My old hobby-horse has not had a decent outing for some time and so after much neglect I thought I would get it out… as they say… and for the uninitiated in the use of the term ‘hobby-horse’ which I’m sure there are very few…. I’m not referring to a child’s toy horse nor the May Day hobby-horses that run riot during the Padstow Obby Oss festival in Cornwall each year… no, I’m referring to my favourite topic… Pipeline Management.

I thought it was time to share my old versus new comparison. Unlike the Padstow Obby Oss festival that is steeped in tradition and has its roots back to the 14th century and has not changed much for hundreds of years the same nostalgic view of things past should not be held out for Pipeline Management.

To improve… to get better… things need to change and if there is anything in the B2B sales arena that needs a damn good change… it has to be pipeline management.

However, before I share my old versus new musings with you I would like to point out that Pipeline Management is also linked to another ancient custom… the quest for the Holy Grail. This legend or piece of mythology (not to be confused with methodology) has its origins dating back to the late 12th century when Robert de Boron, the French poet wrote Joseph d’Arimathe… all in octosyllabic verse… about how he, Joseph that is, used the Grail to catch the last drops of blood from Jesus’ body as he hung from the cross… apparently, as legend has it, the grail has magical powers. Through various routes it, the Grail that is… as legend has it… made its way to Great Britain where some careless soul lost it, or put it somewhere safe and wont tell anyone… people have been searching for the Holy Grail ever since… without luck.

The Holy Grail of the B2B sales world is accurate forecasting… sales directors and managers alike have been searching for years the secret of accurate forecasting… in the belief that once obtained they will be the custodian of ultimate power… they will be in control of their business!

Now, if sales management are looking for the holy grail of sales using the traditional pipeline management methods… then to coin another phrase… they are flogging a dead horse… no matter how hard you flog it, it isn’t going to do any more work… no matter how hard you insist people use the corporate system… they won’t… there are other stronger forces at work that prevent them from doings so… self preservation. Pipeline Management has to be for the benefit of the sales professional first and corporate second… not just for the benefit of the corporate. I’m advocating personal pipeline management rather than corporate pipeline reporting… notice the difference!

So… here are my 22 points of old versus new…yep… 22 points!

Click on the picture to make it larger… it will be easier to read, trust me.

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I’ve been travelling the length and breadth of the UK last week and not been able to put up any posts on my blog and so feeling a little more than a tad guilty I’ve been trying to put one together during my lunch break on one of the training workshops that I’ve been running… to help me I enlisted the help of some friends and so my thanks go to Tony, Richard, Elaine, Mike and Dave (aka Ishbell) who helped me develop this list.

Here are our 5 best reasons why you should not manage your pipeline:

You Might Make Some Money
It may well be a fallacy that sales people want to make money. Some people clearly don’t rate it as a priority and therefore failing to manage the pipeline is the clearest sign that money is not important… it’s as that great inventor, Thomas Edison, once said… “Good fortune is what happens when opportunity meets with planning.”… so avoid good fortune because as we know money is the root of all evil and therefore best not to have too much of it.

It Limits Expectations
Let’s face it, managing your pipeline is only going to raise expectations. If you show that you are in control of your business you are setting the expectation that you are indeed in control… is this really the image you want to portray of yourself?

There’s No Fun Being Predictable
If we have some fun at work then the job becomes more enjoyable and it’s good to be able to enjoy your work. A couple of bluebirds in the pipeline has never done anyone any harm… you are way behind on your number, nothing in sight that is going to close… your boss is about to have a nervous breakdown due to pressure of not being anywhere near close to the number and you walk in with a fantastic deal, from nowhere, that saves the day. Just watch the relief on everyone’s face… is that not more enjoyable than being predictable?

Visibility Means Questions
The more there is to see, the more questions you will be asked. If there are big deals in the pipeline then more people will be asking the questions. While you take time to answer the questions you are not selling. Also, there may be some questions that you can’t answer and so you may lose some credibility, which you don’t want to happen and so by showing the deals you will really have to be in control and by demonstrating you are in control you will lose that aura of enigma that you have worked so hard to cultivate.

