The customer is always right” might be a noble customer service attitude, but in sales, it’s deadly.
Unfortunately, it’s also pervasive.
When we think of “cost of sales,” what usually comes to mind is the direct expenses associated with acquiring customers: salespeople’s salaries, benefits, travel and entertainment, etc. But this way of thinking about cost of sales is incomplete, understating – often by orders of magnitude – the real costs.
Here’s an example. Gary is sitting at his desk working, and probably wishing that things were a little better than they are. Times just aren’t what they used to be at Gary’s company. Business is slow. Suddenly, a request for proposal shows up in his inbox. He prints it out and peruses it. Looks like a beauty. Being in sales, he takes the lead on coordinating the response. Like most RFPs, this one will require input from numerous people throughout Gary’s company: the techies, the bean counters, production people, etc. First, he calls the prospect to qualify the deal. Sure enough, it’s hot. The customer will be making a decision within a month. How do we know? Gary asked them. How many other bidders? Only three.
Satisfied that this baby is real, hot and winnable, he pulls the team together. They look over the RFP, agree to their respective duties and go to work on the response. About 12 man-days later, the proposal is off to the prospect, ahead of the deadline. Gary starts the follow-up process, “How are we looking?” “When will the decision be made?” he inquires. After a few weeks of this, things go quiet.
Well, you know how the story ends.
Now we’re talking cost of sales! If Gary had asked the tough questions before deciding to respond to this RFP, he would have learned that this “opportunity” was really just so much tire kicking. But nobody ever told Gary he had to ask tough questions.
Just because it can fog a mirror doesn’t mean it’s worth pursuing
I believe that job one for salespeople is to size up opportunities and then make judgments on what resources to put into winning those opportunities.
Well folks, it ain’t getting’ done. And it’s costing your company a fortune. Both in the resources deployed to the pursuit of un-winnable deals and the resources not deployed to the winnable ones.
If this is a problem in your company, here are three things that you can do to remedy it.
Create a “culture of no” in your sales organization
Most salespeople have a traditional sales mindset. This means they come pre-wired not to say, “No.” So you, as a business owner or executive, have to give salespeople the approval, indeed the mandate, to do so.
It’s up to you to create an environment in which salespeople feel a sense of accountability for your company’s money to the point where they are not afraid to ask customers the direct questions that need to be asked about how real an opportunity is and how likely your company is to win the deal. Don’t think you can say it just once, though. This is a cultural thing. You will need to reinforce it with your sales force at every turn.
Give the sales team the criteria
It’s one thing to tell your sales team that it’s OK to ask customers direct questions and to say, “No.” It’s quite another to give them the rules and guidelines for doing so.
Sizing up an opportunity’s win-ability is not an easy task. It requires far more than asking useless questions like, “When will you be making a decision.” It requires understanding the business drivers behind the project, the political agendas, and the competitive landscape. As a leader, it’s your job to give your salespeople these criteria.
The devil isn’t in the details, he’s in the words
Let’s come back to Gary. Most likely, the language he used to open the call when he phoned the prospect to “qualify” the deal sounded something like, “We have a few questions we’d like to ask you before we quote.”
It should have sounded more like, “We’re trying to make some decisions about resources. So before we roll up our sleeves and start dedicating time to developing a response to your RFP, there are some things we need to better understand.” The difference is subtle but powerful. In Gary’s case, it would have made the difference between 12 man-days and, perhaps, 12 minutes. That’s serious money.
Elevate the accountability bar for your sales team. Elevate their proficiency to ask the tough questions. And, in the process, elevate your company’s profitability.