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Nailing your OKRs – write productive Objectives

Introduction to Objectives and Key Results (OKRs)

 

As Sales Directors we are always looking for ways to improve the team’s ways of working, increase revenue, and stay ahead of the competition. One way to achieve these goals is by implementing the Objectives and Key Results (OKR) methodology.

 

Objectives and Key Results (OKRs) are a way of defining goals for your team. They’re used by some of the world’s most successful companies, including Google and Facebook. OKRs were first developed by Intel in the 1980s as a way to align their employees around specific goals, and then popularised by investor John Doerr in his book “Measure What Matters” . According to Andy Grove, former CEO of Intel: “We had tried many other approaches before arriving at OKRs–but none worked as well.”

 

In this article, we will explore how sales organizations in medium-sized companies can implement OKRs to improve their sales processes and increase revenue.

 

 

 

Definition and Components of OKR’s

 

Objectives and key results (OKRs) are a simple yet powerful way to set direction for your team. They help you focus on what matters most, align around priorities, and drive results.

 

OKRs have 3 principal components:

    • Objectives are high-level statements that define the purpose of your business or project. An objective could be “increase revenue by 10%” or “improve customer satisfaction ratings.” It’s important for objectives to be measurable so that you can track progress against them over time.
  •  
    • Key results are specific behaviors or outcomes needed from each person on your team in order to achieve an objective–for example, “Achieve 90% success rate on all projects” or “Grow social media followers by 20%.”
  •  
    • Tasks: The activities that you undertake to get you the Key Results, which in turn leds you to the Objectives. By evaluating our ability to perform the tasks, you can coach, train and prepare yourself better to reach the objectives. 
  •  
    • Weighting is an optional additional component of OKRs that helps prioritize which key results should receive more attention than others; this might be based on importance (e.g., revenue generation), difficulty level (e.g., increasing customer retention rates), urgency (e.g., launching new product features before competitors do), etc..

 

 

 

Benefits of Using OKRs for Goal Management

 

  • Improved communication: OKRs are a clear way to communicate goals and progress, which helps teams stay on the same page.

 

  • Better collaboration: When everyone knows what they are working toward, it’s easier for them to collaborate effectively.

 

  • More effective goal setting: OKRs help you set goals that align with your organization’s larger strategy so that you can achieve more impactful results–and have fun doing it!
 
 

 

Creating a Culture of Accountability with OKRs

 

The goal of any company is to create a culture of accountability. This can be done by focusing on OKRs, which are the key results that you want your team to achieve.

 

For example, if you’re working in sales and your objective is “to increase our revenue by 20% this year,” then one key result would be “increase sales leads by 10%.” Each employee has their own set of objectives and key results so they know exactly what they need to do each day in order for the company as a whole to meet its goals.

 

OKRs are not just an HR tool. They’re a way for the entire company, from the CEO down to the newest hires, to work together towards a common goal. When everyone is working towards an objective and knows exactly what they need to do each day in order for that objective to be met, then it’s easy for them to feel engaged in their jobs.

 

This is why OKRs are so effective. They give employees a clear idea of what’s expected of them, and they help everyone involved with the company to understand how their daily tasks fit into the larger picture.  Studies show that organisations, just by working with clear, agreed and challenging goals increase productivity by up to 15%. With a feedback and measure structure that continuously tells us how we are doing, that effect is nearly doubled!!

 

 

 

Basic Rules for Writing Effective Objectives and Key Results

Some key learning around objectives and OKRs 

 

      • Set SMART objectives. SMART is an acronym for Specific, Measurable, Achievable, Relevant and Time-bound.

 

      • Use the cascading approach to set goals at all levels of your organization or team. This means that each level has its own set of OKRs that cascade down from higher level objectives (i.e., a departmental manager’s OKRs cascade down from his/her company’s annual goal).

