Think About It… the e-book version

by Todd Youngblood

When reviewing an opportunity, most sales manages will ask about the odds to close. When asked about odds to close, most sales reps have a ready answer. Most often, it’s wrong; based on some mystical gut feel, but it sure does makes everyone feel better – like authentic planning, prioritizing and time management actually occurred.

We don’t have enough time. There are always many more things on the To-Do? list than we have time to get them To-Done?. That’s why we as sales managers and professionals have gotten so very good at setting priorities. Or maybe not…

The obvious place for a sales team to start a priority setting exercise is with known opportunities. Which opportunities have the highest odds of yielding the greatest revenue soonest? The likely dollar value is typically fairly easy to estimate. Likely closing date is a little harder to nail down, but can usually be pegged within a two or three month window. Odds to close though; that’s a tough one. And unless one can get a good handle on that, any attempt at a valid, meaningful sorting of opportunities is reduced to guesswork.

Is there a way to assign odds to close that’s a bit more scientific than a rep’s gut feel? See what you think of the following approach.

Start by creating a spreadsheet that will assist in examining each opportunity systematically from three different perspectives including that of the prospect, my company and the market. With regard to the prospect, the first thing I’d like to know is how influential we are with the key decision-makers. If we have yet to establish a relationship with them, I’ll give this factor a score of 1. If they know and respect us as business people, I’ll give this factor a score of 5. There are other things I’d like to know: Has the prospect approved and funded a budget for this opportunity? Do we know the evaluation criteria? Do we thoroughly understand the business need or problem driving action? With a little effort, you can come up with a total of 10 or 12 key questions regarding the prospect. You can then assign a 1 to 5 score to each.

Next, come up with another 10 or so key questions from a “my company” perspective . Questions like: Is this opportunity in sync with our strategic direction? Do we have the resources and ability to deliver if we win? Can we realistically manage the risks if we win? Do we have sufficient competitive differentiation? Assign a score of 1 to 5 to each of these.

Finally, come up with a few more questions from a marketplace/competition perspective. Do we have any competition? If so who are they? Is a competitor favored by decision-makers and influencers? Does the solution involve new or unproven technologies? Will winning open up new market opportunities for us? Score each of these.

Set up your spreadsheet to add all the numbers and establish a total score for each opportunity.

It won’t take you very long, maybe a month or two, to refine and standardize your three sets of questions. With that, you’ll have a pretty darn rock-solid way to prioritize opportunities. It won’t be long after that, maybe another four to six months, that you’ll have enough data and an extremely simple process to calculate what will be a surprisingly accurate odds-to-close percentage.

Like the approach and wish you had an example? Download a Sample Opportunity Assessment Spreadsheet. And finally, as always…

by Todd Youngblood

The best of the sales managers and executives I’ve had the pleasure to work with tend to demand very few things. They expect a lot in terms of results, but are generally reluctant to lay out a long list of specific requirements. The single most common demand of the top-notch sales leader? A monthly forecast.

Sales reps who have never done a forecast absolutely hate the idea. Those who have gotten used to submitting a monthly forecast are typically amazed that they ever got anything accomplished without it.

Let’s back up for second… I have yet to find a rep who did not agree that a “ToDo” related to a major current account or major new opportunity belongs at or very near the top of the priority list. Basic time management dictates that this is so. Living in react mode, responding to the requests/demands of the last person spoken to, is a guaranteed path to low productivity and poor overall performance.

In other words, a rep’s first cut at setting the priority of his or her action items must be based upon the expected revenue/profit from the opportunity related to each action item. The amount and timing of expected revenue/profit is determined by the dollar value of the opportunity, the odds to close the deal and the projected close date. (This is really simple and really obvious, isn’t it?)

Now a definition… A forecast is a list of opportunities with their dollar values, their odds to close and their projected close dates.

Now a few simple questions… How is it possible to make an intelligent choice of action item priorities without an up-to-date forecast? Can a rep claim to be following even the most fundamental tenets of time management without an up-to-date forecast? How out-of-date can a rep afford to have the forecast be?

Here are the three main objections to preparing and submitting a thoughtful, accurate forecast every month with appropriate responses:

• I’m too busy selling – Selling what to whom? Are you busy with tasks directly related to your largest, nearest-term opportunities? Show me your “ToDo” list and explain how the items listed contribute to closing one or more of your top 10 opportunities… Shut up and do your forecast.
• Doing this paperwork reduces my selling time – How long does it take you to update your forecast each month? Is it more than 20 minutes? It is!!!??? That means the quality of your forecast is really, really poor and therefore your time management is based on fiction and fantasy… Shut up and do your forecast.
• You can’t forecast what’s going to happen in my territory – You can’t? What happens in your territory is due to chance only? There’s nothing you can do to make things happen? If you want, I’ll assign your territory to someone else… Shut up and do your forecast.

