Deals

Sales Strategy – There’s No Way That Deal Should Be At 75%

/ Ethan Zoubek / Leave a comment

The Importance of Objective Sales Stages

We’ve all been there. We look at a deal in the sales forecast with which we’ve been involved, see that the probability is set to a percentage that corresponds to one of the sales stages setup in our CRM system, and say to ourselves “WHAT?! I know that deal! There’s no way that deal should be at 75%! What is he thinking?” We then pick up the phone or pound out an email to the sales rep and/or his manager and ask for an explanation.

The response that we get is… sort of not terrible. When we listen to the explanation we understand how the rep could make a case for the later stage. We can see how they might feel that it’s further along than we believe it to be. We listen to the rationalization and it passes a loose sniff test. The logic may be a little flimsy, but we can see where they’re coming from. But here’s the problem:

 Sales Stages Are Not About How We Feel

There are two ways to structure sales or opportunity stages in our sales process: 1) based upon what our reps think the close probability is, or 2) where the deal is in the sales cycle based upon objective measures – upon what’s actually happened.

The first way is the wrong way. End of discussion.

Sales reps are, almost as if it were a law of the universe, prone to hearing what they want to hear and destined – absent any structure and discipline imposed by sales leadership – to think a deal is further along than it actually is. There’s a name for it – Happy Ears

Without a degree of objectivity, forecasting falls into a world where reps and their managers end up thinking “well, this could go either way. We’ve got a 50/50 shot right now. I feel pretty good about it. Lots to do, but it really does feel 50/50. So let’s forecast this at 50%.”

What happens is that we get a TON of deals forecast at 50%. And that throws off our forecast. It reflects the wrong numbers to the rest of the business.

I know this because I did it myself over the years, probably hundreds of times. Even when I knew better. I got too close to a deal and missed my blind spots. I was thinking positively because I wanted to hit my numbers. I became friendly with the project sponsor and trusted that it would get done even though I really had no idea of what their legal review process was or how long it would take.

Whatever the reason – left to our own interpretive devices, we become optimistic and over-confident and we start to feel that a deal is closer than it is. Then the end of the quarter comes, deals start to slip, and everyone is wondering what’s going on.

The Path to Accurate Forecasting – Objective Questions

I operate with a tight set of sales stages that correspond to a percentage probability (with amounts of 0%, 10%, 25%, 50%, 75% and 100%) and I have found, working with other sales leaders and colleagues, that the easiest way to move toward accurate forecasting is to overlay a set of objective qualifiers on top these sales stages. These are binary, black or white questions that must be asked and answered before the sales rep can move the deal to the next stage. Think of each stage as a column, with a clear question at the top. Ask that question to see if it should be moved to the next stage.

Sales_Stages_Ethan_Zoubek

For example, an objective qualifier for moving a deal from 25% to 50% would be “has the prospect narrowed the competitive field down to three or fewer vendors and are we one of them?”

If the answer is ‘yes’, it can move. If it’s ‘no’, it stays.

It’s that straightforward. If there aren’t three or fewer vendors remaining, and we’re not one of them, the deal doesn’t advance to the next sales stage. It’s clear, it’s objective, it’s binary, and it is immune to subjective interpretation.

Here’s another example. To move from 50% to 75%, we must be formally advised that we are the selected vendor and we must receive a first round of redlines back from the account. These qualifiers have yes or no answers. Formally selected in writing? Yes – we have the email right here. First round of redlines back? Sure thing – we’ve sent them to our counsel. The deal can be moved forward.

Now, there’s a HUGE amount that happens between moving from 50% (field narrowed to three) and 75% (first turn of redlines.) A huge amount. And that’s the point. Which brings me to…

Why Sales Stages Are So Important – Reason #1

Deals are lost or slip because of things that we have missed. There are always a ton of moving parts. Managing to disciplined sales stages provides a predictable, repeatable system to apply to all deals so that things don’t get missed.

Some reps are great at discovery but start to fall apart during late-stage selling. Others are incredible at understanding the legal cycle and negotiations, but aren’t great at articulating business value early in the cycle. No one is great at everything. It’s natural for people to migrate to their strengths and avoid their weaknesses. No problem, as long as the gaps are covered – and a clear and objective set of sales stages with criteria for each stage helps ensure that a rep and their sales leader can formulate a plan to cover all bases and ask for help where needed.

Why Sales Stages Are So Important – Reason #2

Beyond giving a sales rep and her leadership a means by which to understand deal progression and priorities, the point of sales stages is to enable the business to have visibility into pending transactions so that the business can plan – plan for necessary resources (both human and technical) plan for spending, etc. It allows the professional services organization to forecast headcount requirements and staffing needs. It enables finance to get visibility into things that are critical to run the business, like how much cash can be expected to come in at any given point in time.

It would not be an overstatement to say that the entire functional operation of the business is dependent upon accurate forecasting.

When sales reps understand this – when it’s clearly outlined to them that sales stages aren’t simply a mechanism by which to have their chops busted by their managers, we get more accurate forecasting. Reps start to understand that the forecasting goes beyond them and that doing so accurately helps the business – and most reps genuinely want to help the business.