 

      • Make sure your key results are realistic–you don’t want them to be too easy or too difficult; they should be challenging but achievable within the timeframe you’ve allotted yourself for achieving them.

 

      • Key Results must be Actionable – i.e. the person responsible must understand and know what to do with them! Consider being more activity oriented and detailed when the person is less skilled with the specific task at hand, and allow yourself to be more result oriented when the person already possess that skills and knows perfectly what to do.

 

 

Note: Change Management by definition requires people to do something new. This means that no matter the seniority of the person, he or she will be helped by more activity oriented KRs than higher level results. Can we help? Let us know!

 

 

 

Tools that help you write and achieve your OKRs

The first step to achieving your OKRs is setting them. You can use the following tools to help you do so:

 

  • Objectives and Key Results (OKR) template
  • Google Docs template
  • Microsoft Excel template
  • Purpose specific softwares, some examples
    • Quantive – connecting high level with individual contribution
    • Leapsome – Performance Management & Personalised Learning Platform
    • Culture Amp – Performance Management and Employee Engagement 
    • profit.co
    • etc etc 

 

 

Examples of Well-Written Team OKRs

Here you will find a few examples of Sales team OKRs, the web is full of examples and suggested OKrs that you can find inspiration in. Just remember to make the KRs really SMART, and actionable.

 

  1. Objective: Increase our sales department revenue by 15%.

Key Results:

        • Maximize pipeline value to $250,000 every quarter
        • Improve closing rate from 15% to 30%
        • Implement a Activity Based performance system for evaluating performance
        • Increase scheduled calls per sales rep from two per week—to seven

 

  1. Objective: Reduce the average time it takes to close a sale from 9 months down to 6 by March 31st.

Key Results:

        • Reduce time from initial contact to demo by 30%
        • Reduce time form demo to WIN by 30%
        • Improve our sales process by implementing a new sales training program

 

  1. Objective: Improve the efficiency of our sales team

Key Results:

        • Conduct monthly training sessions for each stage of the customer lifecycle
        • Increase conversion rate from 10% to 30%
        • Receive positive feedback from 90% of our customers about the efficiency of our sales team

 

You may want to find more inspiration in the “What Matters” page  

 

 

 

Common Pitfalls When Setting and Achieving OKRs

 

In addition to understanding the basics of setting and achieving OKRs, it’s important that you avoid common pitfalls. Here are some things to keep in mind:

 

        • Make sure your goals are realistic. If you set unrealistic goals, they may be unattainable and cause frustration or disappointment when they aren’t met.

 

        • Don’t manage expectations by setting low expectations for yourself or others in order to make them look better than they actually are. This can lead people down a path where they feel like their work isn’t good enough or worthy of recognition because it doesn’t meet this new standard that was set artificially low by management (and thus not aligned with reality).
        • Writing Key Results that the person don’t know how to act upon. Key Results should be specific, measurable and time-bound. If you don’t know how to act on a goal, then it’s not really a goal; instead it’s just a wish that might come true by chance. For example: “I want to lose weight” is not specific enough, but “I will run for at least 30 minutes three times per week” is specific because it specifies the activity and the frequency with which it needs to take place in order for you to reach your goal of losing weight.
        • Too long between reviews: OKRs are guidelines for action, not annual bonus objectives or laws set in stone. Hold frequent performance reviews, that you keep light and short – 30 – 45 minutes ever 2-3- weeks is better than a 2 hour quarterly session that becomes everything else than dynamic and creative. If an OKR is not achieving its desired results, don’t wait until the end of the quarter to course correct.

