Category Archives: Sales
After walking the hallways of business for over 25+years what is it that strikes me? Nonsense. Specifically, I am struck by how much of what is accepted as the standard way to think about and do things, in business, strikes me as nonsense. It occurs to me, that some of the ‘best’ nonsense is labelled ‘best practice’.
The Nonsense of the Sales Pipeline and Sales Forecasting
There is a particularly delightful piece of nonsense, ‘best practice’, in the area of the sales pipeline and in particular sales forecasting. Let’s start with disclosing what the ‘best practice’ is. From what I have seen it occurs to me that the ‘best practice’ is:
- to break the sales pipeline process (some call it opportunity management) into stages and to associate a specific probability of success to each stage;
- each opportunity, at whatever stage of the opportunity management process, has a revenue figure , an expected close date, and an associated probability attached to it;
- the sales forecast (of how much revenue the sales force will close) is calculated from these opportunities – the revenue, the probability of successfully closing that opportunity, and the expected close date; and
- each sales person is held to account for delivering the expected sales forecast figure from his pipeline.
This all sounds sensible if looked at on its own divorced from the real world. What shows up when you expose this ‘best practice’ to the real world? Let’s imagine that five vendors are pursuing the same sales opportunity ($1m) with MegaCorp and they are all using the same six stages to track and forecast this sales opportunity within their organisations.
- Initial Contact – 0% (probability of successfully winning this opportunity)
- Qualification – 20%
- Proposal Submission – 50%
- Presentation to Decision Maker – 80%
- Contract Negotiation – 90%
- Close – 100%
Now let’s assume that three of the five vendors have made the final cut and thus been invited to make a presentation to the decision maker. What will show up in their sales forecasts? Each of the vendors will be forecasting revenue of $800k. And given that the probability is at 80% (so high) the unfortunate sales reps responsible for these opportunities are likely to find themselves committed (by the rules of their organisations ‘best practice’) to delivering this revenue.
Now let’s look at the situation. $1m is on the table. Three organisations are in the running for this prize. Each has an equal chance – 33.33% probability and so each should only be forecasting to win $333k. Yet, each is forecasting $0.8m and collectively they are forecasting to win 3 x $0.8m = $2.4m.
Let’s assume, that two of the three vendors are invited to submit a contract for negotiation. What will be contained in the sales forecasts? Each vendor will forecast $1m x 90% = $0.9m and collectively they will forecast $1.8m in revenues. What is the money on the table? It still remains at $1m.
It occurs to me that in the absence of having fixed the game in advance, the probability attached to an opportunity, at whatever stage, is (or should be) works out as follows (if one stays firmly in touch with the real world):
- Probability of winning sales opportunity <= Deal size / No of vendors still in the running
It also occurs to me that if this way of accounting for opportunities was embraced then more sales people would record and track their opportunities rather than waiting to win/lose the opportunity and then going back and filling in the requite fields in the CRM system or Excel spreadsheet.
The Nonsense of Process
If there is a God in the world of business then it occurs to me that it is ‘Process’. The taken for granted assumption is that there has to be a process for every piece of work that has to be done in an organisation. Why this insistence on process? It occurs to me that folks in business have collapsed effectiveness/performance (generating the desired outcomes) with process (doing work through a prescribed set of steps and methods):
- following process = generating the desired outcomes.
This is clearly not the case. And I say, it is especially not the case when it comes to effectiveness in the domain of sales and selling. Yes, it is quite likely that training a green / novice / incompetent sales rep in process will result in an increase in his sales performance: he will close more deals. No, it does not follow that process turns an average sales rep into a great one. It is quite possible, even likely, the need to follow prescribed process creates unnecessary work, and gets in the way, of good sales people working sales opportunities and closing them.
Let me put it differently, if success in sales is so highly dependent on following a prescribed sales process then we should be able to take people who are great at following process and turning them into able sales folks. Which folks in business are treating at following process? How about the folks in Customer Services, or Field Services, or Finance, or Logistics, or Operations, or IT? Having second thoughts?
