Stop Chasing Business That Goes Nowhere
Our clients tell us one of the top issues they would like to improve is how they manage opportunities through the sales funnel.
They often face salespeople who expend resources chasing business that does not fit their ideal prospect profile.
Their goal is to focus salespeople and resources on business they know can close thus shortening sales cycles. Managing time for maximum efficiency is one of the single most important activities a salesperson can do to increase sales results.
As we discussed in a recent blog, about half of all salespeople don’t make their sales quotas, which speaks to mismanagement of the sales process and failure to honor the way prospects want to buy. It also reflects a failure to understand what needs to be done to win new opportunities.
Scorecards for Sales Predictability
Many organizations that want to improve the predictability of new sales opportunities have adopted a scorecard process, part of best practices selling. McKesson, a multi-billion dollar pharmaceutical company, created a scorecard that gives salespeople the ability to assign a score to each deal. The score changes over time as more information about the prospect is learned.
To advance a deal, the rep must obtain the right information about the prospect. If not, the deal stalls and the rep must walk away. The beauty of the scorecard is that it subjects every deal to ongoing evaluation to ensure that resources are appropriately deployed.
The graphic below provides an overview of how McKesson uses the scorecard throughout the sales process to make resource allocation.
Box 1 – Like most sales organizations, McKesson prescreens opportunities for a potential fit. From this initial screen, the account manager creates an initial score for the prospect by completing the scorecard to the extent possible in advance of engaging the prospect. While at many companies, the formal evaluation process stops here, it represents only the starting place for McKesson.
Box 2 – For the rep to progress the deal to the next stage (and commit serious sales-organization resources to deal pursuit), the score must continue to improve. On the other hand, in typical sales processes, account managers can continue to pursue all deals indefinitely until they run out of gas.
Box 3 – To get the score to improve, account managers must obtain critical information from the prospect. McKesson determines the information it wants account managers to collect by analyzing past deal successes. So for example, if an account manager finds that the prospective prospect is dissatisfied with its current supplier, the score can go up. If either, 1) the account manager doesn’t know whether the prospect is happy with its current supplier; or 2) the prospect is pleased with the current supplier, and then the prospect score cannot go up based on that attribute.
Box 4 – As sales progress through the pipeline, account managers can make decisions about how best to allocate resources. Scores that are low despite the existence of a great deal of prospect information can be shot or back-burnered while high-scoring opportunities can be pursued more vigorously. Unlike systems intended to monitor sales force performance, this system is intended to improve outcomes based on proven success factors, thus increasing the motivation of account managers to enter key data.
Box 5 – Finally, the scorecard provides a tool for managers to coach their staff. Given greater visibility into the potential value of deals in the pipeline (and likelihood of fruition), managers can give better guidance regarding deal pursuit.
In keeping with best practices, MHI Global developed a Funnel ScoreCard® that addresses key challenges facing sales leaders such as:
Lack of a well-defined methodology for effective prospecting and selling
Making enough new sales calls to continually add qualified opportunities to the sales funnel
Replicating the best practices of top performers
How to Build an Opportunity Scorecard─Why It’s Important
Salespeople, sales managers, and leaders with a scorecard know early in the sales cycle─before they spend a lot of time and company resources─whether they have a high likelihood of winning a new account. They know, with virtual certainty, if that account will be profitable and produce a long-term win-win relationship with their organization. And they know that each step they take in the sales cycle will be made at precisely the right time, not too early, too late, or missed entirely.
As an example, one of our clients, a large financial institution, took its sales funnel, bulging in the middle with lots of activity, and with the scorecard removed 36 percent of prospects from the funnel. These prospects represented opportunities that were burning up resources with no end in sight to close. The result? The organization improved its closing ratio by 86 percent and, now with the added room, moved more qualified opportunities through their funnel.
Implement the Funnel ScoreCard®
If you want to improve selling efficiency and effectiveness in your organization, a scorecard will help you determine if your current selling resources might be misallocated. Ask yourself:
Are your salespeople chasing and wasting precise resources on unqualified prospects?