 

 

 

Comparison of OKRs to Other Frameworks and related Terms

 

Since the introduction of objectives and management by objectives in the 50’s many models and frameworks have been developed and used. We will have a look at some fundamental models that you will come in contact with. A brief comparison of OKRs with other goal management frameworks:

 

Balanced Scorecard is an effective tool for measuring organizational performance across four perspectives: financials; customer metrics; internal business processes; and learning & growth opportunities. While both tools use a similar approach to measuring performance across multiple dimensions of an organization’s strategy, they differ significantly in how they define success: Balanced Scorecard measures outcomes whereas OKRs measure progress towards achieving those outcomes over time 

 

MBOs: Management by objectives (MBO) is another well-known framework that functions similarly to the others. Aligning objectives, creating a plan of action, and measuring performance are key components in MBOs—as they are elsewhere. However, MBOs differ from the other frameworks in that they first define objectives and then measure performance against them. This differs from balanced scorecards and OKRs, which focus on measuring outcomes instead of progress towards those outcomes. 

 

SMART is not really a framework, as much as it is good advice on HOW to write objectives in any framework. When we write goals we shovel always make them Specific, Measurable, Attainable, Relevant and Time-bound. OKRs also have these characteristics. 

 

KPIs – stands for Key Performance Indicators and depicts quantifiable measures that track performance over time. You can select KPIs for multiple organizational domains, including project, individual, departmental, or business objectives.

 

BHAG goals stand for Big, Hairy, and Audacious goals. These refer to challenging, long-term strategic or business goals that your organization uses to guide it. Comparable to the vision of the company, and the mission it has put for itself. They are far ahead n the future, but still help direct employees toward effective action.

 

4DX –  4 disciplines of strategy execution– a framework developed by firm Franklin Covey. It proposes four core disciplines for helping individuals and teams reach their goals. These disciplines include:

            • Focus on the wildly important:Teams and individuals should narrow down their focus to no more than two Wildly Important Goals (WIGs)

            • Act on the leading indicators (lead measure):focus on activities that drive the best results, where lagging indicators describe what you’re looking to achieve and lead measures describe the activities that drives toward the goal

            • Keep a performance scorecard: teams should have access to a visible scorecard that lets them know whether they’re successful or not

            • Create a chain of accountability: People at all levels are held accountable for their goals through weekly WIG sessions where they discuss commitments, performance reviews, and improvement plans

 

 

Conclusion and Resources for Further Learning

 

OKRs are an effective way to measure progress and hold yourself accountable. They can be used for both personal goals, as well as company-wide objectives.

 

They are a simple framework that can be used by anyone in any field. If you’re interested in learning more about OKRs, here are some resources:

 

 

Leading Indicators tell you the future

 

… and lagging indicators tell you what just happened.

 

 

Leading or lagging KPIs?

As managers, it is our job to have a good view of our business at all times. For this we look at our processes and define some key measures along the flow. The measures that tell us how much or how well we do things are referred to as KPIs, or key process indicators. Often you will see that any process is split into a sequence of process steps. This way, it is easier to isolate and consider each step separately and to study their charateristics.

When we measure things that go into a process step to predict what will come out on the other side, this is known as a leading indicator. Leading indicators are generally more difficult to measure, but they make it possible to influence the future result. Typical leading indicators will be focus around activity and capacities, e.g., number of visits, meetings, and proposals made.

When we measure on the result that comes out of a process, we talk about a lagging indicator. Results are things that already happened. They are easy to measure, but are generally very difficult or impossible to influence. Typical lagging indicators are sales revenue, profitability, and quantity sold.

 

Most sales organizations focus on the lagging indicators of the business,. i.e., orders received. These are often easier to measure and tend to be available through accounting, ERP, and CRM systems. However, it is important that we also look at the leading indicators of our business to establish that we are undertaking the right amount of activities, of sufficient quality, and in the right direction that will give us the results we need.

 

 

 

 

Activities drives sales

 

We should always look for leading Indicators when we want to see how we will be doing. Lagging indicators, such as last month’s sales numbers, tell us what already happened (was sold last month). They say nothing about our coming months. When we are looking for predictability and to plan our work, we need to look elsewhere for guidance.

