn’t truly qualified in the first place. Many of these deals fall out later in the pipeline process, which is not optimal in terms of managing time and resources. By spending more time at the front end of your sales cycle to get to know your prospective customer and qualifying them completely and in depth, you reduce the risk of going on a wild goose chase. A partially qualified opportunity is likely not closeable.

The first challenge is that many organizations push sales reps to decide if something is qualified before they actually have a chance to really complete the due diligence needed. Often this is decided by the sales force automation software being used – where qualified is the second step of the pipeline. I propose looking at adjusting the pipeline steps as follows:

Phase 1 - Interested: the prospect has indicated an interest in your company via a request for information or a meeting or a conversation. Let’s be clear: an opportunity enters this phase only when they show interest in you. Do not add them to your pipeline just because you are interested in them.

Phase 2 - Coached: This is the additional pipeline step that is crucial to being able to do the homework in advance. “Coached” means you are in discussions with the prospect, and you’ve identified a “coach” in the account who is actively helping you get all your qualifying questions answered.

Phase 3 – Qualified: A deal is qualified only when you understand and can fully explain the following:
•    What is the business pain the prospect is experiencing – in their language?
•    How is the project need defined by the prospect and can we address it?
•    Does the project have both a name and a budget?
•    What is the time frame for a decision AND for a completed implementation?
•    Who are the members and their roles on the decision making team?
•    What are the criteria for each member of the decision making team?
•    When do they expect a completed proposal?
•    Who else are they talking to and how likely is it that we will make the shortlist?

A deal is not fully qualified until an answer for each of these questions is accounted for. Does this sound like a lot? Absolutely. The reality is that every pipeline has “hopeful” deals that are almost qualified, yet still don’t have many of these questions answered. Do we really understand their pain or do we simply see “a project” we could do? There is a big difference between the two. Another subtle but important aspect is the project name. If the prospect has an internal project name for this opportunity, then you know that it is real and has assigned resources and budget. Make sure the opportunity is real. Many sales people don’t find this out until many weeks have elapsed. Next, make sure that you know both the decision participants and what each of their criteria is likely to be. If you have a CFO on that team, you can be sure his/her criteria is quite different than the technical director or vice president’s. Most importantly, what other companies are in the running for this deal? Just assuming the “usual suspects” isn’t enough. Be sure you know who you are competing against and on what basis. And finally, what is the likelihood of winning the deal? Access the trade-off in investing resources in a deal that is 30 percent likely to close versus one that is 60 percent likely to close. Seems obvious, but too many organizations chase every opportunity like they are going to win them all, a sure guarantee for depressed revenues at year end.

It may be time for a check-up on deal qualification. Ask your sales people to scrub their pipeline deal by deal to see how many of them are fully qualified using the list of questions above. You may be in for a wake-up call, but better now than later. You can either go after the missing information, or decide to cut your losses and go after a better deal. Either way, being sure that each opportunity has an answer to all the qualifying questions, before you start to invest significant internal resources, will make all the difference in generating revenue.


Lisa Dennis is president of Knowledgence Associates in Cambridge (www.knowledgence.com). "Closing the Deal" is a new weekly feature in MHT where sales experts share their advice on technology sales.