You know how this story ends.
Is there anyone out there who believes that losing slowly is the best policy?
😧 “I would prefer to work an entire sales cycle before finding out that we’ve lost...versus finding out at the beginning. Working entire sales cycles are great learning experiences, and losing builds character!” 😖
That's a fast path to failure, right?
Worthington Holman, author of the 1912 book Ginger Talks, captured it so eloquently 109 years ago:
“Your time is your capital, your stock in trade. It is the only kind of capital that costs you nothing to get and everything to lose. The successful salesman hoards minutes and hours as a miser hoards gold. The spendthrift of time is a sure candidate for failure.”
1912, Ginger Talks, W Holman
But we often lose slowly anyway...
Why? I believe it stems from three core areas.
- Elemental Leadership Policy - What we measure and enforce dis-incentivizes sellers from qualifying out quickly.
- The Sunk Cost Fallacy - We've taken the endorphin hit from adding it to our pipeline. We're not just gonna let it go!
- Sales Enablement - Our focus of enablement is on prospecting and selling, less on matching/fitting, and our messaging often kicks the mismatch can down the road.
But we can solve for all three...
1) Elemental Leadership Policy
We've all seen diagrams like this before...the "proper sales funnel"1.
More "leads" equals more "qualified prospects". More "qualified prospects" leads to more sales. It's math! We measure the volume at the top of the funnel as a measure of our expected results to come out of the bottom.
You've probably heard a sales leader or two proclaim this sales rep requirement:
"At all times, you must have 4x your quota in qualified pipeline!"
You may have actually heard me say it in a previous life. 😬
Understanding that we would close a percentage (say, 25%-40%) of our qualified pipeline, in order to feel comfortable with our forecast, the belief was that we must, at all times, maintain 3-4x our quota in total pipeline, right?
This type of thinking is the CAUSE of losing slowly, not the cure for maximizing our results. How?
When asking my sales team to attain this pipeline load target, guess what they did? They filled their pipeline with 4x their quota...with crap! 💩
Instead of analyzing why we only close 25%-40% of our "qualified opportunities", and look to optimize that ratio, we run to the end, and simply fill the pipeline with more stuff. If we only close 25%-40% of our pipeline, doesn't that mean we don't close 60%-75%? Why?
We are systematically causing our sellers, by what we measure, to spend less time on qualification. The result is less of an interest in qualifying OUT a deal that we are less likely to win.
As a result, we are wasting the precious and limited inventory of our sales team - TIME!
Leaders - Review the unintended consequences of what you measure: Measuring to pipeline load. Having reps focus on scale. More touches. More monkeys at more typewriters (i.e., the Infinite monkey theorem). Quality over quantity.
Instead, prioritize the ratios - win rates along with cycle lengths of both wins & losses. What would you prefer? A large pipeline with a small conversion rate...or a small pipeline with a high conversion rate? In an ideal world, you'd love to have both - a large pipeline that with a high win percentage...and through better qualification, that's often the long-term result, anyway!
2) The Sunk Cost Fallacy
"The sunk-cost fallacy (SCF) refers to a greater tendency to continue an endeavor once an investment in time, effort, or money has been made."2
In other words, once we've invested time and energy into something, we don't want to let it go, even if it's the best thing for that something...and for ourselves.
You've been given a lead that you're excited about. You've done the research. You've done the homework. You've had a couple of meetings with the prospect.
As Tommy Callahan explains in the movie, "Tommy Boy":
"Let's say I go into a guy's office, let's say he's even remotely interested in buying something. Well then I get all excited. I'm like Jojo the idiot circus boy with a pretty new pet. Now the pet is my possible sale. Hello there pretty little pet, I love you. And then I stroke it, and I pet it, and I massage it. Hehe I love it, I love my little naughty pet, you're naughty!"
You've fallen in love with this opportunity.
However, it becomes clear this isn't a good fit...for you & your company, or the prospect. What do you do?
But there's still a chance, right? So we keep going. We keep investing that valuable time. Once in awhile, it turns out you were right, and you were able to salvage the opportunity. However, those are the exceptions.
Could your time had been spent more wisely prospecting and developing opportunities with a much higher propensity for both short & long-term benefit? Probably.
But we don't want to let go - our pretty lead must be let go...
Leaders - we need to create environments where losing is celebrated...for the effort, and for the lessons learned to aid in losing less often in the future. Your rep is already getting punished in their wallet. This way, (a) you hone your focus, (b) your pipeline ceases to be filled with crap, and (c) there's still a win in a loss.
3) Sales Enablement
Deal qualification seller development is an oft overlooked skill, but could arguably be one of the most important to maximize the revenue capacity of an individual rep.
Working the right deals, at the right time, with the optimal mutual outcome is what often sets apart the top performers from the middle-of-the-pack.
It starts with our messaging.
You might be surprised to hear this, but I'm an advocate of leading with transparency. 🤪
While transparency sells better than perfection, it also qualifies IN or OUT quickly and firmly.
"Based on our initial understanding of your environment and desired outcomes, there are a couple of areas where we have a bit of concern around our fit. Can we address those first? If those are going to be show stoppers for you, best we both know that up-front versus 3-months down the road, right? "
"Given our understanding of your environment, the investment is likely to be between $X and $Y. If that's way off from your expectations, let's address that up front so we don't waste your valuable time, either.
It helps the buyer predict their experience, faster, with the side effect of a faster sales cycle.
It establishes your relationship on a foundation of trust, with the side effect of adding a differentiator in your favor - you differentiate in the WAY you sell.
If the pricing is waaaay off, and you're talking about a 7-figure deal with a 4-figure buyer, one of you is in the wrong conversation, right?
If there's something off about the fit, the customer WILL find out...either during the cycle, or after they've purchased. Either way, not good.
Would you rather that come from you, or your competitor?
Would you prefer to control the message, or let the competitor deliver the news?
And if it's a show stopper, would you rather know sooner, or later?
Would you prefer the prospect drift along like a log on a lazy river, in hopes they realize the river ends with a huge waterfall months into the cycle? Or worse, right AFTER they signed on with you?
Leaders - work with your marketing department to curate information around your pros & cons. Read customer reviews. Solicit feedback from your customers who renew (ask them why), customers who buy more, customers who advocate, and especially customers who leave. What are the common themes? Due to the proliferation of reviews and feedback on everything we do, buy and experience, it's all out there. Curate it, inform your messaging with it, and lead with it!
It's often been said, the second best thing behind winning is losing quickly. There are things we absolutely can control to foster an environment where losing quickly isn't a punishable offense, and the result is an optimization in the utilization of one of our most valuable assets - our time.
1Abella, Amanda (2016) "Confused by Sales? A Basic Sales Funnel Explained." Due.com blog
2Tait, V., & Miller, J.H. (2019). Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy. International Journal of Psychological Research, 12(2), 8-16.