 

Many companies analyse the sales pipeline to predict future results. But the sales pipeline is just a static snapshot. It tells us how many opportunities there are right now in every sales step. In other words, what work we have invested to move each opportunity to where it is now. If we do not spend a minute of work on any of the opportunities at all for a month, our sales pipeline would look exactly the same a month later. The deals would just be delayed a month, except we would probably lose some.

 

If you use pipeline data, look at the change in pipeline rather than the absolute numbers. Examples of forward looking pipeline KPIs you may want to consider are listed below:

  • New opportunities in the last 30 days (value and # of opportunities)
  • Time opportunities are in same stage (per stage)
  • Number of transitions, forward movement between sales steps

 

These are the direct results of the amount of customer interaction that is done and how well the interaction went, thus indirectly measuring quantity and effectiveness of activity. We recommend that you work with activity data in an active way to complement these more traditional views. For this, it is important that calls, video, and visits are registered. In our opinion, it is preferred that all activity gets at least a quick mention and an entry into the system. Prioritise getting at least some information about all activity, rather than asking your team to write long visit reports, as this almost guarantees that very few will be made.

Today, you need more leads than ever!

4 reasons you need more leads now than you used to need

 

You probably already have a pretty good idea about your team’s performance by monitoring basic sales processes and metrics. You know how many leads enter in one end, and you know how many turn into qualified prospects then deals. You are controlling your conversion rates, and you are constantly trying to find ways to improve them.

Just increase the conversion rate and you will do well” is the common recipe.

Yes, increasing your conversion from lead to actual sales is of course important. But a “conversion rate only” strategy depends on individual skills and introduces a serious scalability problem. Why? Here are a few things to keep in mind:

 

Diminishing benefit per transaction

First, the benefit you get from every transaction is not what it used to be, especially in software.  With the introduction of SaaS models, initial deals are smaller, and you may find that the initial benefit/margin from the first contract doesn’t even cover your transaction costs. Over time and with Customer Success management, you will win it back many times over, but in the meantime, you need to finance your activity. 

 

B2B sales remain complex

Before, a customer would need 5-6 months and 8 signatures to pass you an order of 100,000 Euros, but today, that same guy pays a subscription fee of 2,000 Euros/per month. At least one could expect the purchase decision to be easier for the customer. This is often not true. The decision to implement a software solution is STILL associated with great risk later on in implementation and usage. 

For the customer, the main part of the actual transaction cost is not in the price but in the implementation of new processes, adoption of new technology, the product cost over the whole lifecycle, the perceived risk of cloud hosting, etc. So, even if your contact could sign off on the initial contract, he or she will not take the risk without doing all the evaluation work, proofs-of-concept studies, and anchor the decision with his peers and managers, just like before.

 

 

The “educated” lead

Additionally, today your leads already come to your “shop” well educated. They have studied your offerings on the web, as well as your competitors’ offerings. They understand the basic benefits of the product, etc.

They find plenty of information on the web before you even get a chance to talk to them. Even if you have gotten the lead through outbound activities, your leads will browse around to educate themselves before buying anything from you. This makes traditional selling even more difficult than say 20 years ago, and your transaction cost (“cost of sales”) increases.

 

Sales conversion takes sales skills

Increasing your win rate, or conversion rate, from the leads that you have essentially depends on the skills of your sales reps, meaning their personal skills on how to create a buying vision, how to meet objections, how to manage the process, how to turn a sceptic prospect into a devoted believer, etc. These skills take time to develop, and only a few reps will become real stars.

A long learning curve and total dependence on your key seller(s) doesn’t really sound like a very scalable model to build your business on, does it?

