Creating the Predictor Questions

Quick Summary: Use actual experience to identify the 5 or 6 milestones in each level of the sales funnel.

Abstract:

Identifying the events to capture as milestones in the sales process can seem to be a large task, with unique circumstances of each sales opportunity curtailing the ability to find a common set.  However, examining a number of past losses more than likely will reveal a number of common issues that impeded the sales events.  Think of them as channel markers, indicating where you should not go.  From that list, it is easy to identify the points of progress along the way.

The previous articles in this collection, “Progress as a Predictor,” and, “Progress Predictor Questions,” described the process of developing a sales forecast by monitoring a number of milestones that need to occur during the sales process.  It was recommended that approximately 35 milestones or steps be identified and tracked.  Further, it was recommended that the milestones be defined as questions which require a simple yes/no answer.  The, “Progress Predictor Questions,” article provides some real world examples of the questions used by one company in this process.  The task of creating similar questions that are applicable to a specific company may seem to be an almost overwhelming and burdensome task.  There is, however, a simple sequential method that can be used to quickly identify the milestones that can be completed in an hour or two.  The steps in this process are:

  1. Recruit two or three sales reps and a sales manager to help.  As discussed in the article, “There are only Two Kinds of People,” critics are easily created by telling people what to do, while these same people can become “creators” and support an effort if they are asked what to do.  Including sales reps in the process will help keep the activity realistic and supported by them and their peers.
  2. Create and name the sales funnel levels that best meet the characteristics of the prospects and the company.  A sales funnel may consist of five to eight levels, with a seven layer sales funnel as the one most commonly used.
  3. Start a list, by asking each participant in a “round robin” format to briefly describe an event or factor that derailed a sale.  Yes, this appears to be a negatively focused activity.  Clearly, the goal is to identify the milestones that must be met in order to obtain a sale.  However, by focusing on “what went wrong” anticipatory actions can be taken to head-off the issue.  Think of these events as river channel markers that mark where you do not want to sail.  Instead, take note of when you actually pass them on your way to your final destination.  The first column, labeled, “Sales Derailment Issue,” in the table included at the end of this article, provides some examples of the reasons listed that a particular sale was unsuccessful.
    1. Remove any derail suggestions captured in this process that appear to be unique or apply only to a small set of the potential sales opportunities.
    2. Group similar inputs as much as possible, but try to build a list of at least fifty items.  At first, this may sound difficult, but as sales reps begin to openly discuss situations that they have experienced or have heard about, far more than fifty sales derailment inputs will be captured.
  4. Next to each input, create a short phrase that highlights the issue in the form of a question that, when answered with a “yes,” will result in the potential derailment issue being successfully resolved.  This may seem confusing, but some illustrative examples taken from the, “Progress Predictor Questions,” article are included in the second column of the table and will help to clarify this approach.
  5. Add to the list of milestones any other specific activities that mark the entrance or exit points of a particular funnel level that may not have been prompted by a derailment issue.
  6. Assign each of the milestones to a particular funnel level and begin to eliminate items so that there is a fairly even distribution of milestones associated with each funnel level.  For example, if there are seven layers in the sales funnel and the overall number of milestones is desired to be 35, then 35/7 or five milestones (plus or minus) should be assigned to each funnel level.
  7. When removing some of the milestones to arrive at a manageable number, try to identify milestones that can be covered by others.  For example, a milestone of submitting a proposal can be assumed to have occurred before a milestone of receiving approval on the proposal has occurred.  Further, this example illustrates that milestones that rely on some external result (customer accepted the proposal) are better indicators of progress than milestones that reflect your activities (submitting the proposal).
  8. Optionally, to help summarize the sales progress and allow comparisons between different opportunities, a percentage for each milestone completed can be established.  The percentages can be the same for each milestone or varied to reflect their overall importance in measuring the progress.  Assigning and tracking both percentages are useful.  Apply each percentage in binary fashion.  If the answer to a question is anything other than “yes,” the percentage value is zero.  If the answer is “yes,” add the question’s percentage to the accumulated total.

There is no question that there will be many more tasks that will have to be undertaken and successfully completed than can be captured in this process.  Further, some of the captured milestones may not be applicable in certain situations.  An example of the non-applicability of some items occurs when tracking an add-on sales opportunity.

