ENGEL | Sales Excellence
  • Work with Us
  • Business Blog
SALES EXCELLENCE CONSULTING

BUSINESS LEADERSHIP BLOG

| Precise Observation
| Practical Insight

| Personal Perspective

Pipeline Management | Avoid the Matrjoschka Effect!

27/4/2020

0 Comments

 
Picture
Picture
Timing in Sales is difficult to manage, especially when teams are head down closing their deals today. It´s likely they miss to identify and qualify required opportunities to feed them tomorrow.
Personally, it reminds me of the response we get when calling into a teenager bedroom - good intend but no sense of urgency!
The formal concept to manage this challenge in business is called Sales Pipeline Management. It´s bridging today´s deal-by-deal business execution with the projected business attainment on an opportunity-by-opportunity basis. While, it is the shared formal concept for all stakeholders, it allows for different perspectives:​
  • Sellers want to know if the business volume will ultimately make them hit their target.
  • Management probes into deal health, velocity and win-rate to understand the solidity of the managed business.
  • Leaders expect balanced individual- / team-contribution and want to see the pipeline develop towards profitability and along the strategic direction.
While there are plenty of publications on Pipeline Management, I would like to share some perspective, why Quality must beat Quantity!
Ideally, all your opportunities convert to business and contribute to the goal attainment. However, reality is very different. Deals are slipping into future quarters, they close smaller than expected or simply are lost.
Let me introduce some commonly used concepts to address the lack of control on the pipeline:
  • The more the merrier: Trying to compensate the potential losses through incremental opportunity.
  • Inspect what you expect: Working on the Information Inefficiency, believing that more information leads to more insight and more control.
  • Coaching till it hurts: Coaching sellers and teams along the sales process to make better situational decisions and overall benefit deal sizes.
In essence, you can either further mobilize your demand generation engine to put more deals into the pipeline (increase Quantity) or lose less from it (increase WinRate) - either way, you will need to prepare for the unexpected. Important to keep in mind that both approaches are limited by available sales capacity of the organization.
As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.
Albert Einstein
The Spreadsheet Acrobats will tell you that the required future Pipeline Threshold to hit your future sales target ("pipeline coverage") will be the future target to go plus an % uplift. The amount of required % uplift is defined by the % amount of historically lost deals. In other words, we set the pipeline coverage goal high enough so, we -hopefully- cater for potential future losses.
The formula is simple and compelling, BUT, it is based on at least three critical assumptions:
1. History Repeating: The pipeline coverage formula uses historic facts to anticipate the need for the future. So, be aware that the rear mirror might give you a wrong impression on the direction of the road ahead - it is very unlikely that moving forward the circumstances for your business will be the same again.
2. Statistic Probability: The pipeline coverage formula uses statistical assumptions in a discrete business. Therefore, it will not work on small number of deals, significantly varying deal sizes or changing likelihood to succeed.
3. Sales Capacity: No matter how many deals you deem appropriate or how much effort you are willing to put into coaching, your cost of sales sets the practical limit.
Pipeline Coverage -
Pipeline Coverage Expectations - The Matrjoschka Effect
The mathematical approach alone is not getting you on the safe side. You end up in an unhealthy race fighting lost opportunities with more demand generation. However, the more pipeline volume we expect, the more difficult it is to find sufficient deals and the harder it gets to reach a similar success rate again. Fighting the tendency of dropping WinRates through incremental volume requirements we can call the Matryoshka Effect in Pipeline Coverage Requirements - the Pipeline Coverage targets keep going up while WinRates are trending downwards.
In reality, many leaders still prefer to drive the hard fact based, quantitative approach over qualitative coaching. The reason is simple: It´s easier to scale pipeline generation within a sales organization (all hands on deck!"), than coaching sellers, partners and marketing for elevated deal quality.
The only way to escape Matryoshka’s appetite for more is by putting focus on the qualitative approach to deals, both on the Demand Generation and on the Deal Management side. Increasing the number of healthy deals (and the healthy meals for Matryoshka) will get your pipeline into a stable, healthy state.
​Give it a serious try, put focus on the organizational capability and you will be surprised, both by the qualitative and the quantitative effects it triggers.