It occurs to me that success in sales requires a certain way of being-in-the world. In part this way of being in the world involves how one relates to and is involved with people and the challenges/risks/anxiety involved in the world of selling. If this is not your way of being-in-the-world then it is highly unlikely that you will excel at selling no matter how versed you are in the process or how skilled you are in the tools of selling.
Above and beyond this familiarity with people and ease with the anxiety of selling is attunement. What attunement? An attunement to the situation – the context – at hand: the economic environment, the company you are selling to, the people you are dealing with in chasing opportunities, the product/s you are selling, the organisation you work for, the competitors etc…
No amount of process, method, templates and tools can generate this attunement in and of themselves. This attunement has to be earned through lived success and lived failure, through learning by doing. This kind of attunement arrives only after one is scarred through real world experience on the ‘battlefield of life’. Still wondering what I am talking about? I invite you to read the following passage:
I think it was in Argentina that I turned professional. I had been on the road for a year; I had been very high and very low, and everywhere in between. The world no longer threatened me as it had; I felt I had the measure of it.
…. Riding the bike was as natural as sitting on a chair. It scarcely tired me at all. I could pack and unpack the bike with the automatic familiarity of shaving, and I did not allow the prospect of it to annoy me. The same was true for minor maintenance problems: a puncture, cleaning a chain, aligning the wheels, whatever it was. I did it without giving a thought to the inconvenience. The things were facts of life. I slept on the ground more often, and my bones began to arrange themselves accordingly…
I felt very much tried and seasoned, and no longer expected to make silly mistakes or confront unexpected hazards. I had also developed a battery of useful instincts. I knew when there were thieves around, when the bike had to be protected and when it was safe ….. I knew when to expect trouble from strangers, and how to defuse it. I knew what drivers of cars and lorries were going to do before they knew it themselves. At times I think I could even read the minds of stray dogs, though it was a rarity to see one on the highway that was not already a pulped carcass at the roadside…
I leave you with my assertion: a lot of that which is sacred in business is nonsense. What it takes to see this nonsense is to empty oneself of the theory, of ‘best practice’, of the taken for granted way of thinking about and doing things, and to look at the situation with fresh eyes:
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
– Marcel Proust
Why Aeroplanes Don’t Fall Out Of The Sky; Why Business Screws Customers and Hospitals Kill Their Patients
I invite you to ponder the following
- Why is it that commercial aeroplanes don’t fall out of the sky?
- Why is it that terrorism did not take root, establish itself, and grow in the USA/UK?
- Why is that it is rare for criminals to kill a policeman in the UK?
- Why is it that the bankers lied-cheated-stole, brought the western capitalist system to its knees, and prospered whilst the rest of society has been paying the price of their actions?
- Why is it that hospitals in the NHS have been killing their customers (the patients) for ten years (or so) despite whistleblowing (by doctors and nurses working in these hospitals) and complaints made to hospital management, the regulators, and the politicians?
- Why is it that employees have no voice in large organisations and domination-intimidation of the less powerful by the more powerful is rife in these organisation – public and private?
- Why is it that large established businesses, and those who lead-manage-run them, continue to screw (cheat, swindle) their customers?
What did you come up with? I suspect that you came up with the standard excuses and explanations – this is what we do when we show up from the taken for granted way of seeing and explaining.
What shows up when I look beyond the accepted excuses and explanations?
I invite you to put aside the standard, commonplace, complaints, excuses and explanations. Instead I invite you to grapple with the question that I have posed in a zen like manner. What shows up for you? When I grapple with this question this is what shows up for me:
- When a commercial aeroplane falls out of the sky it is clear-obvious that the aeroplane has fallen out of the sky. When such an aeroplane falls out of the sky people die and often there is carnage. Loved ones grieve and demand answers. The media is on the scene and gives voice to the grief-loss of the loved ones and vividly displays the carnage. All of which makes it unacceptable for commercial aeroplanes to drop out of the sky. Put simply, commercial aeroplanes don’t fall out of the sky because we do not accept them falling out of the sky!
Terrorism failed to get established in the USA and UK because it was unacceptable to allow terrorists space to terrorise. Because it was not acceptable, massive resources were mobilised and draconian measures put in place to deal with threats of terrorism.
It is not ok for criminals, or anyone else, to kill a policeman in the UK. Killing a policeman is going to far and that is something we will not allow. Because we do not allow it, it rarely occurs.