Makes you Replaceable
Let’s face it… show everything, keep contacts up to date, keep account plans up to date, keep pipelines up to date, produce full deal plans, etc, etc and you can be more easily replaced. Play everything close to your chest and management will find it more difficult to replace you… obviously you don’t want to be replaced, so is this not the best way to avoid it?

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It sounds rude, but an oxymoron as I’m sure you all know, is defined as a phrase in which two words of contradictory meaning are used together for special effect… well I reckon Pipeline Management at a corporate level is indeed an oxymoron. In fact, pipeline management at any level other than a personal level is an oxymoron.

There are two words to prove my point… ‘So What?’

Go and see the CEO or the VP of global sales and get them to explain what they do with their rolled up pipeline report… ask so what… so what decisions do they make on the back of that report… and I can tell you whatever decision they make it’s going to be wrong.

First of all, they have limited information. They think they are looking at the whole pipeline, but they are not. A lot of the early pipeline is not in the corporate system… it’s still with the sales professionals who don’t want to show everything too early.

Secondly, most corporate pipelines use factoring to come up with a forecast, which is about as useful as a chocolate teapot. Individuals will manipulate their percentages or deal values to make sure their individual forecast is not too low or too high and therefore make a mockery of the whole process.

Lastly, although they have limited and not entirely correct information they will still have a lot of it. If an individual has 20 deals, his manager will have at least 200 and his director over a thousand and the VP over 5,000 deals…. So where to add value?

The pipeline can’t be managed at this level, or any management level as there is on the one hand not enough information and on the other too much information and far too much of that is incorrect… hence the oxymoron. Therefore, it’s not pipeline management, but pipeline reporting. People are going to report what management want to see… keeps management off their backs!

The actual value to the corporation for the list of deals is for comfort. As long as management can see enough volume in the pipeline they are happy… it’s the corporate equivalent of comfort food…. and you know what comfort eating does for you… makes you bloated, fat and unhealthy!

So if you are a manager, director, VP or some other VITO… go and do some exercise on the bits that you can control… get each professional below you to show you how they are going to be making their number. You will only have two types of subordinate to deal with. Those that will be showing a miss and those that will be showing a hit. For those that show a miss get them to tell you what they are doing to bridge the gap. Find out which of their subordinates are forecasting a miss and how they are helping them bridge the gap. For those that forecast a hit… make sure they are right. You need to manage the gaps, not the pipeline.

Cascade down the management chain until you can go no further… and you should come across the sales professional… the people who keep everyone else in a job. These guys manage the pipeline… they have to manage their own pipeline to show how they are going to make their number. Again, sales management is simple… focus on the ones who are showing a miss… help them address the gap. Make sure the ones who are showing a hit are right to do so.

Managers manage the gaps, sales professionals manage the pipeline. It keeps everyone fit and healthy.

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Sales reviews, the bane of everyone’s lives. The sales manager has so many to do. The sales professional has to answer so many intrusive questions… and it all takes so long!

As the old adage goes… ‘time is money’… and as so eloquently expressed by the Romans all those years ago… ‘tempus fugit’… so time flies and the problem that causes is amply summed up by another old adage… ’so much to do, so little time’.

So, in the spirit of time is money, time flies and so much to do… then the shorter you can keep your sales reviews the happier everyone is going to be. Therefore, here are the only 3 questions that you need to ask…

1. Show me how you are going to make your number.
Following our pipeline methodology makes asking this question really easy. The sales exec is either going to show you how the number is going to be made, in which case move on to question 2, or not. If not, find out what they are doing to close the gap.

2. Show me how you are going to close your committed deals.
The committed deals make up the forecast and follow the binary method of forecasting – these are the deals the sales exec says will close. So, make sure the close plan is robust for these deals, everything else is incidentally because if these deals close the target is achieved… don’t waste time on incidentals!

3. Show me how you are filling your pipeline.
Lastly, s sustainable pipeline requires a full sales funnel. What is the sales exec doing to proactively fill the funnel? An empty funnel will lead to problems later.

There you are, 3 simple questions to help manage your team… I could have written a lot more, but kept this post short as time is money!

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Following on from yesterday’s post, here are the guidelines as promised with full colour diagram!…

Show How Making Number
The first priority for managing your pipeline is to show how you are going to make your number - show the plan, show the deals you are going to win, then win those deals… it’s as simple as that!