The very practical approach of Coaching for Pipeline Success [Keith Rosen] works well for me but, Training alone doesn't develop champions. Leaders do!
0 Comments

Renewing Contracts | The Missing Bullet Holes

19/10/2018

0 Comments

 
Picture
Star Treck - Mrs. Spock
Source: Shutterstock
Imagine, sellers would be rational individuals like Mr. Spock, the fictional character in the Star Trek media franchise - the commander of Starship Enterprise who always followed the rules of logic, never distracted by emotions.
I agree, this is neither realistic nor desirable to move mixed human-vulcans into sales roles. Some sales leaders would not want to lose their financial controllers either.
Experience tells, winning a new customer means 6 times more investment than maintaining an already loyal customer. Isn´t this a really good reason for you as a commander to go deep on what is driving the Enterprise towards customer loyalty?
I don't know anything, but I do know that everything is interesting if you go into it deeply enough.
Richard Feynman, Nobel Prize in Physics 1965
This usually is the point where measuring the world starts and big data is put into action. It begins with identifying statistically significant parameters. Try to understand what sets a successful contract renewal apart from those which did not renew. If you want to go beyond anecdotal evidence, a lot of data points are involved, but the effort is worth it. Aberdeen Group research states that Analytically Grounded Sales Teams average a 2.7 times greater annual increase in customer renewal rates. Meanwhile, such data analysis is well supported by BI tools or even Artificial Intelligence engines and it is backed by external business consultant experience.​
Business Acumen remains key to success in increasing the likelihood to renew a contract. Even though you may find significant correlations, it´s the causation which makes it relevant. The correlation between growth on ice-cream sales and the outbreak of bushfires in southern California maybe a strong correlation but it´s not the cause. Mind the difference between correlation and causation.
Turning good analytical work into concrete action is what makes the difference in business. Overhasty conclusions and bias on this last but most important step may put your whole endeavor at risk. Following historical anecdote shows why.
The United States Statistical Research Group (SRG) once used to be on mission to help win world war II. Sales is not war and trying to find a way to minimize the loss of airplanes through better armor is not business optimization. Surprisingly enough, we still can learn from their work.
YoY Advantages of Analytical Grounded Sales Teams
Source: Aberdeen Group, Sept. 2016 | "YoY Advantages of Analytical Grounded Sales Teams"
When American planes came back from engagements over Europe, they were covered in bullet holes like a Swiss cheese. But the damage wasn’t uniformly distributed across the aircraft. There were more bullet holes in the fuselage, not so many in the engines. So, how can the armor be optimized  on the weakest parts without negatively impacting the overall performance of the aircraft?
Columbia University professor Abraham Wald came up with a surprising answer: The armor, said Wald, doesn’t go where most of the bullet holes are. It goes where the bullet holes aren’t - on the engines!
You’d have planes coming back with bullet holes all over the wings, the fuselage, the nose — but none at all on the engine. Simply because those severely damaged engines did not return from their mission and therefore don´t show up in your analysis. Protecting engines and pilots better, increased the likelihood to return from the battlefield.

Survivorship-bias.png
By McGeddon - Own work, CC BY-SA 4.0, Link

​Taking the recurring business scientifically to the next level implies a lot of work but it is the right choice in the digital era.  Even if you decide to start small, next time you assess the feedback of your customer satisfaction survey with your teams, make sure you especially understand where the bullet holes are missing - it might well be your blind spot hiding the lethal risk to your business mission.
0 Comments

