Thursday, November 30, 2017
We’re deep into Q4 and I’m reminded of the end-of-the-quarter scramble which often makes this time of year the most intense and agitating for selling teams. Sellers who have not hit their number yet (or aren’t on pace to) are pressured to accelerate any and all deals that have a remote shot at closing.
Regardless of whether it happens mid-year or late December, I’ve experienced 2 consistent themes at the heart of this unfortunate but largely preventable event: sub-optimal pipeline health and consistent forecast accuracy.
It’s imperative to remember that the selling/buying process is a process, and invariably moving with the customer through the process takes time. Thus, accounting for the impact of time on the selling engagement can provide critical insights to a sales organization regarding what’s happening right now (pipeline health), and what’s going to happen in the future (forecast accuracy). Equally as important, it can give teams directional insight as to where they should apply their efforts to remedy the problems.
Rather than examine aging as a metric applied globally across the entire pipeline, I propose evaluating at the sales stage level as a much more effective method of understanding the impact of deal aging on pipeline and forecast.
Recently I was working on a similar problem and thought it would be interesting to model the potential impact of opportunity duration and age at the stage level. Consider the following graph. It displays, relative to the sales stage, what a hypothetical target stage duration of an opportunity should be. The total length of this sales cycle is ~ 80 days:
(Assume this represents an average B2B SAAS sales cycle. Stages 2-4 are for discovery, solution architecture, and solution validation. These typically take the longest within a sales cycle)
Presuming I was analyzing a team of 5 sellers, each with 50 opportunities, I might summarize their average deal age at the pipeline level. In this model I can clearly see that most of the selling team is within 1-3 days of the target deal duration, but across the team I’m in line with what the optimal deal age should be:
Shifting the analysis to the individual stage level, however, reveals a different story. While the average deal duration remains consistent, there are significant variances by stage and seller. Cells highlighted in red indicate stage durations above target:
These individual variances should be viewed as leading indicators for potential friction or stall-out points in a selling cycle. If over time target durations are consistently exceeded it could be a signal for opportunities to introduce new sales tooling or collateral, coaching, or potentially a process alteration due to changes in customer behavior.
Here is a link to the data file and tables: /goo.gl/gXNBKa
Wednesday, November 22, 2017
Degree of difficulty calculations (DD) are a simple yet powerful tool which can be used to help proactively and objectively quantify the impact of influencing events within a sales organization or selling engagement. By quantifying the potential impact of these events early (especially in terms that are clear) sellers and sales leaders can effectively manage and prioritize their activities and deployment of resources.
For example, when assessing a seller’s pipeline using a degree of difficulty measurement can be an effective method to help focus their efforts on deals that are strong versus those that are weak. This could by typified by a case where it’s prudent to focus on a deal that is fully the ideal customer, deep in the selling cycle, and has executive support versus one that’s 2X-3X the size but they’re just “kicking the tires”.
Alternately, when designing quotas or evaluating territories a degree of difficulty measurement could be used by sales leadership to pragmatically represent total value of the addressable market, based on attributes like customer fit or competitor penetration.
Here is a simple degree of difficulty framework that can be used in the context of pipeline evaluation. I acknowledge it’s completely arbitrary, but I believe it’s realistic for demonstration purposes:
- Assign each opportunity in the pipeline a difficulty of 1-5, with 1 being the least difficult (closest to your ideal customer) and 5 being the most difficult (furthest away from your ideal customer)
- For each incremental step further from the ideal customer, decrease the value of the opportunity by 10%
- Multiply the contract value metric by the difficulty calculation, resulting in a revised contract value
Using the above framework, the graph below represents a practical example of how a degree of difficulty calculation could impact a hypothetical opportunity with an annual contract value (ACV) of $197,000:
For each incremental degree of difficulty the value of the opportunity drops at a consistent 10%. The slope is static, thus the impact on the opportunity is relatively predictable. This is directionally interesting, but less realistic in terms of describing what actually could influence the totality of a seller’s pipeline. Some opportunities are more or less difficult than others.
When applied across the entirety of a seller’s pipeline, assuming each opportunity has equal potential for an independent degree of difficulty, it’s possible to postulate a total potential impact to pipeline value. For example, consider the following quarterly pipeline:
- Opportunity 1: ACV - $197,000; DD - 2
- Opportunity 2: ACV - $175,000; DD - 1
- Opportunity 3: ACV - $193,000; DD - 3
- Opportunity 4: ACV - $187,000; DD - 1
- Opportunity 5: ACV - $171,000; DD - 5
- Opportunity 6: ACV - $179,000; DD - 4
(NOTE: this is a fictitious, non-random pipeline example representative of common pipeline values in B2B Marketing Technology sales. I arbitrarily selected ACVs and DD measurements.)
Notice the difference in hypothetical pipeline value with and without a degree of difficulty calculation - a 16.4% decrease in value - which translates into ~$180K. Extrapolated over the course of a selling year that’s nearly $1M in annual pipeline value - significant enough in most selling organizations to have meaningful dialogue about how opportunity difficulty and risk should influence selling behaviors and prioritization of efforts.
Wednesday, October 25, 2017
Whether it’s selling to a new customer or engaging an existing customer, the product demonstration can play a critical role in demonstrating or creating value, validating business objectives, or accelerating a buying cycle.