Perhaps you’re finding the tone of this month’s newsletter to be a bit blunt. I suppose it’s because I’m just so tired of repeating the iron-clad logic behind such a simple, powerful principle. Without a good monthly forecast, good time management is impossible.
Am I wrong? How can on-time submission of monthly forecasts from every sales rep on your team not be #1 on your short list of demands? Can you really expect focus on the top, near-term opportunities if you don’t even know what the top, near-term opportunities are?

by Todd Youngblood

Ready… Fire… Aim…

Think about the inevitable wisdom behind the cliché. Are you or others on your sales team ever guilty of ignoring simple, obvious logic? Do you ever miss what appears to be an easy target? Have you thought about how this applies to your approach to account & territory planning lately?

Out of habit (& necessity), sales executives and managers set annual revenue targets for every territory in their business. The starting point is “obvious.” What did the territory produce last year and what growth rate is reasonable to expect for this year? This “obvious” starting point is the wrong starting point.

Well, not really wrong, just way too simple to be of much value for Account & Territory Planning purposes. Maybe adding a three step data analysis to what you’re doing now would trigger more insight and help your aim when shooting at the key sales targets.

Step one: Where did the revenue come from? Take a look at some historical data broken out in a grid that shows sales to existing and new customers as well as sales for existing and new products, services and applications. It might look something like this:

Notice the seven sources of revenue growth and that the first row in the chart forces a close look at retention of business from existing customers; i.e., sales that came in two years ago that didn’t come in last year. Oddly enough, most territory plans I see simply assume that repeat business will just happen automatically.

Step two: Where should the revenue come from? This might seem like a tough question to answer at the territory level, but… Some great insight can be gained by comparing the data in the step one chart across all territories in the company, and looking at each territory compared to average and “best-of-breed.” For example, wouldn’t it be useful to know if I’m better, worse or the same as my peers at retention? …at stealing market share from competitors? …at opening up new fields of opportunity by penetrating new industries? Do I tend to ignore new products, services & applications? Do I tend to focus too much on the new stuff and let my growth rate from existing stuff fall behind my peers? What is the balance among the seven sources of revenue growth for the very best, most successful reps in the company compared to mine?

Step three: Where will the revenue come from? Take the total revenue target for your territory and plug it into the bottom right box on the grid. Using the insight gained from step two, and your own judgment, distribute that number back through the seven revenue sources. NOW it’s time to start laying out the territory action plan.

Now you’re ready to aim and fire at the high odds targets to maximize revenue growth.

by Todd Youngblood

Forecasting consistently tops the list of activities that sales reps despise. “It’s a waste of time.” “Things change so quickly in my business, that you can’t forecast what will happen tomorrow – forget about the whole year…”

If you are among those who feel that forecasting is a waste of your time, answer the following questions. Do you consider your territory to be your own business? Do you consider yourself to be an entrepreneur within the context of your company? Are you the CEO of your own “Me, Inc?” If you think like 99% of the world’s successful sales reps, you just answered, “Yes”, three times.

OK, Mr./Ms. CEO, picture yourself in a venture capitalist’s office looking for some investment capital. The VC asks how much revenue and profit you expect to generate over the next twelve months. You explain that for your business, forecasting cannot be done. Things change too rapidly. You don’t waste your time trying to predict that sort of thing.

How would you rate your odds of getting a nickel of that VC’s investment cash? Would you invest your own money with no clue at all as to the potential return? Hmmmm… Maybe the exercise of forecasting does have value. Maybe the ability to forecast well is a prerequisite to being a truly professional sales rep.

Here’s a three-step process to execute every month that will produce a good forecast:

Step 1: List every opportunity you have at every account and prospect. Assume that you can close them all, note the earliest month each could close and add up the possible revenue/profit per month for he next twelve months.

Step 2: Now – assume the worst – and revise the list from step1. (Some closes will move out in time, some will become smaller, others will get crossed out.)

Step 3: This time, be realistic. Revise the first list once more by noting the most likely outcome based on what you know now. Commit to make it happen.

Chances are, you will find that thoughtful forecasting focuses your attention on the critical subset of your opportunities. That is, those most likely to produce the best results.