Any sale is an investment of time, money, personnel, facilities and other resources intended to produce a return of cash. Any sales opportunity that is not likely to produce revenue, or enough profit, does not warrant an investment. However, walking away from a specific opportunity does not mean walking away from the customer.In this post, we review best practices for making the go/no-go decision and discuss steps to leave the door open for new opportunities.
Like every other aspect of selling, the go/no-go decision is constrained by time, money, personnel, facility availability and (most critically) incomplete information. To a certain degree, the decision is based on opportunity costs: If we pursue this opportunity, will we have the capacity to pursue another opportunity concurrently or later? There are only so many hours and dollars available to a seller, so it’s important to manage them well, keeping in mind the organization’s overall portfolio.
Some organizations have formal, data-driven scoring systems for determining whether to go forward. Others base the decision on factors that are more difficult to quantify – market intelligence, for example. Alvin LeBourgeois of Miller Heiman suggests developing five criteria that are scored on a ten-point scale, where scoring the criteria validate the quality of the opportunity and tell you whether to proceed. He says, “Companies that develop an Ideal Client Profile find they are winning faster and losing faster, thus better utilizing their seller’s time.” For example, if you were selling staffing services, you may rate the prospects’ propensity to outsource staffing. If they rarely did it in the past, you would not score them at the top of the scale.
Sometimes, it may be appropriate to go forward, even if the likelihood of winning is small. For example, you may want to establish the organization as a competitor in the market or gain the attention of a sought-after customer. Over 2,700 exhibitors invest the time, travel and booth rental every year at the annual Consumer Electronics Show in Vegas for a chance at their big break. Jake Sigal, of Livio Radio, made that investment in a booth and focused on meeting key prospects in 2009. He invited NPR to a demo there and they really liked what they saw. Later that year, he was able to ink a deal with the prominent media organization. He said “I guarantee that if I would have called NPR in the middle of July, they would have said no.” He made a calculated risk and invested the selling time.
The decision on whether to go forward is always a judgment call – easier for some opportunities than for others. Further, this decision is rarely a clear-cut/done deal. Typically, the decision is made with caveats: conditions that have to be met before the decision to go ahead is final. In other words, a go forward decision is often a statement that the opportunity can be won if the seller takes certain actions to raise the probability of a win to an acceptable level.
The seller must be as informed as possible, which is most consistently realized when using a well-structured sales process with certain key characteristics:
* Qualify the deal early and allow time to identify and execute any actions required to influence stated needs and to vet solutions with the customer to win.
* Check progress of the sale at every gate or stage in the process and confirm that satisfactory progress is being made on the actions required to win.
The precise structure of the sales process should be driven by the process maturity of the firm, the size of the company organization, its management culture, the diversity of its business base and other factors. A key element of a sales process is the number of review gates, including the timing and objective of each gate. Some processes involve literally dozens of gates; even if some are not relevant, they are designed to ensure that the management team has not overlooked any important issues. At a minimum, a set of gates would include:
1. Qualify an opportunity
2. Explore the needs
3. Develop a solution
4. Propose the solution
Each of these gates includes a decision. The process and the gates should facilitate rigor of communications to result in the fully informed go/no-go decision. The cost increases as a seller progresses through each stage in a sales process. Clearly communicating your standard for go/no-go decisions ensures sellers spend time on winnable deals.
photo by Katrina Snaps