Recognise the 3 Parts of the Pipeline
In planning how to win you need to recognise that the pipeline is made up of three parts – the Funnel for unqualified opportunities. The Upside for customer controlled opportunities. The Commit for the opportunities you control.

Follow the Buying Phases
The funnel and pipeline have to represent the buying phases – the customer moves from accepting a Need to gathering Requirements then to choosing a Solution and finishing with negotiating a Deal.

Understand Who is in Control
You place an opportunity in one of the four customer focused buying phases and then decide if you are in control of the deal. If you are in control, the opportunity gets placed in the Commit grids, if you are not, then that means the customer is controlling you and so you put the opportunity in the Upside. For example, if the customer has decided to address their need, is currently gathering their requirements and looking at different vendors then place the opportunity in the Define grid if you are in control or place it in the Requirements grid if the customer is in control.

The Four Closing Disciplines
Control of an opportunity comes from developing and using the four closing disciplines – accurate Qualification, developing the Business Imperative with the customer, the customer agreeing that the Value you deliver is superior to the competition and developing and utilising the right Relationships…. I’ve posted stuff about these disciplines before, especially the Business Imperative… and I’ll post more on qualification soon – it’s part 4 of the ‘how to recession proof your business’ series.

Get Commitment for Closure
The most important Qualification question is getting the customer to commit to a close date, or at least a ball park close date. If the customer will not commit to a close date, then something is wrong… you may not know what is wrong, but something is… it’s to do with your relationship, their authority, the real status of the opportunity, etc, etc… further investigation is required… the opportunity is upside at best and certainly not commit.

Follow the Primary Qualification
There are three primary qualification questions for moving deals through the pipeline. To move from Funnel to Pipeline make sure the deal is real. To move from Define to Propose make sure you can win. Finally, to move from Propose to Close make sure you will win.

Time Bound the Pipeline
Sales Pipelines need to be time bound. The Funnel is time independent, the Pipeline needs to be set up for each sales period. If you are quarterly driven, then there will need to be a separate set of pipeline grids for each quarter. Deals closing this quarter are more important than deals closing next… a bird in the hand is worth two in the bush!

Closing Time Frame
Deals in the Close grid should close within 2 weeks, deals in the Propose grid should close within 6 weeks and deals in the Requirements grid should close within 13 weeks. Deals closing after 13 weeks are in the subsequent quarter’s pipeline,

Binary Forecasting
Forecasting is binary – win or lose – and therefore the commit deals form part of the forecast. Show me how you are making your number = closed + commit + remaining run rate. Run rate is all the sales you get that don’t make it to the pipeline – and I don’t mean bluebirds!

Less is More
Pipeline Management is not a numbers game – if it’s anything it is a winning game. The numbers game means at least 3x your target in the pipeline, whereas the winning game requires only 1.5x… less time filling the pipeline, more time closing. The Upside is the numbers game, the Commit is the winning game – the reason you only need 1.5x target in the Commit is because you are in control of the deals.

Customer Relationship
Where your deals enter in the pipeline will tell you the type of relationship you have with your customer. Enter at the last stage and you are probably thought of as a commodity supplier and you can only compete on price. The next to last stage indicates a product supplier competing on product features. The stage prior to this indicates a solution architect that can compete on business benefits, whereas the first stage… getting in before there is a deal to be done, indicates a trusted business advisor where you compete on relationships. Deals entering at this stage should follow the commit route.

Discussion Topics
Where your deals enter in the pipeline will also indicate the type of discussion you should be having. Trusted advisors talk about business; Solution architects about efficiency; Product suppliers about… product and Commodity suppliers have nothing to talk about other than the commercial arranges of the deal.

Personal Value
Your personal value to the customer is also determined from where deals enter the pipeline. Enter at the need stage and you are Exploring business issues. At the requirements stage you help Define. At the solution stage you Propose and at the deal stage you Close. You add most value to the customer at the Explore stage and the least value at the Close stage.

Visual Representation
The pipeline as shown is a visual representation of your sales environment. Deals will move from left to right as time progresses. In fact you can complete a sales review in 15 seconds!… click here to find out how.

