“There’s nothing wrong with learning a prospect can’t or won’t buy, as long as you learn it early in the sales process.”
This admonition came from a VP of Sales I worked with. He wasn’t being glib. “No” answers are a sales fact of life. The VP recognized the importance of vetting opportunities before a salesperson committed the scarce resources of time and money.
Salespeople commonly call this vetting qualification. What’s less common is thinking about qualification strategically, which involves managing risk. Many companies leave qualification to the tactical discretion of individual salespeople. The results are clearly mixed. Some salespeople languish by pursuing risky opportunities that other salespeople might quickly reject. Other salespeople readily disqualify opportunities that might actually be valuable for the company because commission plans don’t adequately reward risk taking. In any case, when a sales force exhibits wildly disparate productivity results, qualification processes should be on the probable-cause radar.
The symptoms will be manifest in statements like these, taken from my own selling past:
“They would have purchased, but they told me they couldn’t afford my proposed solution.”
“They selected a vendor whose Senior VP is the brother-in-law of their VP of Operations.”
“They postponed their decision. It’s not a priority for them now.”
“They can’t buy anything until they replace their legacy IT infrastructure. They expect to change over in about two years.”
Successful sales organizations understand that vetting the best sales opportunities requires the same strategic visioning and thought as how to invest in new product development or how to fund expansion. Why? Because selling requires the commitment of significant scarce resources—mainly time and money. Companies that excel at managing sales risk early in the process possess a key advantage over those that don’t.
How do companies formulate qualification strategies and the questions that follow? They begin with understanding the value their products and services provide. That understanding yields insight into what prospect companies and opportunities might benefit from them the most. Those insights are converted to profiles of organizations or persons, and those profiles can be further described by more detailed attributes. From there, qualification questions can be created.
Executives should ask themselves “Do we have a set of qualification questions that is consistently effective for identifying the most valuable opportunities for us to pursue? What are the greatest selling risks that we face? How do our top performers qualify opportunities? Are we disqualifying potentially valuable opportunities? And last—but not least—”Does our sales incentive plan encourage our sales team to pursue opportunities that are valuable to our organization? ”
But building effective qualification doesn’t stop there. Qualification questions are never static; they are refined by reviewing sales losses and wins. For losses, the top question is “What didn’t we know at the time the purchase decision was made?” (With that in mind, it’s not difficult to determine the questions that should have been asked early from the list of sales outcomes above.) For every win, the questions should start with “Why did this customer buy?”
What are the best questions to ask? In over twenty years of selling of high technology products and services, I uncovered risks in sales outcomes that can be mitigated through asking the following set of questions, which I term the Four Green Lights. (Note that all questions have a ‘yes’ or a ‘no’ answer.)
1. Solution fit: Does my prospective customer have a strategic challenge or operational issue that can be solved using my product or service?
2. Access: Can I get access to the person or people who have the authority to commit and spend the financial resources to procure my product or service?
3. Money: Will my prospective customer pay me what I am likely to charge for my product or service?
4. Timeframe: Will my prospective customer purchase from me within a timeframe that matches my planning horizon?
How should your company manage the risk? The answer depends on your appetite for it. Even four “yes” answers doesn’t begin to address all the sales risks that could be encountered. But one or more “no” answers might represent a risk level that is clearly higher than a company can financially accept. For example, if I don’t have access to the people most influential in making a purchase decision, the likelihood of a successful sales outcome is very small (based on my experience). Today, I wouldn’t pursue such an opportunity, so it’s imperative that I uncover that condition through early qualification. A situational analysis of your company’s competitive position might cause you to eliminate some of these qualification questions and add others.
How does your organization view the connection between strategy, risk management, and sales opportunity qualification? Are your processes related? Do your qualification steps support your business strategies? What do you believe are some best practices?