Oil slicks, mine explosions, lost sales opportunities . . .
Risks? What risks? Woulda, coulda, shoulda! By now we know that engineering shortcuts and bad assumptions come home, biting executives in the backside. Serves them right! Apologies fly. If only the sickening results were confined to the perpetrators. But they never are. Ask a BP shareholder, coal miner spouse, or anyone whose business depends on the unperturbed ecology of the ocean. And images of oil-soaked waterfowl further remind us that risks aren’t only manifest in financial statements.
Thanks lately to BP, risky business practices have bubbled to the top of discussions. That’s healthy for sales executives, because selling strategy is all about risk—and how to manage it. But like BP executives, many sales executives aren’t ready to face it. Who wants to be branded a naysayer? “We want to know how we are going to make our revenue target—not how we’re going to miss it!” An optimistic demand that ignores one of the few certainties in sales: not every prospect becomes a customer.
In February, 2010, Outside Technologies, Inc. conducted the 2010 Sales Risk Survey in partnership with CustomerThink. Over 100 salespeople and executives responded. How they’re coping with risk might reflect how a broader group of vendors see the road ahead:
• Greater uncertainty has a direct financial cost. Compared to last year, sales pipelines and sales cycle times are increasing. Fifty-two percent said that sales pipelines increased relative to last year, ballooning to an average of three times revenue target. Only 23% said their sales cycle times were trending shorter.
• The poor economy is perceived as the greatest risk, with approximately 25% of respondents identifying it as #1, and almost half placing it among the top three risks. “Challenges from competitive forces and new offerings,” “inability to establish relationships with decision makers” and “major changes in buyer preferences and needs” also made the top three, with the latter two tied for third.
• The risk of “no decision” remains formidable. Forty-four percent named “prospect delayed purchase indefinitely or did not make a decision” as the top reason for lost sales opportunities, followed by “price was high relative to competitors” (38%), and “competitor did a better job in marketing and sales” (35%).
• Erosion of “sales control” brings new risks. While the majority of respondents (70%) agreed with the statement “when we lose sales opportunities, we know the reasons why,” a surprising 53% indicated that their companies have less influence over purchasing decisions than ever before.
• Even though risks are known, many aren’t managed. Over 63% of respondents agreed “we know the greatest selling risks we face today,” but 43% felt that unexpected situations played a role in lost sales opportunities.
• Most are not preoccupied with having cutting-edge products or services in the sales bag. Less than 20% agreed with the statement “our customers only buy products with the latest features or technology.”
• We might not like what’s happening in Washington, but it won’t impact sales strategies. Less than one third agreed that pending legislation could substantially change their marketing and sales tactics.
• Companies cannot afford to lose their top sales producers. Retention of top sales talent was identified as a vulnerability by over 45%, while almost 25% felt their salespeople “lack the basic skills to compete in our markets.”
• Social media plays a role in communications risk. While nearly 60% felt their salespeople were skilled at communicating key value propositions, a whopping 57% percent disagreed that their companies were “effective at using social media for communicating with our prospects and customers.”
• Supporting technologies are not as vital as sales automation vendors would like us to believe. Nearly 72% were neutral or agreed with “if we were suddenly unable to use our sales/CRM applications, it would not adversely impact our sales operations.”
By nature, salespeople are optimists. But the collective observations of the sales executives who took this survey reflect a nuanced view of how people view the economic road ahead. We can infer emerging strategies and tactics based on the opportunities people see and the risks they want to avoid. In upcoming posts, I’ll share the external forces that contribute to selling risks, the greatest risks that executives see over the next 12 months, and how sales organizations are coping with them.
Further reading: Sales Risk Survey Executive Summary (free to CustomerThink registered members)
