The Importance of Qualifying Out

Regardless of whether or not the sales pipeline is full of qualified opportunities, opportunity qualification is one of the most important steps in the lead and sales process.  Unfortunately, too many sales executives view the world with rose colored glasses.  Even though 3 out of 4 vendors lose each deal, they all seem to enter every sales cycle confident in their ability to differentiate and win.  However, if you do the math, it is obvious that some sales teams are clearly delusional.  In fact, I would argue that the numbers are even worse in some of the large enterprise opportunities where a long list of 5 – 10 software vendors is common. 

Same Challenge for Successful and Unsuccessful

Interestingly enough, I find that software vendors at both ends of the success spectrum have the biggest issue with deal qualification.  The successful software vendors typically have experienced rapid success begin to exhibit a confidence that results in a “we can win everything” sales culture.  On the other side, the unsuccessful vendors have so few leads and opportunities that they feel reluctant to qualify out of anything.   

Counterintuitive Approach Required

Although struggling sales teams with few leads and opportunities should focus on increasing the funnel, they also need to qualify harder than any other sales team.  The concept is somewhat counterintuitive, but it makes complete sense when analyzed.  If a sales team has few leads and opportunities, then they must make sure that they spend their time correctly to win the few potential deals on the table.  For example, if a company has 10 sales opportunities compared to an industry norm of 20 sales opportunities for that region/vertical, then it is critical to have a higher win rate.  To increase your win rate, you must qualify even harder than a sales team with twice the number of opportunities.  Assume that a typical win rate for the industry is 20% of all opportunities.  So, a company with 20 sales opportunities will win 4 deals. However, if your company/sales team only has 10 current sales opportunities, you must double your win rate to 40% to match those 4 wins.  For a long term solution, you need to fix your sales funnel and improve sales & marketing to get closer to the 20 sales opportunity level.  However, in the short term, you will need to qualify very hard to focus more closely on the four deals that you can actually win.  This means that you will need to remove emotion from the opportunity qualification process and use a more quantitative qualification process with clearly defined qualification criteria to achieve this result. 

Continue Strong Qualification Process with Success

Once you start adding a more rigorous process for opportunity qualification, it is important to follow the process and refine it over time.  Once you fix the funnel issues, the qualification process will really start to pay dividends with more wins.  It will be very easy to slip back into old habits when success proves easier to attain, however, this is exactly the time to become even more diligent with the program. 

It Starts at the Top

Make sales opportunity qualification part of the culture within your sales organization.  It is important for sales management to congratulate team members for walking on poorly qualified opportunities or pursuits with a poor fit.  If the qualification process is implemented successfully, you will end up walking on a few deals that you would have won.  However, the benefits of focus and pursuing more deals in your sweet spot will increase your total wins for the year.  In addition, the total cost of sales will decrease as the sales team will pursue fewer deals that end up in losses or “no decisions”.  By reducing the number of “no decision” results alone, the qualification process will increase the success of your sales efforts. 

Win or Lose Quickly

As a final word, I’ll leave you with some advice that works well when you can’t decide if a company is a good prospect in a sales pursuit.  Be honest with them.  Sit down with them and explain why they do not fit your qualification criteria.  They will help you understand where you are correct or misinformed.  In most cases, the prospect will acknowledge that the opportunity isn’t well qualified.  In some cases, the prospect will help you gain access to the proper resources to qualify more accurately.  Either way, you will be able to qualify the opportunity quickly and move on to the next deal.  Remember, it is our job in sales to win or lose quickly.  The worst thing you can do is lose after a long, expensive sales cycle….

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This means that you will need to remove emotion from the opportunity qualification process and use a more quantitative qualification process with clearly defined qualification criteria to achieve this result.