A sales rep for an industrial company is selling a product into a new account. The product is complex. The decision-making cycle is long. A purchase will require the customer to learn new technical skills and to integrate the product into the organization’s workflow.
The rep is working with multiple people in the account, but is feeling confident that the deal is moving forward.
- Will this sales rep close the deal?
- What is the probability that it will close?
- Of the factors that are in the sales reps control, which ones are the most important for the rep to spend time on? Which ones are the most highly correlated with completing the sale?
- Of the factors that are the most important, if the rep determines that it isn’t possible to control those factors, what criteria should the rep use to decide that the business can’t be won and that it’s time to move on?
These are questions about an account that most reps and most companies can’t answer. But the answer is of intense interest. It tells the rep where to spend valuable time. It tells the company what revenue it can forecast.
Sales qualification using science and community knowledge
Michael Webb at Sales Performance has been working on a method for sales qualification for a few years and has started teaching others how to use it. I attended one of his webinars recently and he showed us how his method works. It takes some effort to implement, but the results are powerful and fascinating.
This isn’t the place to go into any detail, but to give you an idea of how it works, here are the steps:
- Part 1: Prepare Questions – Gather the sales reps and find out which questions they think are important to ask about an account.
- Part 2: Gather Data – Take these questions and answer them for a large sample of accounts that you have won or lost.
- Part 3: Analyze Data Statistically – Look at the linear correlation between the questions and wins/losses.
- Part 4: Revise Questions and Deploy – Re-examine and refine the questions that are highly correlated with win/loss.
Some of the insights that came out of Webb’s method: Only a few criteria matter. You can figure out what these criteria are by talking to your reps and using some straightforward statistics. The results capitalize on the collective knowledge of your sales force. They are specific to your company. This makes the knowledge not only useful, but a competitive advantage.
Just one more thing. Webb showed a graph whose pattern is consistent across all the companies he’s used his method with.
The graph shows the relationship between (1) the probability that you are going to win the deal and (2) the number of important success factors from your Sales Qualification exercise. The graph says: If you meet a certain number of criteria, it becomes highly likely that the deal will close. Anything under that number, it’s probably not going to happen. Webb calls it a tipping point in the deal.
Knowledge that is powerful for the sales rep and the company
The rep can look at a current sales opportunity and the number of qualification criteria that can be currently satisfied. If it’s higher than the tipping point, then it’s likely the rep will win the customer.
If it’s lower, then the rep can ask: “Do I have control over enough of the important criteria to satisfy them and reach the tipping point?” If the answer is “yes”, then the rep knows to continue working the deal. If the answer is “no”, then it’s time to stop working on it and either abandon it or perhaps send it back to Marketing to be further nurtured.
For the company, this qualification method makes sales and revenue forecasting much more reliable. Webb says he’s seeing companies achieve a 90% and higher forecast accuracy.
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