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Testing the Sales Hypothesis
by Steve Bosworth
Bosworth & Kenney Selling
One of the questions we like
to pose to clients in both our sales and sales management workshops is, “How often in your selling career have you been caught off guard by a loss involving an opportunity that you were convinced was
yours?” You gave it the very highest degree of confidence on your forecast only to receive the crushing news that you’ve lost to a competitor, or worse yet, no buying decision was made at all. Besides
the obvious embarrassment, there are some very painful business ramifications to an inaccurate forecast. Senior executives have been known to turn homicidal when, after having received profuse assurances
from everyone, a critical account fails to materialize. Why were opportunity assessments so far off the mark? There are bad habits and behavioral characteristics to overcome that are endemic to
salespeople in particular.
We think it’s due in part, to an insidious human condition known as “Happy Ears.” Nearly every salesperson (and often their sales managers) contracts the dreaded Happy
Ears syndrome at some point in their careers. If not treated early and aggressively, the effects can be crippling. This condition is known to gleefully infect salespeople of all ages, creeds and color,
without prejudice. The byproduct of the aforementioned malaise can have searing consequences; bad forecasts have caused stocks to tumble, earnings projections to be missed and have left promising careers
in shambles.
More years ago than I’d care to admit, I was required by my university to prepare a senior thesis which was, by design, to be rigorously analyzed and challenged using the scientific
method as a testing process. As a graduation requirement, every senior candidate had to form a hypothesis relative to a subject of interest within his/her area of academic concentration. Then, using
meaningful statistical analysis, the student was expected to either prove or disprove the hypothesis and defend the findings before a committee consisting of departmental faculty. There is a concept here
that I believe, if applied formally, could have a beneficial impact on a selling organization’s ability to predict sales at the opportunity level. Many sales professionals struggle with the ability to
properly qualify a potential opportunity. Even more destructive is the lack of disqualification skills. If sellers were taught to examine and test their opportunities the way they did in school, they
would learn to quickly disqualify themselves out of non-opportunities and spend their time on more productive pursuits.
As in school this effort will require some work. Some say that the mantra
of a salesperson is “Hope Springs Eternal”, bringing to mind the false hopes and illusions of Willie Loman in Arthur Miller's, “Death of a Salesman.” The frightening fact is many executives continue to
forecast based mainly upon gut reaction and the opinion(s) of a salesperson. Forecasting based solely on opinion or false hope is as much of a tragedy as represented in Miller’s story. That the practice
continues in 21st century suggests that there may be some fundamental shortcomings relative to sales opportunity validation practices.
Salespeople love to present their offerings on
management’s alter with great panache. In order to add a veneer of credibility, they’ll crunch their forecast through the appropriate SFA or CRM machinations and present it on PowerPoint for all to see.
Managers shudder in delight and anticipation, sellers preen in the spotlight and onto the forecast it goes. Instead of testing the veracity of the sellers opinion, managers in their rush to
judgment, will often add their own spin, further enhancing the likelihood of closure.
Sadly, the root information is still suspect at best, because it hasn’t been truly validated or tested. The
seller, and often management, are drawn into a costly, resource intensive, web of calculated disinformation designed for a single primary purpose, to create hope in the mind of a desperate salesperson.
If this notion is true, then this condition facilitates a virulent breeding ground for the Happy Ears syndrome within a sales organization because now it has been reinforced with technology. Guess what?
Enamored in the glow of that which is state-of-the-art, someone forgot to test the hypothesis. The forecast is not worth the powder to blow it up.
Back to School
Most sales
executives believe prospect qualification is an important selling skill, but often overlook the notion of prospect disqualification. It’s as if they subconsciously avoid the scrutiny that may produce bad
news. Let us consider a process that would treat a new opportunity as a yet untested hypothesis, similar to our academic brethren’s thesis. What if there was a standard process within a sales
organization that would make it incumbent upon the salesperson to prove or disprove a forecasted opportunity?
Validity testing could be in the form of significant events or qualifiers, each
representing a go/no go point in the sales cycle. These points should be documented and have a timeline attached. Additionally, during the selling/buying continuum that most of us call the sales cycle,
there should exist within the seller’s organization, an internal forum where the salesperson would be expected to “defend” his/her sales opportunity (thesis). The sales manager’s job is to inspect the
process. Now management can forecast, armed with inspection results and/or updates in hand. The forecast is now a logical assessment based upon factual events versus relying on the opinion of a
salesperson. The manager responsible for inspecting the opportunity becomes the logical person to assign a measurement of close probability because they have tested the opportunity.
Because the
inspection process and validity assessment should fall on the shoulders of the sales manager, it would behoove that person to adopt a repeatable testing process for that task. The salesperson’s
responsibility would be to grow and maintain a viable pipeline with qualified opportunities that is auditable to management.
