The question, “Why Does This Happen,” and its variants (“What causes this to occur, How does this happen, etc?”) are some of the most profound questions we can pose as we look at understanding problems and opportunities. As we start posing these questions, the responses provoke us to follow up with the “What if….., Have you considered…., How might things change if…..? All of these are foundational in engaging our customers to think differently.
They are critical as we look at our own strategies and performance. But too often, we fail to do this. Instead of trying to understand how/why things are happening, we react to performance issues with the automatic response to do more. And sometimes, more works a little, until it fails totally.
It’s really old school, but we don’t understand or solve problems, until we start identifying “root causes.” When we see a performance issue, we are seeing the outcome of a series of activities (or omissions) that created the result. To address the performance issue, we have to understand what caused the failed performance outcomes. We have to drill down ask, “Why?”
As we start asking “Why,” we have to recognize, the failure may not have been caused by any one thing, but a number of things contributed to the failure. Additionally, there may have been some deeper reasons that might be causing these performance issues. To begin to understand the things that drive the performance we seek, we have to understand the underlying cause/effect relationships.
Pipeline Health Example:
Let’s look at an example, pipeline health is almost a universal issue for sellers. Let’s start to diagnose issues with pipeline health, I won’t go through everything, but I’ll give you some way to start thinking about how you might approach these issues to build healthier pipelines.
So here goes:
Typically, when we have an unhealthy pipeline, we don’t have enough opportunities to achieve our numbers. Almost universally, manages say, “Do more—do more prospecting, find more opportunities, fill up your pipeline.” And usually managers say, for reasons that make no sense whatsoever, “You need 3X the number of opportunities…” And when that fails, “You need 4X…” and so on.
But what contributes to bad pipeline health? It’s the quality of the opportunities in our pipeline. It’s the volume/quantity (number and $ value). It’s the velocity of the opportunities in moving through the pipeline. Any one of these things may contribute to bad pipelines, typically several are at play at one time.
But how do we look at quality, volume, and velocity. To look at quality, we typically look at “Are they real opportunities in which the customer has a commitment to do something?” Or, “Are they the right opportunities–for example, are they in our sweet spot?” Addressing these might improve our pipeline health.
Volume is typically a factor of our goals, win rates, and average deal sizes. We can look at these, understanding what the healthy metrics are for each person. If we have a high quality, but unhealthy pipeline, a solution might be, “get more opportunities.”
But that may be the wrong solution, in fact it might create more problems than we have in the first place. Sometimes, “getting more opportunities,” causes sales people to reduce deal/pipeline quality. Sometimes, there might be a better approach, that doesn’t demand getting more opportunities.
Increasing win rate means you win more of what you qualify, so you require fewer opportunities to hit your number. I’m always shocked by the number of organizations that accept, as standard performance, win rates of less than 25%. If we are pursuing the right deals and executing that right engagement strategies, it’s actually pretty easy to have win rates far in excess of 50%. So fixing the win rate might be a way to drive pipeline health and results.
As you are probably already guessing, the next question is, “Why are our win rates so low?” There could be any number of issues–the lack of a buyer aligned selling process, poor execution of the process, the inability to create differentiated value, the inability to help the customer to manage their buying process, the inability to compete, and so forth. So to fix win rates, we have to figure why they are so low.
Alternatively, we might choose to address average deal value. If did nothing other than doubling the average deal value, our pipeline dynamics and results change dramatically. Now some of you might be thinking, “Well our products have a standard price, we can’t increase our prices?” But we could chase bigger sales of those products. For example, rather than going department by department, we could focus on the enterprise. Sometimes, we just tend to do business the way we always have. One client has moved their average deal size from $10K to $1.5M in three years. What they discovered is they had been so distracted chasing transactional low value deals–they didn’t have time to find the high value deals. When we shifted their strategy, they built to average deal sizes of $500K in 9 months and are now at the much higher deal size. It turns out, those deals were always there, they just didn’t see them because they were so busy chasing transactions. But understanding this means drilling down and looking at what drives our deal sizes and how we might look at the business differently.
Likewise, sales cycle impacts pipeline dynamics and health. Clearly stalled deals (with ever increasing average sales cycles) could change a healthy pipeline into an unhealthy pipeline (If I have enough high quality deals in my pipeline, but they are stalled….). Or if we could find a way to help the customer compress their buying cycle, reaching a decision more efficiently.
Why Does This Happen?
I can go on endlessly on this topic, but hopefully, I’ve started to illustrate, that if we are going to address performance issues, we have to understand what’s driving performance challenges. We have to look at this across all or our people’s performance, not just pipeline management. Whether it’s prospecting, account/territory management, call/meeting execution, deal strategies, value creation, or whatever.
Until we really understand the issues and what is causing the things we problems we are seeing, we will never be able to address our performance issues with anything other than band-aid, temporary fixes.
If we are going to continually improve performance, we have to deeply understand the things that impact performance, both positively and negatively. Once we begin to understand these, we can start to prioritize the fixes and coach our people to improve the results they are producing.
Sometimes, when I start presenting this, managers say, “We don’t have the time….” My response is usually an impatient, “If you want to hit your goals, you can’t afford not to take the time….” But in reality, none of this analysis takes a lot of time. Once you start drilling into the numbers, you start seeing some of the driving issues and can focus on them.
Second, in responding to managers saying they don’t have the time, I usually remind them, “Your job is to maximize the performance of each person on your team. If you don’t take the time to understand what’s driving their performance, how can you do your job?”
Problem/performance analysis is a key part of every manager’s job. Make sure you are understanding what is driving performance and why. Look beneath those issues, to understand the problems more deeply.
Afterword: A useful tool to use in thinking about drilling down to understand issues/problems is the “5-Why” approach popularized by Deming and Toyoda.
After Afterword: Usually, we start seeing an “interconnection” of problems across a number of areas. For example, pipeline problems may be a result of deal management challenges, which may be a result of poor call planning and execution, and so forth. It’s useful to see how these issues connect across the whole job of a sales person. The Sales Execution Framework (SEF) is a tool that many of our clients are using to understand the root problems and their interconnection across all aspects of the sales person’s job.