Measuring Winnable Opportunities

Posted by | January 08, 2009 | opportunity scoring | One Comment

This post is the 1st in a series of 5 posts highlighting best practice tools to measure winnable opportunities. This tool was developed for a low average selling price solution ($30K) on its way to a medium average selling price ($100K+).

  Getting your sales team to focus on winnable opportunities can be a challenge. 

I’ve spent my career selling technology but had an interesting conversation on the topic of focusing on attractive and winnable opportunities with a friend outside the industry the other day. 

He works at a mid-sized engineering firm and several folks – including the founders – are responsible for selling new business.  It turns out that only one of the new business folks (a non-founder) sells profitable projects.  Even though it costs $25K+ to work up a bid, no discipline is used to figure out where their firm adds the most value and where they are most likely to win.  So they ‘quote and hope’ and lose a lot of proposals and win a lot of unprofitable business.  But they don't know any other way.

This is not unusual.  I’ve walked into this situation many times at technology companies. I’ve seen the problem with inside sales forces selling SaaS offerings with low average selling prices ($10K / year), with field sales forces selling on-premise licensed software with high average selling prices ($1M) and with everything else in between.

I’ve found it is actually quite easy to come up with 5 – 10 questions that help reps focus on the right opportunities.

Over the next five posts I’ll walk through different variations on this theme and show you five best practice tools I’ve used to keep my reps focused on the right opportunities:

Simple Opportunity Scoring

Growth companies don’t always clearly define focused target markets, thinking that focusing on specific markets would be limiting and compromise growth in light of their horizontal solution and its wide appeal.  And, of course, all these horizontal prospects have the same basic problem and so the same basic solution makes sense – who doesn’t want to fish in a bigger pond?

One reason is that sales reps –   spurred on by core character traits like optimism, creativity and perseverance – often feel like they can win anything if they apply enough grit.  And they will certainly supply a lot of heartfelt talk every Monday morning at the sales meeting about why their deal is a great fit even though it is quite different than any current customer implementation.

And the rep will win some of these outlier deals, help make a quarter and sometimes even open up a new, viable market for the company.   Everyone is happy.

More often than not, though, these deals where the rep is transposing value delivered on the fly are lost.  And when they are won, it often turns out that the solution needs a few tweaks because it’s actually a little different in the new industry -- service scrambles, development scrambles, the rep starts to get calls from the new customer, the customer’s not refereanceable yet, the new market is not necessarily that attractive, etc.  Now everyone isn’t quite so happy.   

Abdicating market management to sales reps is not a great idea.  Sales reps need guidance in figuring out and focusing on those opportunities that are most attractive and winnable.

Short of getting full target market alignment from the management team and having a well-honed marketing team that is disciplined in delivering targeted leads, there are some easy sales tools a sales manager can use to help your reps focus on the right deals.

Here is an example of a scoresheet I used to rank new opportunities with reps at a small software company that was wasting a lot of time pursuing random stuff.  There are ten qualification questions, each worth 2 points, so a 20 point score would be a perfect fit.

For this company, a prospect got ‘fit’ points if it was in the most penetrated market, near headquarters, had a need that matched our easiest-to-deliver solution, if its business had a high average selling price, if our primary contact was highly placed, if it was big enough to afford the product, if we delivered high value, if we could get a decent size starter deal and if there was a good expansion opportunity.

This tool was designed so all the answers, or proxys for the answers, were easy for the rep to figure out.  If the rep didn’t know the budget for our product category (direct marketing, in this case), we would use 1% of annual revenue.  This helped us see that typically we needed prospective with a minimum of $50M in annual revenue. 

We had a simple value calculator to determine the value we delivered at an account that any rep could use and so on.

There were three scoring outcomes: work the deal, walk from the deal and evaluate case-by case.  The most valuable category was ‘walk from the deal’ unless determined strategic by the CEO.  We would review deals during the 1:1s and were able to quickly eliminate a lot of the losers with minimal fuss from the rep.

We would attach the spreadsheet to the opportunity in our CRM system.

Practically speaking, going through this exercise a few times with each rep helps change behavior. It is a good tool to keep around to ramp up new reps

Also, this tactical deal-by-dealing scoring approach can eventually help lead the company to a target vertical market.

One Comment

  • Wil Bradley says:

    You’ve revealed a very important truth. In sales teams I’ve worked in, its all about the sale, not really about the profit. I see potential challenges in convincing sales people, who live and die by the quota.

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