Build the Funnel
The most important thing you can do is build the funnel. If you buy-in to personal pipelines then you will be putting in potential opportunities that are a long way out there… opportunities that you would never put in the corporate pipeline as they are far too early… if management see them you only get pressurised to bring them forward. By keeping them in your personal pipeline they are not forgotten… always there as a reminder to progress.

That’s it, hope you find it useful and if you want a copy of the diagram below then leave a comment and I will send it to you.

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I’m working on a full post for this series, but this recession theory of mine seems to be gathering pace… bit like the storm that is hitting the UK at this very moment! Well, it was this very moment when I started writing this post yesterday, but today is today and the storm is dying down… shame the same can’t be said about the recession.

I have been writing about the coming recession since, probably this time last year. I have put posts up on this blog, I’ve added to other people’s blogs, I’ve posted and answered questions on LinkedIn. Some people have agreed with me and others haven’t, however, it seems I’m right as a number of people who know about this stuff seem to be saying that the US economy is now in recession and even those who are optimistic say they US is all but in recession. Unfortunately, even though I’m writing from the UK we are not immune… the old saying… when America sneezes, Europe catches a cold… is so true!

The Evidence
There’s lots of it around and here is a little that I picked up over the weekend…

The US Economist, Paul Ashworth, at Capital Economics says… “the debate is over… the 63,000 decline in non-farm pat rolls in February is near conclusive proof the economy is now in recession”

Apparently, the end of last week, Larry Summers, the former US Treasury secretary said the economy is… “currently in recession”

The chief economist at JP Morgan, Bruce Kasman, has said… “we now think the economy can be described as having entered a recession in early 2008”

However, still, not everyone agrees that America is in recession… other headlines over the weekend…from the BBC…‘Bush insists US not in recession’… well, that’s cleared that up then!

Why you should be concerned
You don’t need me to tell you that you need to be concerned… but I will because it’s my blog and I need to write about something!

It’s simple, a slowing economy means consumers don’t spend and if consumers don’t spend, no one spends. There will be timing differences across the economy, but eventually, in a recession money stops flowing between people & shops, between shops & suppliers, between suppliers & manufacturers and between manufacturers & raw material suppliers. Now, if you are in sales that’s not good.

Selling is going to get tougher, there will still be deals to be won, but companies are going to be much more prudent about splashing their cash… there’s going to be no splashing and there’s not going to be much cash… so you are going to need to win more from less… which has been my key message in this series.

Why Part 3.6
I’m now seeing companies beginning to be affected by the recessionary economy. Last year I saw consumers starting to cut back, and now I’m seeing large corporates cutting back. There is going to be more pressure on the sales pipeline than ever before and irrespective of what your company’s approach to pipeline management is… you need to be prepared. Making your number is going to recession proof your own part of the business. Your management may be doing other things to recession proof the business, such as reducing spending, reducing head count and other equally unpleasant things. So, make sure you are seen as a revenue generator and not a cost contributor.

Pipeline management is going to be the most important discipline in recession proofing you own part of the business and in my experience this is the least understood discipline. Many people think they have it covered, they think this is the prerogative of the company, but it’s not. Give the company what they want in terms of their corporate pipeline and make sure you manage your own… Personal Pipelines have come of age!

I therefore thought I would add this post as part of the recession proofing series – to make you aware that Personal Pipeline Management is going to be the most important discipline in the coming economic downturn… there… avoided the ‘R’ word!

Tomorrow I’ll post my Pipeline Management Guidelines… complete with full colour diagram… something for you to look forward to!

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How many opportunities can you mange in your pipeline at any one time?… I think this is a very good question and the operative word is… manage.

The Walking Talking Brochures
If your sales team operate as walking talking brochures (WTB) doing product pitch after product pitch then you will need quite a few opportunities in the pipeline as you will be playing the numbers game. The good news is that you won’t be doing any serious management and so you can cope with the volume. The industry averages are for the WTBs… nothing wrong with this approach if you can make your number and can constantly fill your pipeline… it’s the volume approach and many CRM systems aid and abet this approach through the application of their pipeline modules which focus on catelogs, product codes, factoring and percentage probability… just right for the numbers game.

