Overcoming the “No Decision” Sales Challenge (and More)
Aug 25 2016
I totally understand that sales is an imprecise discipline. But one thing I do have an issue with is forecast accuracy; or better said, “forecast inaccuracy.” On a regular basis, sales professionals go through the process of reviewing the opportunities in their pipeline and select the ones that they think have a solid chance of closing within a specific period of time. They then review those opportunities with sales management, and those that meet a set of criteria are added to the revenue forecast. And then? Well, the chart from CSO Insights 2016 Sales Performance Optimization Study shows the average outcome gathered from surveying 675 companies worldwide.
Here we see that 46.6% of the time that opportunity ends up in the win column, which means that 53.4% of the time we were wrong about our assessment. Looking at the other sections of the pie chart, the fact that 29.6% of forecast deals end up with wins for the competition may not be great, but we understand that you cannot win them all. But the really disturbing metric to me is the 23.8% no decision rate. Nearly one quarter of the opportunities being forecast, and aggressively pursued, end up with no one winning the deal. No decisions may very well actually be many companies’ single biggest competitor, and result in a huge waste of time, energy, resources, and money.
These numbers are of course averages, and averages can often hide insights. So I took some time to look more closely at the data, to see if there were best practices that could be learned from firms that are best-in-class at closing the deals they forecast. What emerged from this analysis was a key finding worth sharing. Companies that do invest the time to thoroughly understand their customer’s “buying process” have a no decision rate of 16.9%. That 6.9% drop represents a 29% decrease in the number of opportunities that end up on the scrap heap. When you add that to a smaller, but still desirable, decrease in competitive losses, these best-in-class firms are achieving an average win rate of 58.7%!
We have long been advocates of companies focusing as much attention on their customer’s buying process as they do on their selling process. In fact, we’ve provided a detailed methodology for how to do this, which we overview in The CSO’s Guide to Transforming Sales e-book. If you take the time to follow the steps, you will uncover the business reasons that are driving your prospects to start a buy cycle, who they assign to the evaluation/decision making process, what solution providers make the long list and then the short list to consider, what buying tactics companies go through and why, what criteria really influence the decision to buy/not to buy, etc.
Does this require an investment on a company’s part? Absolutely, although typically less than you would expect. But the size of the prize is significant: a 12.1 percentage point increase in win rates of forecast deals will create an ROI that is orders of magnitude more than the cost involved to get the insights you need to minimize no decisions and decrease competitive losses.