The Forecast
Desperate sales managers have been known to
place a “hot opportunity” (based upon the salesperson’s opinion) onto a forecast without any realistic probability of closure other than blind faith and the aforementioned happy ears. Since the manager
is now operating on a wing and a prayer, he/she attaches their own enhancement spin to the forecast and fires it off to the next level in the hierarchy. The enhancement process is repeated, a new
trajectory calculated; and the forecast is again launched upwards. What began as bad information is further enhanced at each level until it approaches the corporate impact zone like a Tomahawk Missile.
How valid is this forecast? Had it been tested or inspected against any valid standards or milestones? Who develops the testing standards?
We encourage selling organizations to think of
defining the most salient events/milestones possible. Think of successful endeavors that have occurred in past sales situations that were won by the selling agency. Is there anything to be learned from
sales history? There probably is. Have any tactics or behaviors emerged that should be replicated in subsequent selling situations? What were those events? Would it be helpful if these events were
documented? You may consider those go/ no go events to be a set of your best practices within the sales cycle. It stands to reason that many of these practices could be distilled into repeatable events.
They become your testing standards.
Testing the Plan
Let’s say, for the sake of discussion, that a selling organization begins to define and document a series of it’s own most
advantageous events or milestones to be used as qualification/disqualification points for each forecasted opportunity. What then? If a sales team uncovers a prospect and creates a buying vision in the
minds of this potential buyer, then an evaluation plan will help both sides facilitate the buying process. If given the opportunity to include significant events highlighting seller strengths to the
plan, chances of success are greatly enhanced.
High impact, “Best Practice” sets based on historical wins should be defined and embedded into a formal evaluation document accompanying every
forecasted opportunity as key milestones in the plan. Having said that, it begs the organizational question, which steps are crucial to winning? Have the buyer’s business need(s) as well as the seller’s
solution sets been validated? Most buyers will want proof of some form. Proof may be a pilot program, a demo or even a conversation. Meetings with the operational decision maker or financial approver are
certainly key considerations. Encouraging some form of a formal value event can reap huge rewards.
The smart seller will encourage the prospect to also add milestones to the evaluation plan.
So there is now joint ownership of the buyer/seller evaluation plan, which has buyer & seller’s agreed upon milestones embedded.
Anyone attempting a complicated journey would be foolish not to use a map. Start the process with a mutually agreed upon evaluation plan (before committing resources) containing a sequence of events. This evaluation plan will serve as the buyer and the seller’s road map throughout the buy/sell cycle.
Argue and negotiate over the plan steps as necessary, then add a timeline and track to the plan. Keep the plan alive by republishing upon completion of any key event. By completing each of the
steps, both organizations move closer to the agreed upon closure date. If your events do illuminate compelling reasons to proceed (via ROI or realization of the cost of delay), the actual close will be
much easier. The plan itself is a great qualification tool. It makes sense as an evaluation format but the frosting on the cake is that the seller, who employs this tactic, distinguishes one’s self from
a competitor who lacks a process.
A useful by-product of publishing the completion steps is that management can now audit the progress of the plan and track each opportunity down to a
particular milestone. This inspection mechanism may be as simple as reviewing of the documentation, but it is giving management multiple opportunities to “test the hypothesis.” Forecasting confidence is
enhanced if an audit shows the particular proof step as successful.
In the world of a complex selling environment, providing defined operating parameters can be a wonderful thing. People do function
more effectively if they can “Begin With the End in Mind,” but without a map will often lose their way. Introduction and use of a plan helps empower participants of both sides of the buy/sell cycle.
If your prospect initiates the buy/sell cycle and lacks a plan, share your process and encourage them to add their events to the evaluation plan. If the potential buyer already has their
own plan, it is critical for the seller to add some of his/her own steps (best practices) to the buyer’s existing plan. If denied this reasonable consideration, you’ll quickly know whether your offering
has truly become part of the prospect’s vision. Unless the selling organization has unlimited funds and patience, serious consideration should be given to disengaging.
Forecasting
accuracy begins to improve because each inspected milestone in the evaluation plan represents in essence, a mini-close. By the time the buyer and seller have arrived at the final closure milestone, all
significant steps have already been accomplished. Forecasting accuracy begins to improve because closure is listed as another milestone. Management can now track and assess various opportunities as the
milestones are completed. It’s as if a Sales VP could simultaneously monitor all forecasted opportunities via an orbiting GPS satellite, she would know if a high priority account is tracking or deviating
and in need of attention by inspecting the plan. When the plan steps have been completed, the final closing event is less traumatic because the major steps are already resolved as completed milestones.
When the predicted date of closure occurs, buyer & seller benefit from the use of an evaluation plan because there are far fewer open tasks (or surprises) remaining on the table to cause
backtracking or delay. Much more emphasis can be focused on a successful implementation along with the capture of some form of success metrics.
The buyer has now set the stage to measure
results and manage to the plan. If the buyer’s post implementation results are favorable, the seller may be able to leverage a reference story highlighting measurable data with operational and financial
change. A roadmap marked by milestones can be a wonderful thing if one is lost in the wilderness.
As organizations attempt to implement new tactics, management should set up systems to
continuously inspect to ensure uniformity throughout the selling organization. Criteria should remain consistent and every attempt made to obtain feedback to learn and improve the predictive effort.