The Solution Sellers
However, if product numbers and catelogs are not in your sales bag and you are more solution biased around the complex sale, then running the numbers game philosophy will cause numerous problems particularly if you behave like a WTB. Therefore, your approach has to be more considered, your time on each opportunity increases as you need to spend more time with each client. You now need to go for quality and not quantity. Qualification goes beyond just qualifying the deal commercially, you also have to qualify the business imperative, your value (rather than price) and your relationships. On this basis you will not be able to manage that many opportunities and your win rate needs to increase to 1:1.8 rather than the WTB’s 1:4. Less is definitely more. However it is in this arena that CRM gets a bad name because CRM is for the volume business and not that suited to the quality business. The factored pipeline is a distraction – you need to operate the two outcome forecasting method – win or lose – and you need to show how you will be making your number… name the deals that will be closing and give them priority.

Clarification
Finally, some clarification on Pipeline. In the volume type of business the concept of a pipeline is sufficient, but in the quality type of business you also need to introduce the concept of a funnel – the pipeline contains qualified opportunities, the funnel has unqualified opportunities – or leads… these are your future opportunities. The funnel needs to be full in order to drive the right quality into the pipeline. The reason for the funnel is that in the quality side you need to be proactive and identify potential before possibly the client has identified they have an issue – you get in early and develop the lead into an opportunity and during this process you are developing relationships and hopefully trusted business advisor status… and there are only so many of these you can do!

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If I am not much mistaken I do believe us Brits invented the game of Rugby, as well as Football (soccer to some), Cricket and probably Tennis… and where are we on the world stage of these fine sports?… not at the top of our game that is for sure. So, how do we do in other sports like swimming, running, jumping, etc… with a few exceptions we are also not at the top… us Brits are not known of sporting prowess.

All for One and One for All
With us hosting the 2012 Olympics we need to raise our game or be embarrassed as hosts. It does not take a genius to recognise this and several programs are under way to find, develop and nurture the talent. However, our problem has its foundations in our schools. My kids had the awful experience of attending a school that did not recognise individual sporting effort. There was no competition… everyone went out on the field and everyone won. There was no incentive to achieve… everyone got the same reward… all for one and one for all… does not cut the mustard… where’s the incentive to compete?… where’s the incentive to work hard?… where’s the incentive to go that extra mile?… if everyone gets the same reward no matter what their effort, why should you work flat out when others don’t?

Bonus or Commission
It’s the same in business. Bonus schemes do not generate extra individual effort to achieve… those that put the effort in will have probably done it anyway without the bonus being there. It’s one of the reasons why sales guys are paid a commission rather than a bonus, because the commission scheme rewards individual effort… or does it?

Commissions are paid as an incentive for sales people to close more business… to go the extra mile to make sure business comes in and the company prospers… without business there is no prosperity… we all know this! Put a non commissioned sales guy against a commissioned sales guy and I will tell you who will bring in more business. So, we are all agreed, sales guys need to be paid commission to encourage and motivate them to go the extra mile and bring home the bacon!

Where it Starts to Go Wrong
The company does not want to pay out loads of money for no reason. They don’t want to pay commission to lazy sales reps who don’t earn it. They don’t want to make it too easy for them. They don’t want the sales rep selling something that can’t be delivered. They don’t really want to pay until the customer has paid. They don’t want to pay if there is no profit… and in response the commission plan starts to get complex and the incentive reduces in proportion to the complexity.

The Biggest Mistake
Other than the making of a complex commission plan the biggest mistake that most companies make is that they pay commission on revenue rather than order. The first problem here is that the sales guy is not in charge of delivery… that is someone else’s responsibility. If you sell some form of product that is shipped straight away then paying on revenue is not such a big problem. On the other hand, if you bag an order and revenue comes in over time then this is a big problem. A good example of this is services companies… win a big order and delivery is scheduled over months or even years and so the sales guy is paid as it gets billed and he has not control over this. How is the sales guy going to measure his sales earnings? Can he see where the money is coming from? If he can’t see it, if he can’t measure how he is doing, if he can’t project when he will hit accelerators, then the incentive is diminishing. Now he has one eye on delivery, when you already have an army of people doing this, and one eye on future sales. If you want the sales rep to perform he needs both eyes on sales.

I know a services company who pays on revenue and so much time is wasted on trying to figure out what’s being delivered the sales reps have given up trying to figure it and they now treat the commission as a bonus… i.e. the incentive has gone.

