Avoiding No Decision Outcomes - Great Demo

Avoiding No Decision Outcomes

avoiding no decision outcomes

Avoiding No Decision Outcomes
The Surprisingly Large Opportunity for Improvement
(A Never Stop Learning! Article)

 

What’s in this article for you?

  • A Sadly Surprising Discovery
  • A Painful Analysis
  • Surviving BANT
  • Surviving MEDDIC, MEDDPIC, Etc.
  • Presales Input
  • Senior Sales Staff Observations
  • Three Reasons for No Decision Outcomes
  • Re-Analysis and Illumination

 

A Sadly Surprising Discovery

A Head of Sales was reviewing his quarterly forecast and noted that a large number of opportunities had been “rolled over” from the previous quarter. Curious, he examined several prior quarters and found a distressing trend: These opportunities had been rolling over from quarter to quarter for several quarters and, in many cases, for years!

He said, “These will clearly never close…!” and removed them from the current quarter’s forecast.

He thought for a moment and then asked a staff member to perform an analysis of all of the opportunities that had been forecasted to close in previous quarters but had not closed. A short time later, the results were presented.

The analysis showed that nearly 50% of the sales projects that were forecasted to close each quarter did not close, and in most cases, they reappeared as expected to close the following quarter! Very frequently, the predicted close-rate probability was 80% or higher.

Intrigued (and also very concerned…!), he called several of his salespeople to get the stories first-hand.

He asked, “Why do you think this didn’t close?”

“Well, it should have…” was the response. “The prospect said they were in pain and wanted to find a solution.”

He followed up with, “What makes you think it will close this quarter?”

“They still have the same pain…” replied the salesperson.

While there were a few cases that involved acquisitions, changes in senior management, and other factors, most of the explanations lacked any tangible reasons for the delayed orders. None of the examples suffered losses to competition; they just never seemed to close!

He expanded his research, contacting his sales team and reviewing a few dozen opportunities. The results were largely the same: Salespeople didn’t know why the deals didn’t close and assumed they should complete successfully “in a quarter or two.”

The Head of Sales realized these were all “No Decision” outcomes – opportunities that had been forecasted to close (many with surprisingly high probability), but they weren’t won by his team, they weren’t lost to competition, they just never closed. The prospects had apparently chosen to do nothing and take no action.

Was this a case of “happy ears” or other habitual sales optimism, or could a deeper exploration yield some pragmatic guidelines?

 

A Painful Analysis

He realized, with a jolt, that about half of all forecasted sales projects were ending as No Decision outcomes (or, rather, not ending productively)! He thought, “This is way too high – we can’t be running a business where half of what we plan on or expect to have happen ends as zeros!”

But it was true.

Returning to the analysis results, he did a little quick math. “I’ve got 40 salespeople around the world today. If they are averaging 50% No Decision rates, then it’s like I really only have 20 folks selling effectively.”

“I wonder,” he mused, “What are typical No Decision rates for our industry?” A little online research showed two sets of data:

  1. No Decision rates for B2B SaaS software averaged 45-50% overall.
  2. The range was from 20% No Decision outcomes for the best performers to as high as 80% in some of the worst.

“OK,” he contemplated, “We are right in the middle, but I don’t want to be there! It is clear that some organizations have solved this problem (and I wonder how they did?).”

He realized that reducing his team’s No Decision rate by just 5% overall would be like gaining 2 “free” fully productive salespeople. A 10% improvement translated to acquiring 4 full quota-achievers. The average annual quota for the team was $1.5 million dollars, which meant that a 5% improvement was worth $3 million dollars in annual incremental revenue, and a 10% reduction in No Decision outcomes translated to $6 million annually.

“This is an insanely huge sales process ‘knob’ that we’re never addressed,” he thought. “Even worse, if we continue to follow this trajectory, the problem actually gets worse as we scale the organization!”

As he considered this, he realized that other members of the customer-facing team were impacted as well. While the presales organization didn’t report directly to him as the head of sales, he recognized that they were also spending 50% (or more?) of their time working opportunities that led to No Decision results.

This realization was almost more hurtful, as presales was typically the rate-limiting step for sales process-step conversions. The same math applied: Fewer No Decision outcomes yielded greater availability of presales resources to work deals with higher probabilities of success.

“We’ve got to change this!” he announced and gathered his sales and presales managers and senior staff to discuss.

 

Surviving BANT

“What’s going on?” he asked his front-line managers, after sharing the analysis info. “What are we doing poorly or need to do differently, or are not doing at all?”

“Maybe deals aren’t being sufficiently qualified early in the sales cycle?” suggested one manager.

After some discussion, it was agreed that the use of BANT (“Budget, Authority, Needs, Timeline”) was not to blame. The group did identify two areas that could be improved, however. The first was a realization that leads were churning even before they entered the sales “funnel”. The second was a moderately surprising realization that even when prospects confirmed they had budget allocated, the same proportion of deals still ended as No Decisions.

 

Surviving MEDDIC, MEDDPIC, Etc.

“Perhaps we aren’t really getting what we need out of our sales methodology?” offered another manager. They had been trained in MEDDIC (Metrics, Economic Buyer, Decision Criteria, Decision Process, Identify Pain, and, Champion)/MEDDPICC and other systems.

More discussion of the use of MEDDIC found that many reps weren’t using it at all, which clearly contributed to the problem. However, even those who completed the required MEDDIC fields in their CRM system suffered the same ~50% No Decision rate.