Bankers lied-cheated-stole and got away with it because we accept lying-cheating-stealing as business as usual. Greed is good. Lying is good. Cheating is good. Stealing is good. As long as this lying-cheating-stealing generates bumper profits, generates employment and yields the requisite tax revenues.
A number of NHS hospitals have been killing their customers, the patients, over a period of some 7 – 10 years because we accept it. It is OK to kill patients provided the instructions of the Tops (the government ministers) are carried out. It is not OK to disobey our masters. It is OK to kill patients. Besides the killing of patients by neglect-negliance is not evident unlike the clarity of aeroplanes falling out of the sky.
Domination, intimidation and bullying is common place because it is OK to dominate, intimidate and bully people. It is the way that the powerful get the powerless to do what they want them to do. It is the way to exercise control. It is business as usual in public and private sector organisations. It occurs because we accept it.
Large established businesses, and those who run them, continue to screw their customers because it is not obvious when this screwing is taking place. And even when it is obvious it is perfectly OK to screw customers. We accept that business and those who run them will seek to and find way so screwing customers. This is simply business as usual.
Lloyds Banking Group is fined a record £28m by the Financial Conduct Authority
If it occurs to you that I go too far then I invite you to read the latest revelations as showcased in the following piece in the Guardian newspaper: Lloyds Banking Group fined record £28m in new mis-selling scandal. This is what Tracey McDermott, the Financial Conduct Authority’s director of enforcement and financial crime is quoted as saying:
“Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first – but firms will never be able to do this if they incentivise their staff to do otherwise.”
Why has the FCA handed down a record £28m fine?
According to Guardian piece:
1. “for putting staff under intense pressure to sell products customers did not want – or face demotion and pay cuts”; and
2. “the fine had been increased by 10% because Lloyds failed to heed repeated warnings about sales practices and because it had been fined 10 years ago for poor sales practices.
It occurs to me that which shows up and continues to show up in our world, the human world, is that which we accept, that which is OK by us, that which we assent to in our way of being-showing up in the world. As customers we get what we accept – no more, no less. As employees we get what we accept – no more, no less. As citizens we get what we accept – no more, no less.
“We’re not going to get a perfect solution in the short-term”
Talk abounds, advice abounds: the road to organisational nirvana is laid out by many a guru, professor and consultant. Talk about big data, customer analytics and customer insight. Talk about marketing effectiveness and marketing automation. Talk about sales effectiveness and sales force automation. Talk about great customer service. Talk about CRM. And talk about Customer Experience. Yet, little really changes: I see managers grappling with the same challenges that they were grappling with in 1999 when it comes to marketing, sale, service, and CRM.
Given the abundance in talk why is it that so little changes when it comes to organisational behaviour and organisational effectiveness? Let’s take a look at this question from the position of being on the court (in the organisation) rather than in the stands as a journalist/reporter (which is how many gurus, professors and consultants show up for me).
Working with a number of people grappling with the challenge of improving the sales process, improving customer service, enabling CRM and improving the Customer Experience across the entire customer journey one manager exclaimed “We’re not going to get a perfect solution in the short-term”. What led to this statement? Days of grappling with the challenge; coming face to face with the many and interlinked factors – culture, people, process, systems, data, metric, business priorities – in the way of making any significant changes-improvements.
If you and I had been on the court grappling with the challenges that this manager was grappling with then I say that it is highly likely, almost certain, that we would have arrived at the same place: this is too much to take on, let’s focus on what is doable in the short-term.
A history of short-term local fixes leaves room only for short-term local fixes
Given how everything is interlinked to everything (the systems nature of organisations) and the desire of Tops for ‘instant solutions’ to specific problems, Middles get busy on the short-term fixes and the quick wins. What is missed is that today there is only room for short-term fixes and quick wins because previously management took the route of the short-term fix instead of doing that which was necessary for generating longer term effectiveness.
Every time we intervene in the organisation we make a choice. What choice? The choice to leading the organisation to higher performance or generating a drift to low performance. In fixing the pressing local-functional problem, focusing on the short-term, and going after quick wins, the Tops and Middles are generating a drift to low performance. How/why? Let’s listen to a noted systems thinker, Donella H. Meadows.