Account Planning | Busting the Napkin Myth

18/9/2018

0 Comments

 
Picture
A GOAL WITHOUT A PLAN IS JUST A WISH!
Source: Shutterstock
One myth keeps following me during my two decades in direct sales: Best Account Plans fit on Napkins!
Wow, what a bold statement - it feels equally untrue like: brightest minds fit into double-digit IQs.
Everything should be made as simple as possible, but no simpler.
​Albert Einstein
Despite all standardization efforts, enterprise business environments keep getting more complex. The ability to innovate simple and effective approaches in business practice has become a competitive advantage. Oversimplification, however, is tempting but remains an act of negligence.
Account Planning means planning for results. In a number driven world of sales, the decomposition of an aspired revenue goal is psychologically the first step to accepting the challenge. While SMART goals and respective objectives may well fit on a small napkin, they by no means are the plan. I would even argue that it is the wrong end to start with - relevant account plans are starting with the customer.
In recent years, Business-to-Business sales has evolved in various dimensions, redefining how we engage with customers:
  1. ​Sustainability - With Digital Transformation and the move to the Cloud, customer Business Models have embraced external vendors to become integrated part of the value chain. Continuously earning trust, adhering to ethical and legal standards, and delivering positive customer experience are non-negotiable foundations to sustainable commercial success. Yes, the definition of success is far more than transacting in the short term or "making the number" only.
  2. Customer Alignment - Cutomer Centricity is all about understanding the customers business priorities and translating them into strong and precise value propositions. As much as, I agree no Account Plan should be called complete without customer validation. Aligning with customer key stakeholders on the plan and finally signing off on a joint business roadmap is what makes a good plan a demand generation engine.
  3. Teamwork - Enterprise sales has become a team sport of specialized professionals, all working towards joint goals. It´s the heart of every effective Account Plan to ensure a common understanding and efficient orchestration with all stakeholders - internally (Sales, Marketing, Engineering, Consulting, Support, ...) and externally in the ecosystem (Partners, Advisors, Influencers ...).
Account Planning is a reflection on the evolution in sales but even more, so it is a yardstick on the sophistication of your teams work - what a great coaching opportunity or moment to personally benefit the customer relationship in form of executive sponsorship.
Imagine the business potential of getting the perception right by moving away from a necessary evil and abandoning the disrespect which a napkin implies.
0 Comments

Business Model Innovation | Put Your Lights On ...

14/7/2017

4 Comments

 
Picture
Sleepless Nights
Source: Shutterstock
... 'Cause there's a monster living under my bed - Whispering in my ear ...
Carlos Santana - Put Your Lights On
​​A while ago, I had a refreshing and insightful conversation with a customer who happened to be the editor of a major newspaper.
He described how he sees parts of his traditional business erode through digital channels but he also welcomed the efficiencies of digital productivity for his employees. Still, the ambivalent coopetition in today’s business is reality - seizing opportunity jointly with the global digital giants on a worldwide level but also fiercely competing with them on your own home turf.
Surprisingly, there was no sign of fear or worry - where is his confidence coming from?
Probably it is both, the no fear approach rooted in the own strength and the believe, that innovation should be routine - The inventor produces ideas, the entrepreneur “gets things done” [J. Schumpeter, 1947].
... There's an angel, with a hand on my head
She say I've got nothing to fear!
​Carlos Santana - Put Your Lights On
In this context, some good learning is coming from University of St. Gallen (HSG). Their research on Business Model Innovation during the last 50 years, shows that only 10% of the revolutionizing approaches in business depend on completely new invented patterns. All other business innovation sources from existing patterns applied in new context.
Landing change is not easy but it comes down to separating tangible risk form perceived fear. Risk can be managed but fear should not prevent us from starting the innovation journey.
Closing my pleasant conversation with the gentleman, I directly asked him on his personal fear. He responded that in future quality journalism may commercially not find it´s sustainable place. However, messing with the checks and balances in our democratic societies would get him sleepless nights.
Auch der stärkste Mann schaut einmal unters Bett.
Erich Kästner
4 Comments

Selling Time | Time is Money?

21/3/2017

3 Comments

 
Picture
Time is Money?
Source: Shutterstock
Let me today share some thoughts on a recently published article on Harvard Business Review: “It’s 10 AM. Do You Know What Your Sales Reps Are Doing?” [HBR.ORG, 2017].
The title is a wonderful invitation to reflect on the state of your organization, your approach to sales strategy, quantity versus quality and ultimately whether you want to manage activity or result. In any case, business acumen needs to be first!
The article itself is offering it´s own approach to sales management. Of course, sales leaders should rely on supporting data and take fact based decision. It´s also evident that Microsoft provides great products and tools to empower every person and every organization on the planet to achieve more. However, the way how data is used in this article and at which organizational altitude a certain tool like Workplace Analytics is applied remains unconventional.
For example, the authors are not asking why “CRM self-reported data maybe inherently flawed” but propose the approach “to analyze the digital exhaust of calendar and email metadata” instead.
We can be rest assured that it will be 10 AM again and that time will tell how many of their top performing sellers are willing to accept the proposed micro management approach to optimization.
It´s clear that maintaining business data in CRM is not the first thing a seller will fall in love with but why should metadata from calendar, mail or any other app maybe in better shape or even be more insightful than explicit business information?  - Data quality is about discipline but sustainability only can be achieved where relevant business conversation drives respective demand for it.​
Times of the Lone Wolves in sales are over and contemporary solution selling approaches mandate efficient teamwork. The better you coach this in every interaction with your sellers, the more you inherently drive demand for systematic alignment. This will make the case for efficient Time Management and, ultimately it shows the difference between a metering tool and CRM as a sales productivity engine.​
Selling into complex enterprises is a time intense endeavor, so let´s maximize selling time for your teams, e.g. balancing all internal work with the amount of time they need to spend properly serving customers. Time Management also remains a key enabling factor on seller level, requiring to systematically coach and develop every individual – probably starting with yourself!
​If you want to learn more on how to practically approach Time Management, Keith Rosen recently published his new book: “Own Your Day!”. It´s worth reading and opens eyes on why your calendar may yet not be the ideal starting point to conclude optimization from.
Either way, ​Coaching or Inspection - you decide but be aware: ​No one expects the Spanish Inquisition! 😉
3 Comments