Keep It Simple
You don’t want sales guys responsible for delivery; you want them responsible for orders. Other people are responsible for converting orders into cash. If you have complex delivery then measure the sales rep on orders… either Total Contract Value or Annual Contract Value… don’t link their commission to revenue as com plan will get very complicated and a lot of effort goes into managing it. Tracking is easy and everyone knows where they are.

Go the Extra Step
Lastly, I’m constantly flabbergasted at how most companies don’t fully use the commission plan to provide the incentive for the extra push. The company will tell you how you have made to date, but don’t provide the tools to see how you could earn if certain deals come in. Sales reps need to start forecasting their commission rather than sales… but if the commission plan is too complex they can’t do this and the very reason for paying commission has gone… to provide the incentive to go the extra mile.

My daughter used to swim for a club… we had to get her doing something competitive… and I remember watching her do a time trial for her county time. It was a 400m freestyle swim and she missed her time by 1 second. She finished exhausted, she did not look like she could have done anymore. However, if she had known she was going to miss by 1 second do you think she would have found that extra time?… I’m positive she would. In fact I believe if she was 4 seconds down she could have found it if she knew early enough in the swim that was how much she was going to miss by. There are 6 turns in a 400m swim, she could make up 1 second a turn if she knew. However, knowing you are going to miss by 4 seconds on the last length would not have helped. Knowing where you are against your predicted outcome helps with that extra effort…. It’s no different for sales reps… know how you are going to finish early enough and if you are going to miss your target you will have time to do something about it… you can’t make it up on the last length!

In Summary
Putting commission plans together is not easy. Neither the company nor the sales rep wants to feel cheated. Simple plans are easier to maintain, easier to monitor and provide the greatest incentive. Pay on what’s in the sales reps control; avoid paying on what they can’t control. Have the sales rep focusing both eyes on bringing in the orders rather than one eye on orders and one eye on others who are responsible for delivering his commission.

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I am a guest blogger on Karl Goldfield’s excellent blog… Coaching Sales Champions… and I was talking to Karl at the beginning of the week and he wanted to know why I went missing during December! Well… I didn’t go missing, just not blogging… and so I was telling him about the pressure of work, lots to do, working late, etc… which took away my focus for blogging… it sounds like a lot of excuses, but it’s the truth… however, today I have a new excuse… catastrophic loss of power… yep, some power cable somewhere decided to stop working and it took out the electricity in our village… no spark to be found anywhere… last night our only light and warmth was from a few candles. How we managed before electricity I just don’t know. Although the central heating is gas, we need the electricity to pump the water around, so no heating. No television, so we had to talk to each other. No toaster, so no toast, so had to have cereal for breakfast… no hot water, so no washing… and you don’t want to know more about that I assure you! The problem is we take for granted that the electricity will be there and it’s a huge shock (no pun intended) when it is no longer there… a bit like deal qualification.

Qualify Your Deals… how shocking!
Just like my electricity experience where we take it for granted that it’s going to be there, many of us take it for granted that the customer is going to buy… and when they don’t, it’s a huge shock. However, the great thing about not qualifying is that you can spend most of the quarter with a rather good pipeline in pure blissful ignorance that the deals are not actually going to close… it stops all that worry about how you are going to make your number… however, you aren’t going to make any money either and the limited resources you do have will have been working on the wrong deals… and so you transform from being thought of as a revenue generator to a cost contributor… not a good place to be particularly with a recession looming. Therefore an important part of recession proofing your business is accurate and thorough qualification.
Justification
The justification for qualification is to ensure that you’re working on the right deals at the right time. Too much effort on a deal too early is a waste of effort – effort that should be used elsewhere to close another deal. Qualification, therefore, is about prioritising sales opportunities. Prioritising helps you determine whether the opportunity is real, whether the customer has the means and desire to buy, and whether you want to pursue. Let’s face it, you have limited resources at your disposal, so you want to make sure you use those resources for maximum return. You want to hit your target and make money.

Also, if your pipeline is full of flaky deals you want to know early so you can change from trying to manage the deals to finding real deals and the sooner this is the done the better your chances of hitting target.