Over time, some of the milestones may be reduced in importance while others may surface.  Change them as appropriate.  Seldom is the first pass of this exercise perfect.  Finally, an elapsed time element needs to be factored into the entire process to reflect the likelihood of a sale.  A quick review of the number of open items and their presumed elapsed time to resolve should be applied to differentiate the three potential sales states:  1) The sale will probably not occur, 2) The sale is likely to occur and, 3) The sale is likely to occur within the forecast period.

Clearly, this proposed method is no guarantee of successfully and consistently creating an accurate sales forecast.  However, it has proven to be far more effective than using a weighted average of percentages based on “feelings.”

 

Example of Derailment Issues and Milestones

Sales Derailment Issue

Corresponding Milestone

The company was unable to secure the Federal Permit to proceed, causing at least a six month delay in the project.

Does the prospect have all required government licenses or approvals in-hand or are they in the final stages of receiving approval?

To integrate into the prospect’s existing system, we would have had to make substantial changes to our system that would have been unique for this one prospect and, therefore, not justifiable for us and the prospect was not willing to pay for the changes.

Does the opportunity involve only the standard application of our current or planned products?

Our system would have been only one component in the prospect’s business and they were not willing to share all of their plans to address the other required elements.

Have we identified all of the elements of the total end-to-end solution?

To be viable, a number of other systems that were well beyond our expertise were required and the prospect had no means of securing them.

Do we have an acceptable plan to address all of the elements in the total end-to-end solution?

Although Operations has agreed that our solution is ideal, they indicated that its costs were not in the budget and the system cannot be cost justified this year.

Has the prospect prepared a business analysis and/or cost justification regarding this opportunity and have they developed a clear understanding of why they should proceed with it?

We were informed that the company‘s policy is to use only IS09000 Certified suppliers and we did not have that certification.

Have we met with the financial key decision makers and do they agree that we will be an acceptable supplier to them?

The company had already committed to other companies in the overall procurement and we were not compatible with them.

Have we resolved all of the elements of the total end-to-end solution and have agreement with any required business partners on how to proceed?

Aside from the certifications that we did not have, we also discovered that the company had no intentions of dealing with us because of our small size and non-public status.

Have we identified (from the prospects point of view) the three most bothersome things about our company and do we have a strategy to diffuse these issues?

We were unable to determine who our competitors were and were only told that our costs were higher and we could not provide them with a comparison to the other, unknown, competitors.

Have we identified the five items that positively differentiate us from any other alternatives that are being considered?

We found out that this project would only be funded if other higher priority projects were completed on time and within budget.  They were not.

Has the customer already made a contractual commitment or resource commitment on other aspects of this project that leads us to believe that they will proceed with us or someone else?

 

Note that all of the questions can be answered with a definitive “yes” response.  They can also be answered with “no,” “work in process,” or “not yet addressed” status.  Obviously, from a forecasting standpoint only the “yes” or “no” answers can be used to draw any conclusions.

If one insists on using percentages, two methods can be used together or independently.  One method involves the assignment of an equal percentage to each question.  For example, if there were 25 questions (probably not enough) then each question, when answered with a “yes” would be assigned 4%.  Any other answer would be assigned zero percent.  This technique would be strictly a milestone completion percent completion metric.  Alternatively, certain questions could be given a higher percentage weighting.  For example with 25 questions, some may have an average weighting of 4% while others could have 1%, 2% or 8% values.  Of course, the total with this approach needs to be 100%.

Although the percentages in aggregate provide a sense of how far along the sales process has progressed, the real value of this technique is to uncover the showstopper issues that are identified with a “no” response.  These are the issues that can derail sales success.  Either the issue needs special attention or the opportunity needs to be terminated, postponed, or at a minimum, removed from the forecast until the situation is resolved.

To validate the list of milestones, review a few past opportunities that did not result in a successful sale.  Was the loss captured by one of the milestones?  With some advanced or alternative planning captured by one of the milestones, could the loss have been reversed?  Revise the milestones accordingly and then try it and refine it.  Don’t be surprised if there a significant increase in forecast accuracy.

 

Article Number : 5.010205   

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