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Ok, we all know what a business opportunity is. Basically an opportunity is a potential sales deal associated with a specific account. So now that we’re all in agreement about what an opportunity is, what is it really?
In order to get the most out of your sales initiatives it is important for everyone involved with sales to have a solid understanding of how opportunities are managed. This starts with answering these three basic questions.
1) When Does A Lead Become an Opportunity?
On average we need a large number of leads in order to acquire enough good customers to sufficiently grow our businesses. If you use the 80/20 rule as a gauge, every 100 leads you get will only provide you 20 quality leads. And out of those 20 leads, on average only four of those will be hot leads that can be quickly converted – the customer is ready, willing and able to buy from you. How much time and money is spent wading through the ninety-six “deadbeat” leads before striking gold with the “Fruitful Four”? Referrals are the best (and least expensive) way to bring on new customers, but do you get enough referrals to sustain your business? Typically the answer to this question is no. The first step in setting up a good lead generation process is creating a profile for each customer segment your company targets. This will allow you to establish what pieces of information are critical in determining whether an individual is a suspect or a prospect. You'll also be able to use your profiles to determine the best vehicles to reach your intended audience (seo, sem, direct mail, email). This exercise enables you to list the criteria necessary for determining the state of the lead (hot, warm, cold) and the appropriate actions to take (rep phone call, email with product literature, nothing). With these pieces in place you’ll be able to quickly and uniformly answer the big question for every lead coming in – Is it worth our time and money to pursue this? If it’s not, you’ve stopped the process as efficiently as possible, but if you’ve determined it’s worth the investment, the lead should now be converted into an opportunity.
2) How Are Opportunities Valued?
On the surface this seems obvious - $$$$. However opportunities can be measured in units, price per unit and expected net revenues to name a few. If your company’s goal is to increase the percentage of sales coming from new customers those opportunities may rank higher. If the goal is to sell more products and services to current customers those opportunities may be more important. It’s imperative for everyone involved with sales to understand how opportunities are valued. If sales management has a different idea of how opportunities are valued than sales reps do, confusion will kill you. For example, during the course of the sales cycle additional resources are required during the customized product demo stage. The sales manager must determine the appropriate amount of resources to be used for each opportunity based on the information each rep provides. It’s safe to assume that reps feel their opportunities are always highly valuable and want the best available resources to close their deals. If there is no standard way to measure the value of an opportunity the allocation of resources is done subjectively. So reps that are highly persuasive may end up “selling” their management on opportunities that add less to the bottom line than other deals. Good for the rep...bad for the company.
From the sales reps perspective, knowing how to value opportunities will give them a better handle on what deals to concentrate their efforts on to maximize the value of their pipelines, increasing their bonus potential. Good for the rep...good for the company.
3) How Are Opportunities Pursued?
The lead has been qualified and you’re ready to engage the prospect - what happens next? What are the milestones in your sales cycle that allow you to estimate your chances of a winning the deal? What tasks do you need to perform in order to reach milestones? What are the resources you require to complete tasks? How long do you expect it will take to determine the outcome of the opportunity? By answering these questions an organization can begin using their CRM application to automate time consuming tasks repeated for every opportunity.
If your organization offers multiple products and services, chances are milestones, tasks and probabilities may not equate across the board. Selling software requires a different approach than selling professional services. Also selling services to a small company is different than selling consulting services to a Fortune 500, or to the public sector.
A good exercise to perform is to write a definition of what each milestone means to your organization. This step will enable each member of the sales organization to know exactly what it means when an opportunity reaches this particular stage in the sales process, and what tasks are currently underway to reach the next milestone.
Opening the Door and Closing the Deal
Implementing a formal sales methodology is way more than many organizations need to get involved with. It can be time consuming and costly to implement. However, by answering some the above questions you can lessen the ambiguity inherent in the selling process, creating more effective and efficient communication. Forecasting becomes more reliable with a better understanding of how stages, probabilities and tasks correlate with each other. This should result in less administrative time talking about opportunities and more quality time working them. Ultimately, getting all parties involved with selling on the same page should allow for more time to close deals and less time to ask questions.