“Some systems not only resist policy and stay in a normal bad state, they keep getting worse. One name for this archetype is “drift to low performance”. Examples include falling market share in a business, eroding quality of service in a hospital, continuously dirtier rivers or air ….. state of …… schools…..”
How does this drift to low performance occur?
“The actor in the feedback look (… government, business, hospital….), has …. a performance goal or desired system state that is compared to the actual state. If there is a discrepancy, action is taken……
But in this system, there is a distinction between the actual system state and the perceived state. The actor tends to believe the bad news more than the good news. As actual performance varies, the best results are dismissed as aberrations, the worst results stay in the memory. The actor thinks things are worse than they really are.
And to complete this tragic archetype, the desired state of the system is influenced by the perceived state. Standards aren’t absolute. When perceived performance slips, the goal is allowed to slip. “Well, that’s about all you can expect.” ……. “Well, look around, everybody else is having trouble too.”
The lower the perceived system state, the lower the desired state. The lower the desired state, the less discrepancy, and the less corrective action is taken. The less corrective action, the lower the system state. If this loop is allowed to run unchecked, it can lead to continuous degradation in the system’s performance.
Another name for this system is “eroding goals”. It is also called the “boiled frog syndrome”……. Drift to low performance is a gradual process. If the system is plunged quickly. there would be an agitated corrective process. But if it drifts down slowly enough to erase the memory of (or belief in) how much better things used to be, everyone is lulled not lower and lower expectations, lower effort, lower performance.”
Here I ask you to be present to what the manager said after grappling with the challenge: “We’re not going to get a perfect solution in the short-term.” Do you see, how it is that if one takes this reasonable approach the organisation almost never gets around to creating-putting in place the ‘perfect solution’? How/why? Because it is never the right team to make difficult decisions, create-accept short-term pain in order to generate longer term effectiveness!
What are the antidotes to eroding goals and the drift to low performance?
In her book, Thinking In Systems, Donnella H. Meadows points out that there are two antidotes:
“One is to keep standard absolute, regardless of performance. Another is to make goals sensitive to the best performances of the past, instead of the worst..….. if one takes the best results as standard, and the worst results as a temporary setback, then the same system structure can pull the system up to better and better performance.
This reminds me of my father. When I was young my father insisted that a) I finish whatever I started no matter what; b) do the best that I was capable of doing; c) strive to do better than I did the last time; d) set my sights on the best performer in the class; and e) take the short-term pain in order to generate the longer term gain.
Let’s leave aside the theoretical aspects and arguments related to the suitability of using NPS. Instead, let’s consider the implications of using NPS as a performance management tool rather than simply as an indicator which tells us who well we are doing, as an organisation, in building meaningful relationships with customers.
Every human activity produces both things that we want – “goods” – and things we don’t want – “bads”.
– Garrett Hardin, Filters Against Folly
It occurs to me that when we use NPS as a performance management tool we act on the people in the organisation, we act on customers, we alter the balance of power between the multiple parties. And we inject high does of fear and greed into the rich tapestry of human interactions.
This is how we end up generating the “bads” – the dark side of using NPS as a performance management tool. Let’s get specify and look at the dark side. What shows up?
- Customer facing employees (sales, service) and their managers game the system to generate high NPS scores;
Some customers are either ‘bribed’ and-or ‘pressured’ to give high scores;
Some customers, especially the more powerful ones in B2B, exercise their new-found power to extract concessions – free ‘products’, more discounts, credits, special treatment – from the sales reps and account managers; and
Some sales reps and account managers ‘give away’ more than they need to’ in order to play safe and assure high NPS scores. This ‘giving away’ tends to be in the region of services which do not directly impact on the revenue figures and commission cheque of the sale rep.
I leave you to decide whether the “goods” generated by using NPS as a performance management tool outweigh the “bads” that I have shared with you. I do assure you that points 3 and 4 above are not just theoretical – this behaviour is occurring.
Next time you are planning an intervention in the rich web of human relationships get together a diverse group of people, including those who are likely to be impacted, and explore this question: what is likely to happen – today and over the course of time – after we make this intervention?