 

 

Get the Lead-Machine working, and qualify well

 

You need more efficient ways of increasing sales than to just hire more and “better” sales reps:

  • Lead generation is key – Build a lead strategy, get enough (online) qualified leads for your sellers. Traditional cold calling to people is dead, so you need to find other ways of reaching out. You need to create an abundance of good leads coming in. If you have few leads coming in, you risk having those in sales spending their days calling the same leads over and over, “loving them to death” but not selling anything. There is a lot of truth to what SaaS-sales gurus Aaron Ross and Jason Lemkin say in their bestseller Predictable Revenue: “Lead generation drives growth; salespeople fulfil it.”
  • Work pipeline efficiency rather than conversion. Get skilled at early qualification! (Or rather disqualification.) It’s all in that first sales call. If you can, specialize a group of reps for this phase, qualification, and make others good at follow-through, negotiating, and closing the deals. Provided your lead generation phase provides you with working material, your qualifiers will do a real qualification, and use the right questions. See my article on ”Qualification and Pipeline Efficiency.”
  • Be “data driven” – Make everything measurable so you actually know when you are improving and when you are not. Today, there are plenty of good CRMs and marketing automation tools out there, from which you can get all kinds of statistics that help you work your efficiency.  (Also make sure you work the 100% adoption of these tools in your teams. See “Love your CRM.”)

 

 

 

 

 

 

Sales efficiency – the art of disqualifying in time

Efficient sales – pipeline control

 

If we knew from the beginning which deals we would actually win, I think all would agree that we would only be working with those deals. So, the earlier we can qualify opportunities and the better we do it, the less time we will spend on deals that will not be closed. The larger the opportunities, the fewer transactions we need to juggle simultaneously, and the better our life will be. Easy! Or…?

 

As the teams sales manager, one of your most important tasks is to improve and identify challenges in your team’s pipeline management and opportunity control.  Pipeline efficiency should be your mantra.

 

Introducing pipeline efficiency

 

How much of your team’s time is spent on deals that will never happen?

Let’s say you get 300 online-qualified leads from marketing, and from those you close 10 deals on average. Great! But now look at the effort spent to get from 300 to 10!

 

Look at the picture below. All three curves start at 300 and end at 10. The conversion from lead to deal, win-rate or conversion rate is the same in all cases. The hours you and your team have spent getting there (the area under each curve), however, is very different…

 

 

You probably will have other names for your pipeline stages. These names are merely for illustration purposes.

 

The green rectangle in the bottom represents the work you do on the opportunities that actually become deals. If you had perfect information on who will buy from you and who will not, this is the effort you would spend. Needless to say, this will merely be your theoretical optimum cost of sale, but it will be useful to us as a reference for calculating our own ratios.

 

Consequence 1: Waste our time on “no-hopers”

 

The farther away from the green box you are, the more time is spent on deals that weren’t successful. The red curve  represents a more inefficient pipeline, and the green line represents a more efficient one. The green line drops earlier in the process, because qualification is done better and earlier in the process. The red area, the difference between the curves, represents the improvement potential!

 

This is how much time someone at the red curve could save with better qualification. 

 

You get the idea? Your pipeline should have the shape of a trumpet horn.

  • The earlier it falls off downwards, the better. For every inch above the green line you are in any part of the process, you are wasting time and resources that you could have used on more leads, more prospecting, more sales…
  • If your rep’s curve is very flat, only to drop off in the very late stages (the red curve), they are seeing the world though “rose-tinted glasses”, meaning they are hanging on to a bad qualification.
  • The time spent on following up on no-deals is obviously lost time. This has a cost for the company, direct costs through salary and other costs, indirectly through the frustration for the sales rep, who may end up leaving (or get fired) when they never reach the expected numbers.

But, even more important, is the sales YOU COULD HAVE HAD if time was spent more wisely. If you manage to liberate 1/3 of your time for productive sales, you potentially will sell 50% more!

 

Consequence 2: Bad qualification makes bad forecasting.

 

There is also another reading you can make out of this. The red curve is common, because in sales, we tend to hope that everything will close, so as salespeople, we tend to hang on to old opportunities and bring them up month after month in our forecast, especially if we have few inbound leads to work with. This tends to give us a systematic forecasting error as well, as it will be very difficult to determine exactly HOW overoptimistic we are, and on HOW MANY deals.