The Process
Qualification begins with some initial research about the customer but the bulk of the work will come down to asking questions. Remember, your value to the customer is not measured by what you know about your products, but by the questions that you ask. Ask good questions that make the customer think and you’ll be invited back, I guarantee it. Asking qualifying questions is the quickest way to progress a deal to closure.

“Is the opportunity qualified?” may seem to imply that qualification is a one-off activity that, once done, is, well, finished. You tick the box and move on. Well, it’s not a one-off activity but a continuous process and the qualification is different depending on where you are in the customer’s buying process. (If you haven’t read the First Border article on ‘The Buying Process’, this could be a good time to take a look.) Qualification is about focusing on the customer’s buying process, not your selling process. You also need to recognise the four areas to qualify commercial aspects; business imperative, selection criteria, and relationships.

Commercial Aspects
The commercial aspects are what most people typically look at when they’re qualifying. Is there a budget? Can they spend? Who signs it off? And so on. These are important questions but they only become relevant if there is a business imperative.

Business Imperative
Business imperative is about understanding the business need. Satisfied needs don’t motivate: it is only unsatisfied needs that motivate people in business to buy. If you don’t understand the customer’s business imperative for your solution then you can’t hope to achieve direct influence over their thinking. At best you will have indirect influence – spray and pray, hoping something will stick. You end up pitching your product, telling them what it does, what colour it comes in, and then how much it will cost them. You’re leaving it up to them to make the connections to their business need. Market stall holders do the same thing… “roll up, roll up, big and juicy…”!

The business imperative linked to the commercial aspects will help you answer the question… Is It Real?

Selection Criteria
The selection criteria focus on how the customer is going to make the decision. You’ll look key technical, political, and commercial requirements, along with the perceived benefit of the proposed solution. Most people focus on the technical requirements by trying to match their solution to get a fit. However, you can often find yourself disadvantaged because your competitors may have a better fit against these particular requirements. If this is the case, you need to reshape the requirements and you can really only do this effectively if you understand the business imperative. Remember, however, that when it comes to solution selling the customer will buy people first, the organisation they represent second, and the solution last. That means that good relationships are the key to the success of selling. You all know this, of course, but do you continually practise developing the required width and depth of relationships within an account?

The selection criteria linked to the commercial aspects will help you answer the question… Can We Win?

Relationships
So, if the old sales adage that people buy from people is true, your main investment in the selling process has to be made in developing excellent relationships. It’s through relationships that you can influence the customer’s decision making process. It’s through relationships that you discover where you stand in the deal, where your competition stands in the deal, and what you must do to win the business. To develop excellent relationships you have to give something in return. You do this by understanding the customer’s business and asking tough questions that force the customer to think. You
add value by asking questions. You also need to take time to understand the perceived risk for the customer. Those making the decision may well have their jobs on the line if the wrong decision is made. Then again, there may also be career development opportunities if the right decision is made.

This time, if you link the commercial aspects with the relationships then this will help you answer the question… We Will Win?

Qualification Questions
I often get accused of writing long posts, and long posts are great if you want to put up big fences, but not so great if you want to keep people’s attention… and I know this post is already long so I won’t add the full qualification questions to it… those can be downloaded from here. However, I will be going through a slightly updated set of questions in a following post and I also want to finish by looking at how qualification should be included into my simple pipeline.

Qualifying the Pipeline
In Part 2 of this series I introduced a simple pipeline concept. Now I want to add a little more clarification to the pipeline. Refer back to the pipeline that we created from part 2. Now draw two vertical lines down the pipeline to split it into 3 equal sections. You now have a pipeline grid system with three grids in the Upside and three grids in the Commit. In the first grid in the commit add the words ‘Is It Real’, then in the next grid enter ‘Can We Win’ and in the last ‘Will We Win’. Now place your deals in the appropriate grids.

The next recession proofing post I’ll start looking at each of the three sections in the pipeline.

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Since I posted part one of recession proofing your business I have looked more closely at the USA economy… just as fragile as the UK’s and people talking about a real possibility of a recession… so time to get ready!

Sales are the life blood of the company, so restricting the flow of sales by reducing headcount is typically not a good idea, however, headcount freezes will be on and people who leave may not be replaced. It’s generally not your poor performers who leave, it’s your good ones, they’re good so they can leave more easily and you will be left with the poor ones, the ones who struggle in a normal market and in a recession… well let’s just say it won’t be pretty.

