Business developers love to add more and more “current” opportunities to their Sales Funnel. It looks great, and it promises a good month or quarter to come. And it’s a main key performance indicator (KPI) for the type of work they do.
But when does an opportunity stop being “current”? Even if a rejection note has not been received, it doesn’t mean an opportunity should be left in the funnel indefinitely.
For one, it portrays an unrealistic picture, as forecasted sales are much higher than they actually will or can be. It also entices the business developer to keep working on a lead or prospect that’s basically a lost case.
So what can a business developer do to maintain a realistic, yet optimistic sales outlook? Read on …
Know your ratios and numbers, and set realistic KPIs
If you’ve been “developing new business” in your industry long enough, you’ll have acquired a pretty clear idea about the typical duration of each sales stage by now. Apply your sales targets, typical drop-out ratios, and average deal size to that, and you will have a clear set of KPIs that your can monitor and work against.
This is all much easier than it sounds and can be done through a simple Excel sheet. The outcome? You will know how many sales opportunities must be in each sales stage at all times, and what the average deal-size needs to be for you to meet your targets.
Rate opportunities with probability factors
Your current sales opportunities must each be graded with a percentages that indicate their probability to close.
So for example, if a proposal you submitted is valued at 1,000, there are about three other competitors bidding besides yourself, and you have reasons to believe all stand an equal chance, your probability factor for this opportunity is 25%. This means that the weighted value of this particular opportunity is now 250.
Using weighted values in your sales funnel to set and measure targeted sales is much more accurate and will give your a realistic outlook. Your 500,000 sales funnel is now realistically speaking a 75,000 pipeline, so you’ll instantly know that you’ve got a lot of hunting to do if you want to meet your numbers.
We previously mentioned the importance of determining the average duration of each sales stage. You will need these numbers so you can keep an eye on overdue opportunity that should be either closed out, or graded down with lower probability factors.
Reverting to the example of your 1,000 proposal that had a 25% probability factor, if it’s stuck in the “proposal submitted” stage for two months now, you may want to reduce the probability factor to 12.5% and make it a 125 weighted opportunity. This means that you’ve got to move forward and boost that with another lead which will compensate for the lost weighted amount at the very least if you want to maintain your weighted total sales funnel.
Master the painful art of closing out leads and prospects
If you get into the habit of constantly adjusting the probability factors of sales leads, you will soon end up with a bunch of opportunities that look great (total value), but aren’t all that promising in terms of their weighted totals.
You need to review these often and frequently, and unless there are compelling reasons that lead you to believe they may close after all, you should close them out as “lost”. This will help you in avoiding allocating valuable time and energy to basically dead leads, so you can focus on others that are more productive and promising.
Watch your lost leads
Some people or companies will keep coming back to you for more and more proposals, although they’ve never really signed a contract with you yet.
Be careful; those are often not leads that are trying to bring some business your way although they may even tell you so. They might be phantom shoppers, using RFPs as a means to learn more about a subject matter, or otherwise enjoy the attention they get from various potential vendors during the procurement process.
Follow your instincts
Business development is not a science, it’s an art. This is where your experience, market knowledge, and instinct come in handy. If your guts tell you that your chances with a particular opportunity are slim, drop it immediately.
Yes, long-shots do work from time to time, but if you weigh the collective energy and time spent on those until you might land one, you’ll find that it isn’t worth the effort, especially if you factor in the cost of all the lost time your incurred.
If your CRM shows that someone has already sent your three RFPs but you’ve not managed to get a contract from them, chances are the same will happen with the fourth RFP. You’re better off excusing yourself now and preserve your energy for leads that are fresh or more promising.
When it comes to business development, the 80-20 rule is one of your most important guidelines; this means that 80% of your revenue will come from 20% of your pipeline, and the rest (20%) from the other 80% of your leads. So where will you be concentrating your efforts?
Happy Business Development!
About the Author
Pinnacle Business & Marketing Consulting is a results-driven boutique consulting firm that specializes in providing clients with practical and pragmatic solutions to their business and marketing challenges.
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