Ever had sales tell you they would sell so much by the end of month, only to end up selling less than half? Bet you thought you were fine until the last week…. Beware of the rose-tinted glasses!

Up next…

If you want a few ideas on how you can calculate your own pipeline efficiency, have a look at our article “How-to guide: Pipeline efficiency.“

Pipeline Efficiency – More time on good deals! My favourite KPI

 

KPI – Share of your time spent on successful deals!

 

We discuss the time you open on your SUCCESSFUL deals as the share of all sales time you invest. The higher the ratio, the better you are doing, but there are different lever to pulll to improve. Early qualification is one. 

More important than getting the exact right formula is to consistently applying the same formula month after month to compare progress.

 

You may want to have a look at this previous article for the discussion of pipeline efficiency and why it is so important. In short, we are looking for a way to measure the effort we have spent on all deals that were lost and problems we could have avoided if we had done a better qualification in the first call with the prospect.

 

First, examine the typical successful sales cycle, look at the deals that were actually closed, look for patterns, and try to establish what “it takes.” Try to quantify the effort. This will be the yellow rectangle in our picture on the left side.

 

Then compare it to the total time your team spends on sales, prospecting, qualification, value demonstration, and negotiation. This will be your own “curve” in the diagram. Remember that you need to include all the calls and mailings done to prospects that did not become customers, your total time employed, and the time spent from people in other parts of your company, such as technical sales, admin, development, support team, etc.

 

If you do good and reliable activity tracking in your CRM system, then you are only a simple query away from an automated report; otherwise, you could do this as a team exercise on your next sales kickoff. (Have a look at our article on CRM adoption in your company, “Selecting a CRM that rolls itself out.”)

 

 

The two effort meters

There are basically two pieces of data that you need.

  • Effort you spend in successful deals
  • Effort you spend in total – (i.e., worked hours)

It is as simple as that..

 

 

1.    Effort in successful deals

 

First of all, take the deals you and your team closed during the last month, and do a “post mortem” on each. You should have at least 10-15 deals; otherwise, select a larger timespan, such as two months or a quarter—whatever makes sense for you.

 

How much effort went into each of these deals? Who was involved? Were tech sales, development resources, support personnel, admin, or any other part of the company involved? Did you need to meet physically? Did you place phone calls and have video conferences? Try to quantify it.

 

Map out the average successful sales cycle, and look for pattern.

 

 

Don’t jump to conclusions on what to improve just yet. Try to state the facts, and establish your current sales cycle and sales stages as they look today. How many hours of work, from which resources, were needed? Which were the obvious stages that you seem to need every time?

Effort per successful deal = Hours/€ spent on average in your successful deals

And … while you are at it, try to register some other interesting metrics to compare over time:

  • Sales cycle length = Average time from first contact (lead) to closed deal
  • Sales cycle complexity = Average number of touches/activities you needed to perform with/for a customer in order to close a deal

 

 

 

2.    Total sales effort

 

Then, look at the same month (the same period during which you made the deals in the first exercise), but now look at the total resources employed during that period. Try to limit yourself strictly to sales and directly related activities. Try to estimate in the best way you can how many hours you needed. This will give you your total cost of sale, or sales effort.

 

Whatever concepts and hours you choose to include in your calculation, and the period you examine, is fine, just remember to include the exact same items month after month to give you a base for comparison. After all, it is the improvements you are after, rather than an absolute number.

 

 

 

Sales Pipeline Efficiency

 

Sales pipeline efficiency = Effort spent on deals won during the period / total sales effort during the same period.

 

The ratio between these two numbers will give you a notion on your pipeline efficiency. If every lead turned into a deal, this would be close to 1, and the more time your team spends on prospects that do not convert, the lower the number will be.

