If you’re like the vast majority of business owners or sales managers, there have been countless times when you’ve doubted what you see after reviewing your pending business reports. I’ve come to find that there are three primary reasons why sales people misrepresent these numbers so often.
1 They are forever hopeful
2 They are too trusting
3 They are fooled by positive prospects
It’s so easy for many in sales to get ahead of themselves and jump to conclusions when a prospect gives a positive response. That’s because sellers tend to be biased by what they hope to hear; and, many have been trained to listen for positive clues so they can respond with a correlating feature/benefit statement.
Features/benefits selling became popular in the 1980s and no longer works. Stop using this technique as it actually can backfire on you in a big way. If you babble on about your many features and their benefits and the prospect has no need for them, they will tune you out and you will turn them off, possibly forever.
When most sellers hear a positive response, they reply by asking something along the lines of: “Why don’t we get together to talk about it?” or, “Would you like me to put together a proposal for you?” Stop this as well! Instead, ask them why they are interested, why they are positive, what their exposure to your company/product has been, etc. Otherwise, you’ll likely end up spending (and wasting) time with several suspects disguised as prospects who never end up doing business with you.
Sprinkle doses of skepticism and curiosity into every conversation. That’s the only way you’ll get a clear picture of what the prospect really needs and wants and when they’ll purchase. Without that information, it’s impossible to predict the timing and likelihood of the sale closing so the business shouldn’t be included on a pending report. Just because a prospect is positive doesn’t mean they’ll purchase from you.
Once when I was in a Director of Sales role a seller and their manager returned from an appointment with a disgruntled client very excited about how they were going to get a large renewal order. After asking them a few questions it became obvious that they had both fallen into the trap of being fooled by the prospect’s welcoming nature and positive responses. They were both certain that within the next week an order would come in because the prospect claimed he would work with us again. Yet, they had nothing in writing, no firm start date, no answers as to what the prospect would purchase, only a great feeling from their positive meeting. Needless to say they weren’t permitted to include the account on their pending report and the order never materialized. Shocking! The prospect was simply re-connecting with them yet nowhere near ready to proceed. Lesson learned.
So, here are some general rules of thumb for deciphering pending reports and getting a truer handle on upcoming business. While these may seem a bit harsh to some managers, the only way you’ll be able to accurately project future business is when you get your team on board with being more realistic. Managers are responsible for and drive the accuracy of their team’s projections.
1) If an account has been listed on the report for more than five consecutive weeks, remove them.
2) A red flag and sure sign that business isn’t real is when the projected start date changes. If you allow the account to remain on the report, discount its likelihood of closing by 50%.
3) Say a seller lists several accounts in the same industry, all at 50% likelihood and to start in the same month. That’s a signal the seller is in the process of a mass marketing campaign and they’re counting on/hoping that one will materialize. Remove half the accounts and give the remaining no more than 10% likelihood.
4) Have management vet all amounts that constitute large sales. Craft a list of questions you’ll ask the seller to ascertain whether their claim is real. If you have doubts, trust your instincts not the seller’s justification.
5) If the business is truly pending, the seller will be able to state the specific next steps for that account.
6) Beware of all business that’s listed as pending 3+ months into the future. Even with a signature, too many things can happen in the next 90 days for any business to guarantee today exactly what they’ll purchase in the future.
7) If there’s no client signature, there’s no greater than 50% likelihood of closing.
Managers, always remember that if your sellers leave an appointment without a signature, there’s no order and your team is still in the game of chasing down a decision. That game will last exactly as long as you allow it to.
Take charge of your business by developing a strategy to increase the accuracy of your projections, then teach and hold the team accountable to its use. Otherwise, their hope will spring eternal and you’ll be riding on a wing and a prayer.