[This is also a re-publish of a December 2007 post. It contrasts our sales methodology to another commonly used approach.]
I suspect I scared most readers away with that title. This blog entry is a continuation of yesterday’s “Commit or Not Commit” entry.
Most sales methodologies break down the sales process into multiple stages. For example, stage one might be “Identification”, meaning a sales prospect has been identified. Stage two might be “Initial Meeting” and stage three “Qualification”, perhaps meaning the customer has expressed interest in the service and has a budget to spend. Stage four might be “Pricing” and stage five “Contract Presented”, meaning the customer has received a contract. “Verbal” is often a stage, meaning the customer indicated they will purchase. “Closed” is the final stage.
I’ve seen processes where as many as 10 stages are defined. Ouch.
The methodology many companies use is to assign probabilities for each stage. The probability is the likelihood of the sale being completed by the end of the month. For example, 25% might be associated with stage 3/Pricing; 50% with stage 4/Contract and 75% with Stage 5/Verbal. These probabilities are typically defined in the methodology, not by the account executives. The AEs simply identify which stage it is in.
Note that the AEs never have to put a stake in the ground. They are not communicating what they really expect will get done during the month. They are just telling you what stage the orders happen to be in. They might know full well that a particular stage 4 is highly unlikely to close, but a contract was presented so 50% is the probability. Likewise, they might not have completed pricing but, based on past relationship with the customer, they are pretty damn certain the order will get placed.
Where will sales end up during the month? Unclear, as the quantified number is not anything individuals are signing up for. What specific orders are expected to get completed? The clutter of other orders in similar stages is distracting. Much time is wasted in staff meetings trying to weed out what is real and what isn’t. The rest of the organization–engineering, operations, etc.–has less of a sense of the priorities.
Most importantly, accountability is weaker. A weak salesperson has lots more places to hide. A strong one has trouble getting the organizations’ attention on what he or she most needs.
The first thing we do when we close on an acquisition is to convert to our brand of salesforce methodology. It allows the organization to rally around the salesforce and prospective customers. Do not underestimate how important this is to running a healthy business.
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