 

Once you have this overall measure controlled, and with data you feel you can trust, there are lots of exciting insights you can get playing around with the sales stages in more detail. Is there any particular stage that takes more time? Where do you normally lose a deal? Do you see different behaviour between sellers?

 

 

We hope you found this article useful. Best of luck with your pipeline work. Happy selling!

 

 

Seemingly solid pipeline opportunities that slip – Why, and what to do about it

EXAMPLE CASE:

 

ITS ALL UNDER CONTROL!

 

You are in the middle of the month, and you are doing great so far!

 

Since the COVID19 crisis in 2020, the company is looking at every single month-end with a magnifier, but you have more than enough to cover the €150.000 target you have this month. As a matter of fact, you are already working your top opportunities for next month and spending good time on prospecting. One thing worries you though, and that is that your largest prospect for the month, ABC Inc., called to postpone the final contract review you had booked earlier this morning.

 

Probably nothing to worry about; you received a short note saying that your contact is in meetings all day, and that he will call you later to set a meeting for next week instead. You talked to him three days ago, when he was preparing the final documentation to present to the board. The ABC deal alone is €138.000, but as you are cautious, you are only counting on it for 50% when you add up your weighted forecast (meaning that only €69.000 of your target depends on that deal).

 

 

TWO WEEKS LATER, END OF MONTH

 

 

Without the ABC deal, you will do less than 75% of your target. The guy still doesn’t pick up the phone, and he isn’t answering your emails. You have tried via the switchboard, and you got to talk to him for a few seconds, when he promised to call you later in the day. That was last week….

 

Actually, you have spent most of your time chasing ABC over the last 7 days, and two of the other prospects now tell you they feel they need to move the decision to next week. There are still open issues they need to clarify with you, but … next week is on the other side of the month end! It doesn’t look too good. Without them, you are down to 50% of the target.

 

What happened? Needless to say, you didn’t make your target for the month. But what happened? And why?

 

Of course there can be many explanations, but I bet most of us who have been in sales for some time have seen this happen – time after time. The explanation can be found in the psychology of the purchasing cycle.

 

In the beginning of the purchasing cycle, the buyer is mainly concerned with the product or solution itself. They are happy and positive about a solution to a problem that is perceived as much worse than the risk and the cost of the solution.

 

Towards the very end of the cycle, in negotiations, price and other commercial terms tend to be the principal concern. However, somewhere in the middle of the process, the third element, “perceived risk,” pops up as the #1 concern.

 

 

Buying a car takes consideration and thorough market research

PERCEIVED RISK OF BUYING SOMETHING

 

Put yourself in the buyer’s shoes

Remember when you bought your latest car, or when you signed on your house, or any other major purchase you made? What were your steps? How did you feel, think, and act during your purchase process? Let’s examine the process:

    • First you go out and check the market, and find the best product you can find at a reasonable price.
    • Then, the very last moment before signing, you will be thinking about the price, since that is really the only thing you can still do something about when you have already decided what and from whom you will buy.
    • But I bet what you did somewhere along the process before actually signing, was to go back one “last time” to check again for less risky options, to see if there were really no better cars at another dealer, no house that was even more fantastic in the market, etc.

 

You may also spend a sleepless night or two, worrying about if you are really, really, really doing the right thing.

 

… and the day before signing the agreement, you started feeling dizzy and nauseous. Is this really the best deal we can get?

 

Chances are that you postpone your decision, call the sales agent and ask to move the signing date a week or two to buy time. And! …. In the meanwhile, you will be talking to other car brands, car-sharing companies, visiting used car webs… and chance are that in that process, you change your mind and go with another product, or decide for an alternative solution.

 

While this process takes place, the last person you want to talk to before you have finally made up your mind is the salesperson from the original car dealer.

 

 

 

HOW ABOUT YOUR DEAL?