When you start to apply these objective questions, the organization can look at any deal by stage and know what has or hasn’t happened simply by a function of the stage in which the deal is found. Sales leadership can start to identify falloff points in the process, indicating areas that may be in need of more enablement. What it provides is consistency and predictability, which is the greatest gift a sales leader can bring to their finance and executive team.

Stop Calling it a “Close Plan”

/ Ethan Zoubek / Leave a comment

The importance of a plan to address the ‘last-mile’ of a sales cycle cannot be overstated. It is critical, especially for large and complex deals, that the sales executive draft and review with their sales leader a detailed plan to earn the business in question. Doing so is how we ensure that things don’t get missed, that the account team is in alignment, that senior executives are clear as to what is required of them to support the deal and that everyone is focused on the most important tasks to reach the desired outcome: closed business that will bring clean revenue to the company and a valuable solution or product to the customer.

Close Plans Are Necessary

Most evolved sales organizations have a process for this. At certain stages in the sales cycle, for deals of certain dollar amounts or strategic importance, sales leadership will require that the sales executive convene a review in which the sales executive presents the plan. Sales leadership will help strategize on tactics and iterate the plan until a final list of action items is determined. Most of the time, this plan is referred to colloquially as a Close Plan.

Invariably, there will be components of this plan that require collaboration with the buyer to do things like:

  • Align incentives “…and to confirm, we’ve agreed to this pricing structure with the understanding that you’ve agreed to take reference calls and sign the contract by the 25th of this month…”
  • Validate steps “…and you’re sure that the procurement director approves and then sends to the CFO for signature…”
  • Confirm dates (“…and we are certain that the CFO isn’t taking a trip to Bora Bora the week that we are planned to have him sign…”

A plan created in a vacuum isn’t a plan – it’s a hope and a dream until we confer with our buyer.

Don’t Call Them Close Plans

So, being fortunate enough to have one of those top deals in the pipeline and recognizing that it’s necessary to consult with our buyer on the items in the plan, we call our buyer and we propose that we sit down together to review our plan.

When this happens, please – for the love of all that is holy, DO NOT REFER TO IT AS A CLOSE PLAN.

To some this may be a statement of the obvious, but I can’t tell you how many times I’ve heard sales professionals and their managers actually state to their prospective customer that they would like to review their Close Plan with them.

But why wouldn’t they? For months or years everyone in their sales organization has talked simply about the Close Plan. After a period of time, muscle memory and habit kick in. If we consistently refer to something as a Close Plan when we’re inside the four walls of our organization, it’s a safe bet that we’ll refer to it as a Close Plan outside those four walls.

Words Matter

The words we choose matter. They convey the motive behind our actions and the intent that we bring to an engagement. When we talk about a Close Plan, we de-humanize our buyer and we diminish the importance of their needs and values in the process. We turn them into an object that is to be conquered, a deal to be won. We turn them into a thing.

Buyers sense this – consciously or unconsciously. They must. The result of choosing our words inelegantly is that we turn what may have been a very collaborative and mutually respectful process up to this point into a tug-of-war that trades on angles and leverage, a zero-sum game with a winner and a loser.

What the buyer hears us say when we use the words Close Plan is “this has been nice up until now, but I’ve got to get to work and close this deal. And that means I’ve got to close you.” It signals to the buyer that the situation has changed and that they must now be on guard against tactics designed to extract as much money from them as efficiently and smoothly as is possible. And we are the person with whom they must be on guard.

This is unfortunate. Most sales professionals genuinely enjoy their work and the opportunity to be of assistance and utility to the customers they serve. Most attempt to be as genuine and authentic as they can. Most work for organizations that legitimately believe in the importance of customer satisfaction and shared success. It is an error of sales culture and a result of bad habit that a couple of irresponsibly chosen words can undermine what are otherwise thoughtful and deliberate efforts to provide genuine value.

Sales Leaders: Lead

Sales leadership bears the bulk of the responsibility for shifting the tone of the sales organization and the words that our teams use, both in the field and in the office. Our people look to us to get direction – both spoken and implied – as to how they are to engage with the market, the competition, our prospects, our customers and our co-workers.

This is encouraging, because it means that in many ways all we have to do to start to engender a more value-driven culture is to choose our words more carefully. This is a discipline that is easily begun and, with practice, develops reliably. It does demand awareness, however. Many of us run-around barely conscious of the words that spew out of our mouths, oblivious to the emotional wake that we leave and the downstream impact of the words we choose. So we must consciously decide to begin.

There are any number of ways to convey the intent of a close plan – mutually agreed upon steps to reach a mutually beneficial outcome – without calling it a Close Plan. If you’re a sales professional, I’d encourage you to share this post with your leadership to initiate a conversation on the subject. If you’re a sales leader, discuss this with some of your managers and sales executives to collaborate on some new terminology that more accurately reflects the type of organization that you want to be.

For the past number of years I’ve favored the term “Engagement Plan” and have required my teams to use it in lieu of “Close Plan.” It maintains the word “plan,” and it’s important to call things what they are as simply as is possible. The term “engagement” conveys a sense of collaboration and forward momentum.

Next week I’ll spend some time reviewing what I’ve found to be the best approach for structuring an Engagement Plan and when to present it to your buyer. Hint: it is NOT at the end of the sales cycle. To make sure you know when it’s published, click here to sign-up to be notified.