Have you ever had a sales manager tell you that they were unhappy with how long prospects were lingering in your sales pipeline? If so, please forward this to them.
Look at any CRM system and you’ll find plenty of common elements. Among them include fields for sales stage (with a default win probability), expected close date and expected revenue. With these elements, management typically forecasts by discounting the expected revenue based on the win probability (per the sales stage) and organizing opportunities according to expected close date. Thus management has an idea of what they can expect in terms of revenue over the next several months. This is all very basic Sales 101 stuff, but is often the source of unmet expectations between sales managers and their sales force.
A main source of the divide between a sales forecast and the subsequent sales performance is that win probability is typically tied to the sales stage of the opportunity (e.g., if an opportunity is Identified, it has a 10% chance of closing, if they’re Contacted its 20%, Qualified 50% and Proposed 67%). It is my experience that, when looking at pipeline from a macro perspective, the single best indicator for how long a lead will be in your pipeline and the likelihood with which it will survive to become a happy customer is the source of the lead. Therefore, I suggest that you define the lead source at a very high level. In my CRM, I have just three different lead sources. They are:
- Seekers – these are prospects that seek you out
- Sought – these are prospects that you seek out
- Suggested – these are prospects that were referred to you
It is important to think of these categories when engaging with your prospects, forecasting your pipeline, and managing sales expectations.
The Seeker
On the surface, this prospect appears to be the best. After all, they’re most like your mother in that they recognize just how special you are. They have demonstrated admirable wisdom by successfully identifying you as someone who can potentially solve their particular problem. Perhaps they looked you up through a web search, found you through social media or just somehow innately knew that you were ‘the (wo)man!’ More likely, they are using one of your competitors and have decided, for one reason or another, to contact you.
Unless you represent the clear-cut industry leader, the notion of a prospect seeking you out should actually be cause for some concern. It should raise a red flag for you when companies look to spontaneously replace their current vendor. If they were a good customer, paid their bills on time and worked in partnership with their current vendor, why would they be looking elsewhere? If they were indeed a good customer and the incumbent vendor were moderately competent, that vendor, its sales team and customer service staff would be bending over backwards to make sure their good customer was happy.
Case in point, I was once contacted by one of my competitors’ largest customers. They called me in for a meeting and already had all of the information I would normally solicit waiting for me, accompanied with a list of one-sided, ridiculous demands. Against my recommendation, our company met their demands for reduced pricing and extended billing cycles as well as some other one-sided concessions. They quickly became my 4th largest customer from a revenue perspective. Frankly, I looked like a hero for the quarter. However, the stringent requirements of this customer caused me to have the lowest year over year growth of my sales career! My prospecting time was diminished and time spent with profitable customers was cut. I was not able to methodically sell and produce the “right” kind of business.
Eventually, the reasons why this company left its incumbent supplier became painfully obvious. In an unprecedented move, I presented a business case for why our company should fire this customer and no longer do business with them. We gave them 30 days to find a new vendor. Despite the loss of this revenue, I was able to sell far past the deficit and ended up in the top 1% among all sales people globally for my company. I still say that my best and most profitable “sale” that year was selling my company on the idea of cutting that customer loose.
The moral of the story: be very cautious when a prospect seeks you out. Find out why they have sought you out. Be very slow to give concessions. Most importantly, establish a balanced, open communication system with them so that they view you as a respected partner and not a pawn.
The Sought
The Sought are the most challenging and have, by far, the lowest conversion rate. However, these prospects are the key to success for the B2B sales elite. If you want the highest quality leads, you have to seek and engage them for yourself. No one knows more about your product’s strengths and potential for success than you. No one knows more about the types of businesses that will have a painful problem that your company can solve. No one is as invested in wanting to close the right kind of business then you are! This is the prospect you are cold-calling, sending more information to and trying to get time with in order to engage the right buying influences.
The big challenge with these prospects is that they are extremely difficult to accurately forecast in your sales pipeline. A symphony of sales activity must take place, rapport built, relationships established, knowledge exchanged and persuasion gently applied. After first contact, the entire sales process must be executed with flawless precision. Keep in mind that at any time this prospect may shut you down, after all, they did not seek you out. Unlike the The Seekers and The Suggested, The Sought have no initial reason to engage with you.
Often The Sought will tell you that they are happy with their current supplier. To that, my response has always been, “If you are happy with them, wait until you get a load of me!” Of course I’m kidding, but seriously, the fact that they are happy with their current supplier is some of the best news you can hear. It may have more to do with them being a perfect customer than their supplier making them happy. Your job is to get to the right person or people with the right message at the right time.
The Suggested
These are relatively rare in B2B sales. When you can get them, they can be fantastic. Though not always an easy sale, they represent the opportunity to work from a position of mutual, professional respect. Unfortunately this is something that is that is not common enough in the beginning of the sales cycle. The main challenge with The Suggested is that they are often not properly qualified.
I recommend that you do everything possible to introduce as many of these prospects into your sales pipeline. Sources can include your own marketing department, current clients, social media and your oldest and dearest friends. The B2B sales elite treats all prospects with the utmost in professionalism, however, it is even more important to go the extra mile with these prospects. Remember, with these prospects, your actions are not only a reflection on you but on the person that referred you. By going the extra mile, you are turning a favor your referral source did for you into a favor you have now done for them. Initially, they did you a favor by referring you customer. If you do your job well, you will have done the person who referred you the business a favor by making them look very smart for recommending such an outstanding company and sales professional. Lastly, make sure you report back the results to your referral source and, if possible, reciprocate by providing them with leads as well (email me and I’d be glad to share some ideas on how best to do this).
Realizing that there are salient differences between the types of prospects is one of the first steps in understanding a sales pipeline. In reviewing potential sales opportunities, as a sales manager, ‘how did they get here?’ should be one of your first questions. This will help to manage actions and exceed expectations.