 

The very same happens to your customer. It may be your contact who gets last-minute doubts before presenting to the board. Or it could be that his board or management are not convinced and ask him or her to go back and survey the market again. Your contact will not pick up the phone in the meantime. They don’t have anything to tell you, and they may even be a bit embarrassed to tell you. The problem is that during this period, you have little or no chance to influence what happens, unless you are prepared for this.

 

See the diagram to the right – first focus is on the solution to your problem, then price takes over towards the end, but in the middle somewhere we get “cold feet” and start evaluating options – dead afraid to commit to the deal. But there are some things we can do about it:

 

 

 

Conclusion:

 

3 PIECES OF ADVICE FOR BETTER SLEEP AT THE END OF THE QUARTER

 

First of all, be aware that this will happen.  What you can and should always do as a well-prepared salesperson is to minimize the effect, and then secondly, make sure you have more pipeline than you perhaps thought you needed.

 

A few suggestions on things you can do to prepare yourself for every deal:

 

 

 

    1. MAXIMISE YOUR CONTACT SURFACE IN THE CUSTOMER.

 

Go for the real decision makers, and try to make sure that you have access to these people when they enter into the doubt-phase. If you depend on one contact person only, your chances to handle this phase are minimal.

    • You know it may come. So why not plan for this phase of uncertainty in your customer’s mind, at least in a generic way.
    • Do this for all your prospects: prepare materials, events, webinars, promotions, etc. that can serve as the excuse to get back in.
    • It is well-spent time, as you will need to use this many times throughout your career.

 

 

 

    2. KNOW THE PROCESS AND PLAN FOR IT

 

Qualify the purchasing steps with your sponsor. How is a purchase of your magnitude normally conducted in the company? Who is involved?

 

    • Pave the way for the process. Already early in the process you should have the conversation around the purchasing process in the customer’s company. Who is involved? What are their agendas? What personal and professional drivers do they have?
    • Try to map out to identify possible obstacles. Is there anyone who is likely to veto the purchase for some reason, personal or professional? Could your product threaten the position of someone?
    • Commit the process with your contact already form the start, and agree to certain milestones. Agree on a sort of “project plan”; 5-10 items in the list will do. The last line should ALWAYS be “signature” or “project kick-off” or “installing product” that implies a purchase. This will give you a certain “moral right” to ask for the planned dates that you agreed together to actually be respected from the customer’s side.
    • If your sales process is long and needs a proof of concept or other studies, make sure these are billable/paid services! The prospect’s willingness to pay at least something during the process is a great qualifier. If they refuse to pay this work, then on the other hand, consider it a strong “disqualifier.”
    • Look for compelling events on the purchaser’s side. Is there a particular date on which they absolutely must have decided and purchased a solution for their problem? Count backwards from that date, and convey your concern that they may not be on time for the kickoff if changes are made now (i.e., if he goes with someone else).
    • Learn how to rebuild the buying vision, and be prepared to have to sell your product again with a different twist. Your prospect may have scouted the market and talked to your competitor(s). This is when they come back with a new “enhanced” list of requirements that will be much more difficult to satisfy than the initial ones (if your competitor did a good job in planting “landmines” in your way).

 

 

    3. HAVE AT LEAST 3 TIMES THE PIPE YOU THOUGHT YOU NEEDED

 

 

And most important of all, make sure you have at least 3 times as many “done deals” as your target for the period. If your target for the month is 75k€ for instance, you should have at least 225k€ in late-stage deals. With a late-stage deal, I mean a deal where budget is confirmed, you know the decision makers have bought in, or at least are supporting your solution, where the purchasing process has been discussed, and where there is a need and a compelling date for the purchase.

 

As a rule of thumb, the “3 times target pipeline” works. Why? You are likely to

 

  • Sign one-third of those deals within the month.
  • One-third will be lost to competition or postponed into infinity (due to the perceived risk/doubt stage).
  • One-third will slip into next month (again, due to the perceived risk/doubt stage)

 

… Roughly …