Do you have a significant percentage of qualified leads fall through the cracks during the nurturing process?
Are your salespeople missing their sales quotas?
Are your salespeople using too many selling resources too early in the sales process, like plant tours, access to technical resources or financial modeling? A scorecard will force the sales team to open only their sales-ready prospects to these or other high-cost selling tools.
Do your salespeople involve too many of your technical support people, engineers, product specialist too early in the sales process? A scorecard can make certain that these resources are used with the right prospects, and at the right point in the sales cycle.
And finally, are your salespeople working prospects that they have no chance of landing? This is where your selling history embeds in the scoring process. You might find, for example, that you have a much greater chance of winning business from a prospect who uses Salesforce.com for more than three years than other platforms based on your integration. Some scorecard questions might be: Who is your current CRM system? How long have you been with Salesforce.com?
Process to Construct the Funnel ScoreCard®
To determine the attributes included on the scorecard, best practices calls for using a process that facilitates discussions among the organization’s highest-performing salespeople. This way, you can uncover prospect attributes that commonly present in successful deals. With a facilitated process, you understand why you win and why you lose, and can determine what attributes count. Then sales leaders vet the list to settle on the final attributes. Using a third-party objective consultant can be of value to lay out the right attributes needed to close opportunities faster.
With a clear picture of where your current selling process breaks down and the attributes to successful sales, you can now put the pieces together.
In a working session, the top sales performers determine the key attributes of business criteria and opportunity criteria. They then spend time narrowing down the fields. As part of this process, we include a win/loss analysis to determine the attributes that lead to wins.
Next come the scorecard questions and their definitions, along with a scoring system. The total score determines whether or not the salesperson has the go-ahead to tap into additional selling resources. In most cases, a “failing score” simply means the salesperson has not completed the necessary homework or the prospect is simply not ready for the next step.
Creating scorecards require a dedicated process, both crafting the questions, definitions and in weighting the responses. Focus questions on elements that impact the likelihood of winning, profit, longevity and cultural fit. Weightings should reflect the relative importance of each question.
In the example below, a yes answer is given a score equal to the weighting, while a no or unknown answer receives a zero:
Weighting Yes No Unknown Score
8. Relationship with existing vendor for less than five years? 2
9. Existing client relationship with the company? 10
10. Is there a budget for our solution? 5
11. Is the key decision maker behind our solution? 9
This process will need tweaking over time. Your total commitment to it makes or break success. Be prepared to modify the scorecard, especially the weighting numbers.
Results You Can Expect
The Funnel ScoreCard improves sales funnel integrity. No longer are opportunities subject to guesswork. Salespeople understand immediately where they stand with each opportunity in the funnel. Bloated funnels are minimized and forecasting becomes more precise.
Using proven criteria for opportunity identification and ongoing opportunity management, the Funnel ScoreCard reveals key red flags and strengths within minutes. Armed with usable information, decisions are made quickly and actions are focused on sales activities that actually move the sale forward.
The Funnel ScoreCard incorporates the Miller Heiman concepts from Strategic Selling® your organization has already invested in and integrates it with your best practices in winning business. The result is a powerful, customized tool that captures those processes that are most effective in winning business in your sales environment.
Few endeavors in life escape a scorecard: Sports. Education. Health. Business. Income. Think of your own ways you keep score in life. So why not prospects? Lead scoring is not enough. You need to get down in the weeds. Why waste millions of dollars and countless hours chasing prospects that you hope might someday buy but never do. Professional selling is as much science as art. The numbers that count. Use a formal funnel scorecard process on your prospects.
And the road to nowhere will be a distant memory.
See you on the upside,
For more information on how to simplify the complex sale, go to www.pleinairestrategies.com Or call William L. MacDonald in San Diego at PleinAire Strategies LLC at 760.340.4277 or 213.598.4700