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The Sales Clinic: Are You Chasing the Wrong Deals?
May 29, 2008
By Andy Preston
It is an all-too-common scenario when I'm working with sales teams or business owners that when I look at their sales pipeline, I see they are very busy, but they're chasing the wrong deals. How do you overcome that challenge?
Over the May Bank Holiday weekend, I took a day off and went to a traditional British seaside resort. One of the things that I was attracted to was the 2p machines in the amusement arcades. You know the ones—you put your money in the slot at the top and watch the money cascade down and hopefully it pushes more coins—or a small prize—off the shelf below and you win.
What was really funny was watching the people around me. People from age 10 to about 80 were getting really competitive over these machines! They were even leaving their coats over the machines they were playing to "guard" them while they ran across the room to get change. Now the prizes on offer you could have bought for a pound at the most, but people kept putting in coin after coin, spending far more than the prizes cost, in the hope of winning them.
That got me thinking. How often does that happen in sales? Often we chase sales and new customers very hard, only to find out if we do manage to convert them that they weren't worth the effort we put in? This happens for a number of reasons…
Reason No. 1: We're Competitive and Hate to "Lose"
Most salespeople and business owners I meet are naturally competitive. Watching a sales team conduct an activity like bowling, paintball or go-karting is often a funny sight. Even the people who would say they're not competitive generally are in that environment. This gets far more serious when customers are involved and a deal is possible. Many salespeople I've worked with in the past have admitted to dropping prices, increasing what the customer receives or doing whatever it takes to get the order, just to stop it going to a competitor.
Those same people have admitted that those customers become the biggest pains to deal with, always want something for nothing and take up the most of their time.
Reason No. 2: We're Invested Time (and/or money) in the Deal
If we've been to see the potential client a number of times, or perhaps submitted a quote or proposal, often the salesperson thinks, "Well, I've put so much work into it now, I can't afford to lose it." Aside from the implications from a negotiation perspective (I'll touch on those in another article), how do you think this will affect your sales efforts? How quickly do you think the potential client will "smell" your desperation?
This becomes a far more serious problem when your sales cycle is longer and the cost of your product/service is higher. For example, I was working with a well-known large IT company and we were looking at the results of their discovery sessions. For the uninitiated, a discovery session is where a potential supplier will send their team of experts into a prospective client's company to analyse their problems, see if a solution can be found and what it would most likely consist of.
The problem was these discover sessions would often cost over $100,000 and the salespeople, because there was little qualification going on and they didn't know what else to do, often booked discovery sessions with companies that were unlikely to proceed.
However, because the company had now invested over $100,000 in the deal so far, do you think they could afford to lose it or simply walk away? Of course not. It was almost the case that no matter how bad the deal was, or whether their product or service was really suitable or not, the salespeople were encouraged to win the deal, simply because of the investment of time and expenditure the company had incurred so far.
Reason No. 3: We Don't Want to Say "No"
This can be one of the biggest ones, particularly for the small business owner, or the salesperson who is short of new business opportunities. Let's face it, most salespeople and small business owners only have enough potential deals in their pipeline that in order for them to hit target, pretty much all of them would need to come off, wouldn't they?
This causes a huge problem, as because the salesperson or business owner is concerned how much business (or not) they've got coming in the near future, they tend to say "yes" to deals that they wouldn't do if they were guaranteed to be busy and profitable.
For the salesperson, this equates to low-profit deals and for the business owner, this equates to work that you wouldn't normally take on, or wouldn't choose to do in an ideal world. Now, I'm not saying that we should start turning lots of work away, particularly when we're quiet, but we should be aware of what is going on, and what we're doing about it.
The problem is, we'll take that additional work on and then not be able to deliver on it, or certainly not to our usual standard. Yet the problem could have been avoided by scheduling the work in for another date, or by negotiating a better price for the deal. The problem comes when (from a negotiation perspective) the salesperson or business owner is not prepared to walk away from a potential deal that may not be the best thing for them, or the potential client.
S&MM columnist Andy Preston is a leading authority on sales and sales management. He is the founder of the highly acclaimed Sales Training and Coaching Company Outstanding Results, providing help, guidance and support to in-house sales teams of both large and small organisations throughout the UK and Europe. You can see and hear more about Andy at www.andy-preston.com and his sales training company at www.outstanding-results.co.uk.
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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