Column Fodder
It’s a pretty safe bet that if a prospect organization is going to spend significant funds on your solution, they’ve already conducted their own
qualification/disqualification analysis of the various vendors. It is important to them that they acquire a representative group to respond to their proposal requests. It has even been whispered that
they sometimes make their selections prior to inviting in a group of qualified vendors. A few thoughts on allowing ourselves to be used and abused – repeatedly. Every salesperson who has ever carried a
bag has received the seductive call or invitation, “We’re looking to buy and we’d like to give you serious consideration.” Thus begins the slippery path to sales perdition, otherwise known as
“Column Fodder.” When invited to participate, it seems as if many of us completely lose our deductive reasoning skills. If one does not participate in the creation of the prospect’s initial buying
vision, there is a more than reasonable chance that someone else did. Often, you are merely a comparative column in the evaluation process. With our happy ears, once again at full extension, we
subordinate ourselves to the whims of the buyer, who has already mentally picked your competitor.
Consider this. If as a sales organization, management decides to commit the internal resources
necessary to win, then salespeople should insist that the buyer / prospect organization provide them the opportunity to properly present products and services. It is, after all, a fair thing to ask, a
very valid quid pro quo. Most people would agree that in a selling situation the selling entity incurs significant costs just to compete. If not given the opportunity to expand the prospect’s existing
buying vision to one biased by ones own product or service, why compete? Are the rules of engagement unfair? Do they prohibit your sales team from interacting with the true decision makers or showing
what they do best? Has your best shot been spent on presenting to a “designated representative?”
My guess is that the engagement rules have been designed this way for a purpose. It is very
difficult to sell to someone who can’t buy. But, oh, how we try! Call me cynical, but I believe if you’re invited to compete in a competitive situation where you didn’t participate in the creation
of the prospect’s initial buying vision, then what has been purported to be a level playing field, is probably wired for someone else.
Do you ever wonder how many different sales teams are
forecasting the same opportunity? Ironically, in situations like this, a seller may still have an ace-in-the-hole. Think of the prospect diligently preparing the columns in his vendor spreadsheet.
Column A represents the vendor of choice – the favorite.
However, this prospect actually needs the participation of several vendors to represent additional evaluation columns. This makes good business sense. Internal requirements (and in some cases, the law) demand a record of due-diligence in the selection process. They certainly want to enhance their own negotiating & pricing position with the true vendor of choice. Through the power of suggestion (Happy Ears) and other sometimes nefarious means, they keep all competing vendors hopeful. Without realizing it you’ve been designated as a “Bronze Medalist” or, in some cases, the more exalted, “Silver Medalist.”
So salespeople beware! If it smells bad or feels as if the fix is in, challenge the status quo. Ask for an audience with the most senior individuals in the buying organization who stand to be
impacted by the scope of your offering. When denied this reasonable request, walk. Better yet, run like the wind and be vocal about it. Chances are the seller’s time and the selling organizations
resources are being squandered on a boondoggle. Why participate? Why not pursue something you have a fair chance of winning? Often the refusal to participate on the basis of fairness (or lack thereof)
will force the buyer to grant the necessary face-time. If the hardball tactic is successful, and the audience request is granted, the seller is now afforded the opportunity to reengineer the existing
buying vision to one biased with one’s own differentiator(s).
Alignment
An interesting phenomenon occurs when a selling organization decides to define and adopt a process as it’s
own. The task of buying becomes less confusing to the prospect because they have a road map. Buyer and seller are now in alignment with each other. This facilitates the buying process, particularly when
marketing and selling technology products/services to the pragmatists or conservative buyer one encounters in a mature market.
The savvy salesperson encourages the buyer to define expected success metrics. Encourage the prospect to factor in projected measurable change as a result of the impact of the seller’s product (or service) into the buyer’s value calculation. If the decision maker(s) in the prospect organization can clearly see the steps outlined to facilitate the buying process and the perceived value is compelling, they may volunteer to buy earlier than originally planned. It makes business sense to move forward sooner in order to solve a business problem, improve the bottom line or gain a competitive edge. An acute awareness of the cost of delay can be illuminating.
When buyer and seller are tracking to a mutually agreed upon sequence of events which includes validity testing for both sides, then both have ownership of the process without anyone feeling
manipulated. The seller can now realize the predictive value of planned milestones without over-controlling the buyer.
Sources:
Bosworth, Michael T.
(1994) Solution Selling: Creating Buyers in Difficult Selling Markets. New York, NY: McGraw-Hill
Covey, S.R. (1989) The 7 Habits of Highly Effective People: Restoring the Character Ethic.
New York, NY: Simon & Schuster
Kaplan, Robert S. and Norton, David P. (1996) The Balanced Scorecard: Translating Strategy into Action. Boston: Harvard Business School Press.
Miller, Arthur. (1940) Death of a Salesman. New York, NY: Penguin Books
Moore, Geoffrey A. (1991) Crossing the Chasm. New York, NY: Harper Business
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