With money tight there will be fewer opportunities around and so, as I said in my last post, you will have to win more of what is out there… and even what is out there will be difficult to win. Therefore you have to choose your fights and put all your effort into the deals that you can win… be very selective and only chase the deals you can win… nothing else should be in you pipeline to distract you.

A few years ago I worked for a company that sold ERP systems to the process industry… our biggest competitor was SAP… most people in the IT industry have heard of SAP… but unfortunately not many had heard of us… Marcam. I ended up working in South Africa where Marcam only had a small presence and SAP were pretty big… they were on every tender and winning. We developed our strategy to beat them… it was simple… we had limited resources and when we spread them thin we lost, but when we concentrated them on deals we won. We learnt to qualify, only work on deals we can win and then put all our resources on those deals… swamp them with people… develop relationships… build trust… reduce the customer’s risk and we get the order. We won because SAP continued to spread themselves thin… they thought their reputation was good enough to win and they chased everything. They still won plenty, but not when they came up against us!

So, first part of the recession strategy is Pipeline Management… and to help understand what I mean by pipeline management … a kindergarten explanation…

Pipeline Management.
As a sales professional you need to manage your own pipeline. Irrespective of what the corporate pipeline looks like, you need your own simple version. Take a piece of paper and turn it so its landscape and draw a vertical line down the left side about a quarter of the way into the page… the left side of the line label Funnel and the right side label Pipeline. Now draw a horizontal line through the middle of the vertical line all the way across the page. Label the top right quadrant ‘upside’ and the bottom right ‘commit’. In the top right of the paper write down the sales period you are in… let’s assume you are running quarters… so write Q1, Q2, Q3 or Q4. In the top left write your name… it’s your pipeline! Now do the same again 3 times, but increment the quarters in the top right and you should end up with four pipeline sheets covering 4 different quarters.

Now we are going to sort all your opportunities into two lists. One list is the funnel and the other pipeline. If you are doing this on paper then get some small Post It notes… the ones about the size of an index finger and use one per opportunity. Write customer name, opportunity, value and close date. For each opportunity I want you to look at the close date and decide how confident you are that the opportunity will close by the date you have written. All those opportunities with a confidence level of less than 75% are in one and all the others in another pile. The less than 75% go into the Funnel and the others in the pipeline.

The Upside & Commit
The opportunities in the pipeline now need splitting again into two piles. Look at each one and gauge your confidence in winning them. Anything less than 75% confidence goes into one pile and the other into the second pile. The less than 75% opportunities get placed in the ‘Upside’ quadrant and the other pile in the ‘Commit’ quadrant.

The last thing to do is look at the dates of the opportunities in the Upside and Commit and move any that belong to other Quarters… leaving only those that will be closing in the current quarter. The first part of a good pipeline is to make sure it is time bound – only have deals in the pipeline for the period in which they are going to close. This is the first part of providing focus.

The second area of focus is to make sure you can make your number and for this you need to make sure the opportunities in the Commit quadrant are sufficient for this purpose. If the value of opportunities is not sufficient then you need to re-look at the opportunities in the Upside. Move down the next opportunity that is closest to the 75% confidence level. If this makes your number then you have a plan. The opportunities in the Commit quadrant are the ones that you focus all your attention on… these ones are the ones that you feel most in control of and the ones you believe the customer will be making a decision on… they will make your number… chasing the Upside dilutes your chances. Let me provide you with a little example to help temper you natural instinct to chase everything in your pipeline…

Less is More
You are a football (aka soccer) manager… you have 11 players, no squad, and you have four teams to play. Your objective is to win one of the four games. Good odds, but unfortunately all four games are going to be played simultaneously. So what do you do to achieve your objective?… spread your players across four games or 3 games or 2 games?… or do you concentrate on the one game that you believe you can win? Hopefully, as a football manager you will pick one game, but as a sales professional most will spread themselves too thin… less is more… don’t dilute your chances of winning but chasing everything in the belief it increases your chances… it doesn’t!

So, a rough and ready way to segment your pipeline… we now need to refine it by diving deeper into qualification. Good qualification is essential and never more so when the pressure is on to win more of an ever decreasing pie! I will cover this in the next post as part of my recession proofing strategies.

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