I was in Vancouver recently working with Kris, the regional vice president of sales for the eastern region for a client company. Kris and I met for the better part of a day to work on integrating a qualification process into her team’s everyday thinking and language. In short, the qualification process has two basic buckets: potential value (if we win), and winnability.
After about half an hour Kris said, “You know Jerry, my entire team’s target account list is only 200 companies, we don’t need to spend time assessing an opportunity’s potential value – they’re all high. Let’s just assess winnability.”
With that I suggested that we drill down on a few deals that Kris was familiar with. There it was, on deal number three, an “opportunity” whose warranty requirements were so demanding and measurable payback requirements so aggressive that, well, let’s just say that this was one deal we’d just love to see Kris’ competitor land.
Assessing a deal’s potential value can certainly help us throw out an “opportunity” that really isn’t, such as the case with Kris’ deal. However, it’s used just as often – if not more so – to justify pursuing a deal that, on the surface, appears not to yield sufficient potential return to make it a worthwhile pursuit.
Here are five criteria I showed Kris how to apply to her sales team’s deals to help her team assess an opportunity’s potential value. Remember, these don’t help you determine how winnable the deal is, they’ll tell you whether you even want to win it in the first place, and how badly.
1. What is the short and long term revenue potential? This is the most obvious criterion and, frankly, where too many potential-value analysis stop. Making matters worse, the analysis of potential revenue often doesn’t go far enough. In particular, many deals are deemed not worth the chase because the dollars aren’t big enough.
I’ll never forget a client salesperson for a very large technology company back in the late ’80s who was going to take a pass on pursuing business with a little company in Silicon Valley by the name of Cisco. After rolling up our sleeves and peeling back a few more onion layers by asking the right questions it became apparent that this little start-up seemed poised to grow in a big way over the coming years. The potential revenue, as we all now know, to selling to this little nobody company was quite obviously (again, in retrospect) huge.
2. How profitable is the business likely to be? One of the great advancements in thinking of the last ten years by sales leadership is the wisdom of compensating salespeople according to the profitability of the business they bring in, not just the revenue. Predicting profitability is among the more difficult tasks we can ask salespeople to undertake. However, if we arm them with the right ammunition such as assessing an account’s philosophical fit with the selling company, the task becomes more doable.
3. What, if any, strategic marketing value is there? Sometimes, there’s a deal, or an account, that, despite being less than attractive on other aspects of its potential value (e.g. doesn’t look terribly profitable), is attractive to win for other reasons. For example, the company is the most highly respected company in an industry that your company is trying to break into. You might compromise profitability on this deal for the opportunity to get your foot into that industry.
4. What, if any, unusual risks do we assume by pursuing or winning this opportunity? This was the showstopper for Kris. She realized that, despite the apparent attractiveness of the deal, the risks were way too high so she directed her salesperson to deploy his time on other opportunities. I asked Kris six questions all related to this criterion. Kris was giving me the impatient nod on all of them until we hit the question: “Are there any unusual warranty or performance clauses?” This stopped her in her tracks. The operative word in this criterion is “unusual.”
5. What level of internal company resources will be required to pursue this sales situation? Note that this question is about resources to pursue the opportunity. Resources required to fulfill it come under the potential profitability heading. Jack, the sales VP for one client, a major player in the RFID space, had to tell a top rep to forego the pursuit of a deal that, if successful, would have taken this company into a new and very large market for an established product. However, the pre-sales support to make this happen was starting to consume way too much of the technical team’s time, rendering the deal, unfortunately, not worth the chase.
Committing company resources according to potential return is one of the important tasks of today’s sales professional. Help your company – and yourself – by looking more broadly than you might have in the past at a deal’s real potential payback to your company.