Are you controlling slippage and the bow wave in your pipeline and forecast?
A ‘bow wave’ happens when deals that are forecast to close in a particular month then at the time you were expecting them to close they slip, when they reach the forecast close date again they slip again….. repeating until such time as the deal disappears and is lost to no-decision.
I am sure this sounds familiar to many of you, I see this in my client engagements a lot.
In our 2015 opportunity management research the data showed that the best performing companies are twice as good as the average in controlling pipeline slippage. What do they do differently?
Some deals slip for understandable reasons. We work in sales and we face uncertainty every day as we handle people, emotions and bureaucratic processes. An individual deal can miss a decision point for many reasons including sickness or meeting cancellations, but this is not the focus of this message. I refer here to situations where sales people continually get it wrong; regularly missing their forecast number and managers have no confidence in what they commit.
So what is it they do differently? We find that companies who control slippage best have some things in common.
The best companies know why slippage happens
The greatest driver behind pipeline slippage is a lack of customer buy-in to the change project.
If this project is a “nice to have” it will fail to take priority. A buyer might engage with you to be polite or perhaps they have a broad interest in the issue, but in the end they fail to see a compelling value case for change.
Slippage often occurs when there is a disconnect in expectations between the sales person and the client. The salesperson ‘hopes’ that their deal will close but the client is not fully committed to the changes required and they are not compelled to make a decision either way.
Is your prospect ready to change?
Buyers and companies have a natural bias is toward steady state, remaining with what they have rather than go through a process of change with potentially uncertain results. This is not because they are overly cautious about what they spend, it is more to do with the complexity associated with changing the way that people work.
If your solution requires that a client must change their approach (and most do), then you will need to help them see a compelling reason to act in the form of a strong case for change. If you can convince them that the value of change significantly outweighs the costs of change, then the prospect will be as keen as you to get the project underway.
You need to break a company’s inertia and this requires that you convince the prospect that the ‘Cost of Do Nothing’ (CODN) is high. A high CODN highlights a significant impact on their business if they fail to act now and this will create urgency.
Until this happens other client projects are likely to take priority and your deal will be prone to slippage.
25% of deals are lost to no-decision.
Companies are involving more people in decision making than they used to, and this was evident in our recent research where on average 5.8 people are engaged in a typical b2b buying process (Source : OISM 2015 research). As companies become more risk adverse a consensus approach to decision making is more common, and to overcome slippage it is hugely important that you engage with the right people in the prospect organisation. Failure to do so risks slippage and loss because you are unlikely to achieve the required internal consensus your project needs to get off the ground.
Can they act?
Just because a customer wants to change this doesn’t mean they will move forward with a project. I have found that some companies have a strong desire to act yet the project still fails to get off the ground. This happens when the company lacks the ability to execute; either the necessary funding to pay or the skilled resources to implement change.
These situations are common on slippage deals. Not only is the salesperson excited about the potential but the buyer is too and this creates a buzz around the project. They lack the necessary ability to deliver the project and this means it is likely to slip until such time as they are able to progress with implementation.
Insight underpins confidence
The whole sales team needs to systematically review each of their opportunities, identifying those at risk of slippage. A consistent approach to assessing where each prospect is in their buying process approach will help to identify risk areas of your pipeline and forecast. Our DealSheet applications take subjective aspects of opportunity assessment and turns each situation into objective and measurable numbers. Armed with this quantitative data it is possible for sales leaders to make the right choices about which deals are in their commit, upside and pipeline.
How are you capturing this data for your pipeline?
For further information contact Outside In sales and Marketing.