The Sales Blackhole
Updated: Dec 23, 2020
As we head into 2021, we know that major uncertainty exists. How can we make sure that we can lead our companies into 2022 stronger than we are today in the face of political issues and a potentially deteriorating economy?
Analytics, big data, and AI will be crucial tools for thriving during the coming years. An especially valuable application will be targeting the right prospects and improving your closing forecast accuracy to 80%+ . For many this sounds impossible because experience shows that about 50% of many company’s pipelines fail to close as forecast. When close rates are this dismal, you are in fact shoveling sales expense money into a blackhole.
Disappointing close rates are usually blamed on poor sales execution and poor sales management. Sometimes these issues may be the cause. However, my experience is that the dominant cause is more fundamental: focusing sales effort on weak prospects. What’s a weak prospect? A prospect that is not a great fit for your capabilities and culture.
Most marketing organizations use the definition of an “Ideal Customer Profile” to help evaluate prospects. Unfortunately, the ICP definition typically created doesn’t adequately define the characteristics of a great prospect. Typical variables used in the definition of an ICP are company revenue, headcount, geography, public, private, non-profit, government, primary and secondary industry, et al.
These are necessary questions to ask but they are not sufficient. The most important criteria involves selecting prospects that are most like your current best customers. Your best customers are those customers that extract the maximum benefit from the added value you deliver. They view you as a trusted partner. They are careful to avoid imposing on the relationship. They never try and extract the lowest price on every deal. They do not abuse the support that you offer. They want you to be successful. When you were initially selling them, usually they had a shorter sales cycle than many other opportunities. Often, they will not be your largest revenue generator.
Identifying your current best customers is not hard. Your marketing and sales teams know who they are. Construct a list of a dozen. The goal is to compare current and future prospects to this “golden” list. The criteria described above are easy to define since they are or should be readily available from accessible structured data sources. The “secret sauce” is generated by big data, AI and analytics to create a profile of your best current customers' culture as well as the culture of the prospect's personnel that are actually making the decision to buy from you. A critical element is determining who your customer’s buyers are and how do they sell.
Similar profiling is done all the time for consumers. Application in a B2B environment is new and requires leading edge people and tools but the ROI can be fabulous.