Improving sales and bid qualification decisions is the biggest single way to achieve a step change in win-rate success, yet for many sales teams it remains one of the hardest areas to address.
When sound and timely bid / no bid decisions are made it enables scarce business development resources to be focused on the opportunities the organisation is more likely to win. The increased attention made possible enables higher quality propositions to be created, because time and resources aren’t being wasted on the losers.
So in the face of the blindingly obvious need for rigorous qualification, why do so many companies achieve unacceptably low win rates by chasing every opportunity that pops up and wasting precious resources in the process of doing so?
And there’s more. Apart from the negative hit on win rate, there is also a big cost angle to consider. Recent experience with a UK IT services outsourcing provider pointed up bid costs of between £0.5m and £1m as being commonplace.
Can you tell me any other part of a company other than sales being allowed to make a £1m investment decision without rigorous scrutiny?
Why does this happen?
The qualification decision is rarely taken in isolation. The ‘attractiveness’ of a single opportunity will vary according to the state of the rest of the sales pipeline. In a drought, any opportunity will take on increased significance. In a glut, there will be a fight to secure the resources to chase many opportunities that would seem attractive at other times.
Companies mistake volume for quality in their sales pipelines. Good sense would suggest that if we go for fewer opportunities that we have a better chance of winning, then the increased focus will increase the win rate.
But it’s a brave sales manager that takes these tough decisions. Can you imagine the Board’s reaction when you tell them “I’ve halved that big fat sales pipeline we used to have. But believe me, we’ll land more of those opportunities!” It takes a leap of faith and some lead time for such a policy change to take effect.
We live in an uncertain world. No-one can predict the future with anything measure of certainty.
It’s also a brave sales manager who decides to cut out opportunities early in their life cycle. In fact, a ‘no bid’ decision is the exception that requires substantial proof to show why the company should not bid.
It is much easier to keep an opportunity open, putting off the difficult decision until more information is known. This approach can lead to the gradual haemorrhaging of resources and a bigger opportunity cost in the reduced capacity to pursue other targets.
Exceptions are used to prove the rule. “We won that one, even though we heard about it late”, claims the salesperson.
This is often used as an excuse to keep burning money on opportunities in the face of mounting evidence they should be closed down as we don’t know the first thing about the opportunity, the customer or the competition.
One thing I don’t understand is some salespeople’s need to follow up every opportunity. I’ve never met anybody who has won a bid from having no previous relationship of any form with a customer. But it keeps happening. The customer needs some other proposals to be able to beat the preferred supplier up on price, but frankly those other proposals have no chance at all of ever being used for anything other than that.
Qualification decisions are rarely rational. This is because they are often made by the sales team, the very people who are targeted and measured by the number of opportunities in their pipeline.
The salesperson who owns the opportunity will always want to keep as many balls in the air as possible and will be emotionally attached to opportunities in which they have invested their efforts. Each opportunity, however flimsy, is a treasure to be nurtured. Even though it’s obvious to everybody else that what’s being nurtured is in fact an adolescent lemming.
Qualification pain is not felt by those doing the qualifying. When the qualification decision is left in the hands of the sales team, the real pain that results from continuing to bid is often not felt by the salesperson.
The cost – financially, emotionally and physically – is felt by those preparing the bids. It is the bid team that face the long days, longer nights and soggy pizza at 3am in preparing the proposal.
Inertia is perhaps the most pernicious reason of them all. Somehow the salesperson gets a shaggy dog opportunity qualified. Everybody can see it’s only got three legs, but by some sleight of hand (Very often forcing the go / no-go decision to the last possible moment to avoid real scrutiny) the opportunity gets approved and work starts.
The inertia bit then comes into play. The salesperson will argue vehemently this can be won, and at the same time this is the one opportunity they’ll know the real bid costs for. Why will they know the true costs? So that they can trot them out in the next review meeting. Look, we’ve already spent £250,000 on this three legged opportunity, we can’t afford to stop now”.
How do you stop this time and money wasting nonsense?
1. Take early decisions – to enable the full benefit of increased resources and focus to be felt on those opportunities that they really do have a good chance of winning.
2. Agree the factors that would lead to a no-bid/qualify out decision. Do this as early as possible in the sales process to enable a rational decision to be taken. Set up qualification criteria, apply them to every bid, and take decisions based on the facts they illustrate and nothing else.
3. Be consistent in the application of bid / no bid decisions. Use a consistent bid review process that all opportunities go through. Over time this will lead to a degree of self-governance by the sales team earlier on in the process in weeding out opportunities from the pipeline.
4. Make providing an estimate of the total bid cost a mandatory part of the review process. When there’s a big cost number up on the screen, it helps people focus on how winnable something really is. And ensure all internal costs are included in the bid cost. So if it needs ten days of a solution architect at an internal cost of £500/day, that goes into the bid cost at £5,000.
5. Does the value proposition make business sense? No customer is going to buy something if it doesn’t look like a great investment.
So testing what the headlines are of the customer’s value proposition makes a lot of sense. If its generalist and anybody could pull it together for any customer, get out now. Customers only buy solutions where they can see the specific value they will gain. No specific value, no sale.
Or if its a price based value proposition, get out even faster. Customers today have “Strategic Sourcing” functions whose job is to rip any proposal to bits looking for where savings can be made. The result is any bid that’s price based is going to get involved in a race-to-the-bottom resulting in no profit being left for the supplier.
6. Take direction from Corporate Strategy – but be prepared to divert. The application of a qualification process shouldn’t put the organisation into a straight jacket that limits agility and an ability to respond to market conditions.
Include more meaningful measures. Business development good health goes beyond simple pipeline value / volume. Organisations need to recognise that ultimately it is the quality of the opportunity that determines whether or not it becomes a successful win.
Have repeat reviews frequently. Very often organisations have a single in or out review process. Forcing an opportunity to come back to the table for re-review frequently is a very good thing.
- Check out my other Sales and Bid Qualification blog articles
- Download our free Sales and Bid Qualification spreadsheet “Opportunity Assessment” – registration for our Members Area required
- Buy our bargain e-book “Sales Proposals that Win!” Everything you need to know about planning, creating and completing powerful sales proposals
- Sales Managers take our Sales Pipeline Management Course. Everything you need to know to manage your Sales Team’s pipeline
- Check out Freedom to Act – a powerful tool to help sales managers qualify and forecast
Here’s what to do next
If you’re interested in how this could help you, or feel I may be able to help you with some of the challenges you’re facing, please get in touch for an informal discussion.
There’s no commitment, we’ll just discuss your situation to see if working together might be a good fit. Contact me now.