Walking away from the biggest opportunity you’ve had all year? Walking away from an opportunity where you’ve already invested weeks or months cultivating the relationships and building your proposal? Taking yourself out of the game? For most sales professionals, these are some of the hardest decisions to make; However… they can be the decisions that make or break your year.
They can be the decisions that keep you from wasting time on opportunities that aren’t real, investing valuable resources on opportunities you can’t win regardless of how awesome your pitch is, or spending countless business development dollars on a deal that will ultimately be discounted to the point it is barely profitable.
Why do sellers waste time on questionable pursuits and how do we focus them on the right deals?
Legitimate Pursuit or Fishing Expedition?
Recently a client shared with me that they lose, on average, 60% of their deals to no deal at all. Some of these may start out as real opportunities, but many are fishing expeditions, and the others evaporate over time due to internal or external forces. Either way, valuable sales dollars get spent chasing mirages… beautiful oases that don’t exist.
This same client shared that they know their chances of winning increase dramatically if they can work with the client early in the sales process to shape the deal. But what does this mean if their competitor got there first?
The inverse is true… and their chance of success has decreased dramatically. In many cases, at this point, they are column fodder for the procurement process, and short of a major competitive misstep, they are going to spend valuable sales resources on an opportunity that is already hardwired for someone else. Sure, they might be able to figure out how to get in the buying process earlier next time, but this ship has sailed.
Finally, I have clients who offer products that are highly valuable to some segments and merely a commodity product in other segments. For example, one client offers a service that is fairly similar to others in their industry, but the main difference is that they offer a consistent global platform where their competitors do not. They enter domestic deals very carefully because their differentiator only really matters to customers with an international presence. If they sell domestically, their margin is far less than what they can achieve with global players.
The Psychology Behind Hanging On
So, why do I have these conversations with clients? Because salespeople struggle to walk away from opportunities… After all, they were hired to be the go-getters, the optimistic face of the company who can think of no better option than what they are selling. This is great when they are pursuing the right opportunities, but it can signal disaster if they are chasing opportunities they can’t win.
So how is it that a salesperson who wants to optimize their sales (and bonus) ends up wasting time in the zone of unrealistic possibilities?
- Optimism Bias: Basically… it’s psychological. We humans have an innate optimism bias toward the future that would have us believe, generally, that things are going to work out in our favor in the long run (“it will never happen to me”).
- Negativity Bias: Retrospectively, however, we lean toward a negativity bias -- we remember the bad (that one opportunity that could have been…) far more than we remember the good.
- Victim of Sunk Costs: We often have a tendency to honor, rather than letting go of, sunk costs… If we’ve invested time or resources, we want to see it through. We believe we must see it through (“I’ve spent too much time and effort on this to let it all go to waste…”), regardless of whether or not the likely outcome will justify the cost.
My colleague Warren Shiver wrote about "When Losing is Winning" in this blog post and discusses the merits of win planning. Focusing time on the right opportunities and walking away from the wrong ones requires that we put some structures in place that challenge our psychology and our sales DNA and help us take the emotion out of the decision.
Converging on the Right Deals
Here is how we advise our clients to get focused on the right deals.
- Use an established set of qualification criteria and score each deal. Develop this qualification criteria based on past experience and what you know are leading indicators of success and failure in your selling environment. We recommend the POP framework that considers whether the opportunity is POSSIBLE (real), OPTIMAL (profitable), and PROBABLE (well positioned for your organization to win). Require that scores be supported by specific customer evidence (you know, things the customer actually said or did – not what we assume they think). Set parameters for what scores need to be met to continue pursuit of the opportunity. Minimize exceptions to the rule… not every opportunity is a misunderstood Cinderella! Are you a salesperson whose organization doesn't use set qualification criteria? Make your own!
- Establish a cadence of regular opportunity reviews where team members and managers challenge each other both on the opportunity strategy but also on the opportunity viability. Use these reviews to hold opportunity leaders accountable for revisiting the qualification score when they learn new information and then focus the conversation on how to develop the best strategies to win the qualified opportunities. Engage objective members of your organization who are not invested in the opportunity– they won’t have the same degree of psychological bias. Are you a sales professional with an organization that doesn’t do this today? Do it yourself. Make a habit of calling your peers and manager and discussing your opportunities with them – ask them if they agree with your qualification and your strategy. They’ll bring objective eyes to your opportunity – they might help you avoid the dogs or you might get some great insight to improve your win plan…
- Establish checkpoints throughout the sales process to re-evaluate the opportunity. This is especially critical in longer, more complex sales where information may change and evolve as well as the forces impacting the customer’s decision. Tighten the criteria as you move closer to the customer decision where more information is known and few external variables are likely to steer the opportunity in a different direction.
Don’t work for an organization with a defined sales process? Think about prior opportunities. In retrospect, when should you have known that you were either well-positioned to win or didn’t have a chance? Make a list of those points, and evaluate your opportunities against them. Are you at those critical junctures now? What are you hearing? If it sounds like a negative signal that you’ve heard before, think about requalifying.
- Consistently re-prioritize active opportunities. Look at the qualification scores, potential, and the time/resources you need to invest moving forward (don’t focus on sunk costs!) to win each opportunity. If you are considering walking away from an opportunity, think about where you can refocus that time to win other deals. This will lessen the psychological impact as you can refocus both your optimism and your effort to opportunities that you have a higher likelihood of winning.
- Conduct win/loss analysis. This can be formal or informal, and it can be on selected opportunities or all of them depending on your volume. The point is that you are consistently analyzing your approach and the customer evidence and signals that you received throughout the sales process so that you can more effectively refine how you go to market. Use these learnings to further refine your qualification criteria as well as your sales strategies.
Knowing when to walk away is hard. Actually, walking away is even harder… we get it… But what’s worse? Missing that real opportunity because you were too busy?
Remember the immortal words of Kenny Rogers… “Every gambler knows that the secret to survivin' is knowin' what to throw away and knowin' what to keep….” So, we keep singing… “Know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run!”