How Much Money are You Wasting with Unqualified Sales Prospects?
July 8th, 2014
Many years ago, I was recruited to lead a company that had flat sales despite a relatively large and experienced sales team. The firm’s CEO was a brilliant scientist and a very analytical guy. He was beaming as he handed me a huge binder stuffed with copies of over two hundred unfulfilled proposals the company had delivered during the previous several months. These proposals were complex. The cost to create each one was large. In addition to sales and administrative costs associated with preparing the nicely packaged quotes, each one also involved significant design & engineering time. The CEO excitedly proclaimed that these proposals were “just dying to be closed”.
We took a few weeks to follow up on every proposal. You can probably guess what we discovered. Not one of these “hot sales prospects” had any intention of buying. In fact, nearly half of the recipients couldn’t even recall receiving a proposal. Every “prospect” had other priorities that had nothing to do with purchasing our company’s product. Many of these folks had absolutely no decision authority whatsoever. Some prospects requested a proposal simply to placate and/or blow off the aggressive “expert” salesperson.
We were soon able to turn things around and fuel sales growth through effective sales management. We focused the attention of the sales team on some real business opportunities, talked with some real decision makers, and focused their sales conversations upon asking questions, listening and understanding versus talking and giving unqualified presentations. However, I’ll never forget the lunacy this company demonstrated by wasting all of those precious resources chasing ghosts.
Over the last 15 years, I have had the opportunity to help hundreds of company owners upgrade their sales. Through this process, I have learned that the vast majority of companies squander tons of profit by virtue of a rampant and popular dysfunction we refer to as Premature Satisfaction™.
Is your company wasting money with unqualified sales prospects? If so, how much? Most companies dramatically underestimate these costs.
Many Business Owners and Sales Managers place a highly disproportionate emphasis on the importance of sending lots of proposals. The (incorrect) assumption here is:
More Proposals = More Sales = More Profit
Nothing can be further from the truth. In fact, the equation should read:
Better Qualification = Fewer Proposals = More Profit
For the majority of salespeople, the size of their “hot prospect pipeline” and the volume of profit they return to the bottom line are inversely proportional. Many don’t have a clue about time management or the value of an hour of their own (or your company’s) time.
A high level of sales activity is crucial, but please don’t confuse activity with productivity. Generating and launching unqualified proposals is a costly example of one aspect of Premature Satisfaction™ (aka: The Destroyer of Profit). There is a simple cure for this organizational disorder. It only requires some simple tools, some simple rules, and a little discipline.
For starters, every opportunity should always be thoroughly qualified before company resources are invested in creating proposals. A Qualifier Checklist is a great way to begin this process.
Secondly, all sales activities should be singularly focused upon either moving the sales process forward or closing the file. Anything in between is pure wheel-spinning — useless activity disguised as “work”.
A “yes” is fine and so is a “no”. It is the “maybes” that tear into both your revenue and profit lines.
Some other popular wheel-spinning activities include:
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Excessive internet research (and other busywork) to avoid making phone calls
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Sending literature, letters, and emails to avoid making prospecting calls.
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Allowing the buyer to control the sales process.
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Accepting prospect meetings without a clear, mutually acceptable agenda.
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Talking, presenting and giving demos when you should be listening & understanding.
If you are looking to build more predictability, consistency, visibility, scalability and profitability into your sales effort, take a hard look at the quality of your Sales Pipeline and begin eliminating Premature Satisfaction™ today.
Copyright © Joe Zente 2014. All Rights Reserved.
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