It was noted that MEDDIC is a qualification methodology as opposed to a discovery methodology. Some managers wondered if this was a contributing cause. In particular, they observed that many prospects admitted “pain” but were willing to live with it, even with vendor-based value justification numbers. “Pain” seemed to be insufficient on its own to drive a decision to purchase.

There was general agreement that while sales methodology(ies) should help address the problem, they appeared to be insufficient on their own.

 

Presales Input

Presales management was polled, and a number of No Decision cases were identified where product fit was not particularly terrific. In some instances, the alignment between the proposed solution and the prospect’s needs was only moderately good, with some significant gaps. In a few cases, product fit was described as “poor,” but it was determined that “our prospect’s key needs were met by our offering”.

Product fit was designated as one parameter to track going forward, but it was challenging to determine how to measure it. [See the “Fool’s Gold Pursuing Pyrite” portion of this webinar for one successful approach!]

 

Senior Sales Staff Observations

Some of the team’s most successful sales performers were interviewed, as well. They identified a few additional parameters that they believed contributed to No Decision outcomes.

In some cases, they reported that buyers lacked sufficient proficiency to navigate their internal buying processes. Similarly, inexperienced champions struggled to motivate and convince their peers to move forward with a purchase.

It was agreed to implement and track several buyer enablement practices, including asking questions in discovery to determine buyer and champion history, strengths, and needs.

One front-line manager mentioned the book The Jolt Effect, by Matthew Dixon and Ted McKenna, which outlines a set of criteria to attempt to identify and head-off No Decision outcomes. These focus on understanding how prospective buyers act and react with respect to doing extensive research, avoiding risk, experiencing hesitancy, and other factors that can contribute to No Decision conclusions.

The manager reported that while the ideas made sense, they were difficult to implement. They required reps to be able to assess prospects’ specific thinking. The manager commented that “It’s hard enough to get reps to ask the basic discovery questions – it’s another whole level of difficulty to have reps analyzing prospect behaviors!”

 

Three Reasons for No Decision Outcomes

Finally, a senior presales staff member spoke up. She said, “You’d asked me to check out the Great Demo! & Doing Discovery Workshops, as a scout, to see if we might want to train our team on these methodologies. Well, I may have a simple, discovery-based solution for you!

In our training, the facilitator identified three parameters that rather consistently identify an opportunity as a high-probability candidate for a No Decision outcome.” She opened a whiteboard in Zoom and diagrammed:

  1. No Critical Business Issue
  2. Insufficient Value
  3. No Critical Date

She explained, “A Critical Business Issue is an annual, quarterly, or project-based goal or objective that is at risk. ‘Pain’ is the set of one or more problems or reasons that are causing an inability to achieve the goal or objective. However, “pain” by itself is not enough to drive a purchase.”

She chuckled, adding, “In the Workshop, the facilitator commented that ‘People will live forever with the hell that they know unless it impacts their ability to achieve their objectives!’ That’s probably why we see many deals go to No Decision even though we’ve identified their pains! In our discovery conversations, we need to determine if our prospects’ pains are impacting their ability to accomplish their objectives – and, specifically, what those objectives are. Those are the Critical Business Issues.”

Several of the meeting participants nodded their heads in agreement. One shared an example where pain had been identified, mutually, by the salesperson and the prospect, but it was clear that a Critical Business Issue was lacking, and noted that the opportunity was, indeed, a No Decision.

Continuing, she directed the group’s attention to number 2, “Insufficient Value is the second element. In our Workshop, we learned that value not only needs to be uncovered, but it has to be tangible! It can’t simply be declared ‘cheaper, better, or faster’, but it has to be quantified. We need to help the prospect build their business case using their own numbers.”

A sales manager added, “Oh! And we may need to help guide our buyers and champions, depending on their level of experience.” That caused more head nodding and a few Europeans knocked their knuckles on their tables in agreement as well.

“The third factor,” she continued, “is the lack of a Critical Date. This isn’t our end of quarter, as much as we might want it to be!” This generated some laughter as well as a few sheepish looks.

“A Critical Date is a date by when the prospect needs a solution in place and operating,” she said as she strongly emphasized the word when. “It also needs to include the reason for the Critical Date: the driving force. For example, a good Critical Date for a prospect could be the renewal date for a system they want to replace. The date might be March 31st; the driving force is the need to avoid paying for another year’s license.”

More heads nodded; more knuckles knocked.

She laughed, “In the Workshop, the facilitator asked us, ‘In university, would you have ever completed those papers if you didn’t have a due date?’ I know I wouldn’t have!

We learned that if any one or more of these three parameters are missing or incomplete, it dramatically increases the likelihood of a No Decision. Best of all, these are all elements that we should be able to uncover in our discovery conversations, early in the sales cycle.”

A brief discussion ensued, after which it was agreed to re-run the analysis and assess those opportunities already identified as No Decisions to determine if any of the three parameters were lacking. The meeting then adjourned.

 

Re-Analysis and Illumination

Well, dear reader, you already know the results of this second analysis. Yes, nearly all of the No Decision deals were missing a meaningful Critical Date, lacked tangible value numbers, and/or had pain but no Critical Business Issue. To be fair, there were a few opportunities that yielded No Decision outcomes due to acquisition, change of management, or internal politics, but otherwise, the results were fascinatingly compelling.

This is, by the way, a true story (or, more accurately, two true stories combined). That head of sales was me!


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