I found this announcement to be very disturbing, and I think you should too. Fewer than 20% of the 600 plus companies surveyed by CSO Insights in their 2012 Sales Management Optimization Study had the discipline to continually track specific buying behaviors in order to assess the true state of their sales pipelines. More than half never bothered to track buying behavior, or only did so in an ad-hoc fashion. The majority of the sales organizations surveyed – a representative cross section of businesses across multiple verticals and geographies – appear to be relying primarily on self-reported sales activity, rather than insisting on provable evidence of buying behavior when it comes to managing their sales pipelines.
So perhaps it’s no wonder that sales forecast accuracy continues to bedevil most sales organizations, with on average less than half of forecasted deals actually closing at the time or for the value predicted by the sales person. However, the sales organizations that had implemented buying cycle tracking did far better. If you want a simple justification for why it’s worth insisting that your sales people provide evidence of their prospect’s buying behavior, consider this: the sales organizations that did so won nearly 40% more of their forecasted deals than the organizations that paid no attention to it – and had far fewer losses and “no decisions”. If you’re among the 80% of sales organizations that could and should be doing better, you must start by aligning your pipeline stages with the key phases in your prospect’s buying decision process. At each stage, you must anticipate your prospect’s likely intentions, concerns and motivations, and align your sales activities accordingly. But most important, you must establish clear milestones between each stage of the pipeline that can only be navigated if your sales person can provide reliable evidence that the prospect has made a significant, observable and clearly defined step forward in their buying process.
CSO Insights make one particular recommendation that I believe every sales organization needs to implement as a basic discipline: after every significant interaction with the prospect, and most particularly when needs are identified, requirements established or the decision process or criteria agreed, the sales person must record their understanding in an email to the prospect and have the prospect correct or agree their assumptions – and attach the correspondence to the opportunity record in the CRM system. If you implement this process – and given the dramatically better performance shown by organizations that have embraced this, I can’t imagine why you would not – you need to be prepared for a reality check.
Inevitably, applying a rigorous, evidence-based approach to accurately placing your prospects in your pipeline based on the true state of their buying decision process will mean that a number of opportunities will slip backwards or fall out of the pipeline altogether. This may make it appear that your pipeline has shrunk. But these deals were never real – or as well advanced as you thought – in the first place. And you will be far better off flushing them out rather than continuing to fool yourself. If you’re one of the 4 in 5 sales organizations that could and should be doing better, I’d encourage you to start today by:
- Redefining your pipeline stages to reflect the buying process
- Establishing clearly defined gates or milestones between each stage based on observable evidence of buying behavior
- Insisting that your sales people re-qualify every opportunity and review their conclusions with you – backed by the evidence
- Insisting that your sales people document their agreements and assumptions and validate them with the prospect
Your prospects will appreciate it – your organization will come across as highly professional. But most important of all, you could end up winning as much as 40% more of your forecasted opportunities.
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