My friend, Matt Heinz, posted a fascinating article which reminded me of some market analysis I’d forgotten. It’s from Gartner analysis, now about 3-4 years old, but still relevant.
Summarized, at any point in time, as we look at B2B companies (To help us understand it, let’s imagine the total market size is 1000 companies):
- At any point in time, 3-4% of companies in an industry are actively engaged in a buying effort. That’s roughly 40 companies actively engaged in buying.
- 46% of companies are “poised.” In selling terms, they aren’t qualified, they haven’t yet committed to the change/buying effort, but could commit when with the right business case. This means 460 companies represent potential upside at any point in time.
- 50% are neither buying nor poised. It isn’t a need or a concern, they may not even be thinking about the issues or the issues may be unimportant. That’s 500 companies.
So with this as a baseline, let’s nerd out on some more data and math:
- We know that of those companies that are committed to a buying effort, over 60% end in no decision made. So for the 40 companies that are buying, we or our competitors close only 16 of them. 24 still have the need but don’t buy, largely because of FOFU.
Let’s pause and reflect on this for a moment. That’s a huge lost opportunity. These companies want to buy something but don’t. What if we focused on reducing no decision made. We’ll never eliminate it, but what if we could reduce no decision made to 40%? This would mean that an additional 8 companies would make a purchase decision, increasing revenues by 50% (across us and the competition)! That’s a monstrous increase!
And we know what keeps them from buying, it has little do do with selecting a product, but everything to do with decisions confidence. All we have to do to convert those opportunities is focus on building their confidence in the change initiative.
We’re already selling to them, but we aren’t addressing their biggest concerns. It seems a shame to see that much potential revenue sitting unclaimed and unconverted.
Just to add an emphasis to this point. Let’s say the total revenue we and our competitors are getting totals $1B. By reducing no decision made by 30%, we will generate an additional $500M revenue! Again, these are opportunities we have already found, we are already actively engaged, we just aren’t bringing them over the finish line.
And to taunt you further, imagine the revenue that could be generated if we could reduce no decision made even further! We don’t have to prospect, we don’t have to find more opportunities, we just have to bring more of them that started over the finish line!
Now, let’s keep going on this model. 46%, 460 accounts are poised to buy, they are on the cusp of committing to a change. What if we can just move a few of those into making that commitment. What if we could incite 10% of those to buy?
What this would mean is we and our competitors would find another 46 qualified accounts in our pipelines, That more than doubles our qualified pipelines. We move from 40 qualified accounts to 86 qualified accounts!
Running the math on that, assuming we don’t reduce no decision made, we and our competitors would more than double our revenues. Instead of closing a total of 16 accounts, we would close roughly 33 accounts!
Now this is a little tougher than converting no decision mades. We have to look at those 460 poised accounts, we have to figure which might be most receptive or interested in changing, then we have to come to them with a strong case to change. It requires a tremendous shift in how we engage them. So much of the time we lead with our products. They are not interested. We have to first convince them to commit to a change, then they will be interested in our products.
But if we understand our customers deeply enough, if we look at the data from past successes/failure, we might be able to do a better job of targeting, within those 460 customers, and create a more compelling case to change. As a simplistic example, if we replicate the things we did to tilt 46 customers into making a change, we will convert more!
So now we can consider, what if we did both simultaneously? What if we reduce no decision made from 60% to 40%, and what if we tilted another 10% of those customers that are primed to qualify. If we could do this, our pipelines would grow from 40 to 86 opportunities, and rather than we and our competitors closing only 16 of those, we would close 52! This would more than triple the revenue we and our competitors are generating!
Unfortunately, most of our selling strategies prevent us from exploiting that opportunity. We focus on demonstrating the superiority of our products. But to shift these numbers, we have to do things differently. We have to focus on inciting people to change—what opportunities are they missing, how could they improve their performance, how could they grow? And then we have to focus on building and maintaining their confidence. Help them know they are doing the right thing.
We struggle to find more opportunity, we send more and more prospecting outreaches, we cast wider nets. But the opportunity is staring us in our collective faces, we just have to capture a part of it!
Then you might say, “Dave, what about the other 500?” They represent opportunity as well, but they don’t know it yet. The solution for this is to incite them to search. I won’t dive into it, ask me if you want.
One final note, being very greedy and opportunistic. What if we kept all of this a secret from our competition. What if we started doing this, getting first mover advantage? We might win more than our fair share of this opportunity.
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