Will This Year’s Sales Assumptions Work in 2009?

In the last two weeks, has anyone swaggered up to you and said “Yeah, 2008 played out the way I thought it would.”? I certainly can’t brag! So, how well did your sales assumptions work in 2008?

The good news: compared to this time last year, you have 365 more days of hard-won experience to guide your upcoming decisions. The bad news? The future appears ever more uncertain. Just one year ago, it was hard to imagine that the words “credit crunch,” “financial bailout,” “GM bankruptcy,” and “President-elect Obama” would become woven into popular discourse—a reflection of a changed country in a changed world.

Considering that there are constant forces that affect business, the calendar point 1/1/09 seems an arbitrary moment to focus thought on the relationships between assumptions, past events, and future strategies. But beginning a new year presents an opportunity for all of us to pause and think about how old assumptions will work in the near future.

The question isn’t whether assumptions are bad—they’re a decision-making fact of life. The problem is that people who assume things (all of us) are judged harshly when decisions don’t produce the required results, or when things don’t proceed according to plan. If you’re like me and have made a few poor assumptions recently, you’re in good company. Just look at 2008’s Bad Assumption rogue’s gallery:

Alan Greenspan, who said “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms, ” He added “. . . I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

Yahoo’s management, for assuming that an even better opportunity awaited the company’s shareholders following their rejection of Microsoft’s offer to purchase the company in February.

Big-3 CEO’s Wagoner, Lally, and Nardelli, for assuming that boundless arrogance didn’t matter when making a sales pitch before Congress to secure $25 billion in taxpayer-funded financial aid.

In an unstable world buffeted by unpredictable economic, social, political, environmental, and technological forces, which sales assumptions merit scrutiny? Here are my picks:

“Assuming our prospects and channel business partners are trustworthy . . . ” An editorial in The Wall Street Journal, (December 15, 2008) said it best: “Capitalism runs on trust . . .” If we learned anything from this year’s financial market debacle, it’s that trust can’t be assumed, and that if trust is broken in financial markets, we’re all affected.

“Assuming that the economics of our industry follow the trend of . . . ” Radical reductions in credit availability debunk many assumptions, including how to forecast sales, how to segment markets, how to price products and services, and how to interpret financial calculations for deciding on capital goods purchases.

“Assuming our business model will work . . . ” Technology convergence and other forces call this idea into question, even in the most well-established industries. Just ask any newspaper publisher or domestic car manufacturer.

“Assuming we can communicate our message. . . ” Emerging web applications and Social media have irreversibly changed the communication balance of power. Product consumers now produce the most valuable product and brand information. That change alone invalidates many long-held assumptions about how to reach prospects and how to create and manage marketing and sales campaigns.

“Assuming our sales process is efficient . . .” Do legacy interpretations of sales efficiency matter when technology and other forces call into question the very definitions of buying and selling? And how important is sales efficiency anyway if there’s incongruence between selling and buying processes?

“Assuming that our CRM tools will help our employees perform their jobs . . . ” According to Rob Preston of InformationWeek (November 17, 2008) citing a 2008 survey, “only 30% (of companies in the InformationWeek 500 ranking) say their companies encourage employees to use consumer (applications) they find useful, down from 33% last year. So it appears companies are becoming more stringent . . . not a positive trend . . . If those issues always ruled the day, instant messaging, a staple of today’s knowledge professional, never would have made it into the enterprise.”

“Assuming that our Key Performance Indicators predict the results we require . . . ” Correlation doesn’t mean causation, and many selling organizations measure (and reward) behaviors that don’t produce value for the company, as Michael Webb of SalesPerformance.com points out: “The senior executive of a large software company observed that most prospects who went through the expensive ‘proof of concept’ stage of their sales process became customers. So, he ordered a sales contest where salespeople were rewarded for getting more prospects to conduct a proof of concept. Salespeople complied, and the results were disastrous: costs went way up, and revenues didn’t. (The manager’s) assumptions about what caused customers to buy created enormous waste . . .”

Challenging previously-held assumptions will rock the corporate boat, but survival in 2009 and beyond requires a fresh approach. Start asking at the top: “Which assumptions are we making that must be true for our strategy to work?” The answer might uncover 2009’s greatest risks and opportunities.