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Design Your Sales Process Around What You Can Control

by Michael Webb | Comments (0)
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Managers can be the cause of insidious problems when they overlook simple, yet crucial details facing their employees. A few years ago, I was reading about how production forecasts were derived from sales forecasts and ran across this excellent passage. There is a lot to be learned from the principles it illustrates:

"It's impossible to answer the forecast accuracy question because the maximum level of forecast accuracy is often a function of the variability of the data itself. Let's hear why from Professor George Johnson of the Rochester Institute of Technology, who used the example of driving a tired, old car that ‘has given me an average of 17 miles per gallon on the road and never gone above 20 or below 40 mpg under normal operating conditions. Thus the normal range of highway mpg is 14-20, with an average of 17. I forecast 17 mpg for my next trip with this car. At trips end I compute the mpg actually is 14. I'm not surprised because it has done this before under typical operating conditions.’

"He pointed out that he's OK with 14 mpg against his forecast of 17, but perhaps others ('management') might not be. After all, if the rules of the game specify +/- 15%, then he's outside the lower limit of 14.45 (17 mpg times 15% = 2.25 mpg). Here's George again: 'I'm going to get criticized. But wait a minute. I operated the car correctly--I did what I was supposed to do--and the outcome was the result of 'common' causes of variation. It's not fair that I get criticized. The car and I were doing the best we could do under the circumstances. After being unreasonably criticized a few times, I start to get motivated to coast down hills, sneak a little extra gas into the tank, and play the system in other ways so I don't get penalized for things I can't control. This is not the best way to use my time (or the company's resources), but it will keep me out of trouble.'

"A lot of companies have salespeople who feel the same way--not about their forecasts of car mileage of course, but rather their sales forecasts. Arbitrary standards for forecast accuracy that don't take into account the underlying variability are almost always a bad idea.”

"George Johnson then makes a point that we've already heard but it is certainly worth repeating: forecasting is a process, so the issue here is one of process control and improvement. Our response to that: right on! This is the necessary view, but one that many people fail to adopt when talking about forecasting. If we take a process view towards forecasting, then we can start to talk about inputs, outputs, and process error.

"He also pointed out that processes have inherent variation, and because forecasting is a process there will be some variability. This means that some degree of forecast error is inevitable. Some companies disregard this factor and push their marketing and sales people to make super-accurate forecasts. We've seen this approach result in counter-productive behavior. Examples range from switching off, (refusing to forecast because it's a no-win deal and they're tired of getting beat up) to forecasting too frequently (updating the forecast every few days based on the last few days' orders). Quality guru W. Edwards Deming referred to this as 'tampering'-being given incentives to do the wrong thing, and thus doing it. Either of these kinds of behavior can drive Manufacturing and Purchasing crazy."

Reprinted with permission from Wallace, Thomas F, and Stahl, Robert A. Sales Forecasting: A New Approach. Cincinnati, Ohio: TF Wallace & Company, Copyright 2002, p. 36.

The authors point out a never-ending business dilemma: We need to get other people to improve their results for us, yet they cannot control all the factors producing those results.

The two obvious alternatives for the manager are: accept the mediocre performance or demand better results … or else (conflict!).

Fortunately, there is a better approach, one that achieves results without conflict. It is to identify the facts (something everyone can agree on), and then use them to isolate factors that can be controlled from those that can’t.

In the example above, the facts are inherent variation in the mileage performance of a vehicle. Ignorance of these facts puts the employees in a no-win situation, causing them to react appropriately. Respecting facts (things that cannot be controlled) creates the foundation for improvement (looking for things that can be controlled-–and changed–-for the better).

The sales environment is chock full of things that can’t be controlled. Unfortunately, old-fashioned sales cultures are not schooled in distinguishing these subtleties. Instead they are schooled like an old-fashioned army: overwhelm the enemy by trying to close every deal, to march on regardless of resistance, and to overcome obstacles at all costs.

Of course, working harder rather than smarter is a blunt (and expensive) instrument.

Designing Successful Sales Processes

One of the keys to designing any successful business process is to carefully delineate what people can control and what they cannot. In selling, this is usually overlooked to the frustration of all. Yet, identifying these factors is critical to helping people learn how to sell effectively and to elevating the performance of the team.

One excellent way to do this is to work on clarifying people’s qualifying criteria. These criteria should be worked out in great detail, ideally in the form of questions salespeople can score on a five-point Likert scale. The idea is that each salesperson understands the ranges of observable facts in a variety of areas such as:

  1. 1.  How do we know there is an opportunity?
  2. 2.  What is the pain/value to the customer?
  3. 3.  What is the value to us?
  4. 4.  Can we win the business?

Completing these Likert scale questions helps salespeople (and their managers) focus on the facts rather than on what they or their boss wants the truth to be.

We have found in our work with clients that the effort to develop those qualification criteria systematically and to use them in every deal offers dramatic payback. It provides a more precise language for understanding their opportunities and account situations. This enables salespeople to discern what they can and cannot control and to improve their chances of winning a deal by designing
their strategies around what they can control.

Further, it standardizes the way the organization prioritizes its pursuit of opportunities, elevating the
predictability of the whole system.  Furthermore, it becomes possible for deal quality scores to be used as feedback for the effectiveness of lead generation campaigns. Finally, as I have written in this column before, the data this type of approach provides can be priceless.

This technique enables your company to avoid the blunt instrument approach, and instead elevates your sales team’s ability to perceive and adapt to facts in the customers’ environment. There are many other ways to improve the design of your sales process, but defining and clarifying your terms and qualifying criteria should be the cornerstone.

Michael J. Webb
August 8, 2007

 

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