A great demo experience should deliver on these goals every time, enabling the selling teams to effectively leverage product demonstrations as deal accelerators, and not merely a set of motions that aren’t driving value for the customer.
To do this, every great demo should draw on 4 critical keys to successful product demos:
1: Product, Market, and Sales Alignment
Effective product demonstrations begin by clearly understanding how your Product, Marketing teams, and Sales efforts are aligned in support of solving the challenges faced by your customer:
- What significant market problem(s) does the product or solution solve?
- Does the product solve them in a way that’s cheaper or faster than the competition?
- Is the value proposition clear and differentiated?
- Are there clear and consistent definitions of ideal customers?
- Has the value proposition been communicated in the right way to the prospective customer?
- Are the customers leaving the marketing funnel well-qualified and primed for a selling experience?
- Is the current state of the customer well understood?
- Does Sales understand the decision-making (a.k.a. buying process) criteria of the customer?
- Is Sales engaged with individuals in the customer’s organization that have both decision-making and economic authority?
Through this alignment the demo can be used to identify & amplify customer pain, communicate how that pain can be solved, and provide a clear and tangible benefit.
2: Demo Technology, Environment, and Logistics
Considering customers expect technology to “just work”, any flaws in your demo technology or environment can transform a demo from great to ho-hum in an instant. Whether it’s a battery failing, a disruptive software update, or an ill-timed chat message popping up on the screen there are numerous logistical potholes that can easily be avoided.
The physical location is important! Are you sitting in a well-lit area? Do you have adequate connectivity? Ensure ringers on cell phones and notifications on your laptop/tech are appropriately tune, and there is ample Internet bandwidth and power. If you’re in a shared office, book a conference room for a minimum of 10 minutes prior to start time and 15 minutes after the scheduled end time of your demo.
If you’re using your cell phone, use headphones! Otherwise, make sure the phone in whatever conference room has a well-functioning speaker phone.
3: Product and Presentation Skills Acumen
We’ve all seen a demonstration given by someone who doesn’t know the product, platform, or service well enough. Those are “cringeworthy” selling moments that can be avoided by consistent investment in developing product acumen and presentation skills.
Great demos thrive in environments that use well-designed L&D frameworks to educate and reinforce product knowledge and common customer use cases or solutions. Additionally, investing in best practice demonstration and presentation techniques can dramatically improve demonstration quality and overall performance.
4: Demo Delivery, Language, & Customer Stories
Capturing the maintaining the attention of your customer during a demonstration is one of the most difficult things to do. When presenting in person it’s much easier to read and react to your audience. If you see someone frequently glancing at their phone or staring out the window it far easier to re-capture their attention by subtle shifts in pacing, volume, language, or even anecdotal stories.
With more and more buying decisions being made virtually via screen sharing and conference calls, developing demos that are rigorously infused with variations in speaking tone, language, and customer stories is a powerful method to keeping your customers engaged as you show how your solution can uniquely solve their problem.
Delivery of the demo should be upbeat, structured, and well-paced. Don’t be afraid to roll-call at the beginning of the demo to hear the names of your attendees - calling someone out by first name, even over the phone, is a powerful technique that can be effectively leveraged to keep your audiences attention. Use language that is plain-spoken and generic. If you need to use jargon or industry-specific terms, make sure they’re common and well-understood. Leverage customer anecdotal stories whenever possible, but ensure they’re relevant to your customer’s problems, and clearly demonstrate an applicable solution.
Many thanks to 8644938079, friend and former colleague, for his tireless contributions and real-world practice which contributed to these fundamental demonstration best practices!
Tuesday, September 26, 2017
In spite of the functional differences between Sales Ops and Enablement, I’ve found that business outcomes of these teams are most often supported through coordinated cross-functional collaboration with non-Sales functions, frequently in Marketing, Product, and Customer Success.
When considering Ops and Enablement planning, a framework can be a helpful tool to visualize and organize the complex process. It’s easy to get lost in the minutia when setting ops and enablement strategies, so it can be helpful to guide strategy and focus when aligning resources against the right behaviors which drive the right business outcomes.
I’ve found that successful deployment of selling support resources boils down to clearly articulating the right support behaviors defining what to do, what not to do, and when.
This particular framework above is one Iâve used successfully in my career. It visualizes enablement and ops as a series of layered, cross-functional exercises, consisting of three distinct but very important lanes:
- Business Functions: The groups within an organization where most cross-functional collaboration takes place
- Cross Functional Outcomes: The specific strategic focus areas and cross functional outcomes
- Tooling and Processes: Systems, tools, and methods used to support enablement and operations activities
The layered visualization can be particularly helpful when thinking about strategic and operational benefits against a time horizon of achieving meaningful ROI on revenue growth. Not all ops and enablement activities drive business results equally or in the same time horizon, so of course it’s critical to align activities and set expectations around meaningful and realistic KPIs and when those may be achieved.
What might those activities be? It’s truly dependent on an individual organization. I’ve used this framework to kick off spirited yet incredibly valuable conversations with each of the functional groups in the top tier to define planning, engagement strategies, support methods, cross-functional KPIs, and the like between Ops/Enablement and the rest of the organization.
Special thanks to friend and former colleague Dan Krans for his contributions to this framework! His patient and persistent assistance helped shaped the thinking and approach.