Forecast Accuracy | Don´t shoot the frog!

23/1/2017

1 Comment

 
Picture
Forecast Accuracy
Source: Shutterstock
As kids, we asked the frog to show us the weather forecast. I´m sure the little friend tried hard but no matter how much we wanted him to either be precise or even change the weather, he had to realize that success in show biz can be reached much easier.
According an Accenture study, 75% of leaders come to the conclusion that they need to improve the accuracy of their forecast and 57% say that they have to get better at closing deals in forecast time frames. These are probably numbers close to the satisfaction level reported by frog owners.
How come, we seem to struggle with predicting our potential future business attainment? – We are dealing with a so called “Information Inefficiency”, a risk sourcing from an information deficit. It means we don´t know what will happen until it happened. So, in theory gathering information and managing deals on time will mitigate this risk and our forecast accuracy problem is solved.
However, the subject is far more complex since we are dealing with people, organizations and respective underlying political dynamics. Science refers to this risk category as “Alignment Inefficiency”. It describes the domain of risk sourcing from conflicting interests and -incentives within an organization. This important fact makes Forecast Management an interesting cultural aspect and sets it apart from sheer business discipline efforts – Forecast Management is all about Leadership!
Unarguably, the sales teams play a key role in mastering the forecast accuracy but we should not confuse Deal Management accountability on Seller level or Pipeline Management accountability on Management level with Forecast Management ownership on Leadership suite.
Forecasting is a team sport which, when done properly involves your whole organization to varying degree. Teaming up for success requires your people speaking the same language. Are your teams using the same taxonomy, following the same standards in assessing the business and is the final forecast puzzle seamlessly fitting together as one, ultimately reflecting the organizational commitment?
Sellers know their customers and deals best. The Bottom-Up approach is a good start but how do you assess required information without additionally distracting your motivated sellers from what they like best, doing business? – Seller Readiness and Deal Coaching are the first priorities. Getting this right, in right dose, is your ticket into a predictable deal management and a solid forecast foundation. The Best Way To Predict The Future Is To Create It!
When talking about the next level -the sales management assessment- we are already into the usual conflict of interest – ambition or reality. Clear answer: ambition belongs into the budget, business plan and the actual deal management, while reality is the main ingredient to the forecast. The Risks (Timing- and Alignment-Risk) remain as variables in the decision making. Having variables means options and scenarios to be considered during the forecast assessment.
Will the Risk deal offset another Upside or will the Risks/Upsides add up? … Do I have to adjust my P&L now, based on my Forecast or will the available resource still improve the business outlook in current business period? – It´s not easy but it all requires a deep understanding and clear sight on your business to get it right.
The view from the top in an organization provides us with the 360-degree view on the business to precisely navigate the curvy road ahead. Looking back on historic data and trendlines is tempting but also dangerous in anticipating the future. We easily miss the game changing moment in our market. Mark Twain well framed it: “History doesn't repeat itself, but it does rhyme.” Even more so, it generates a false sense of security which distracts from analyzing current business dynamics or going deep on deal progression.
Strong management commitment, insights on operational risks, specific deal challenges and visibility on the underlying decision making processes should equip us well to take a balanced decision on our forecast and conclude orchestrated corrective action on our business to come.
Finally, measuring Forecast precision is a helpful indication when it comes to supporting a continuous organizational learning process. Using it as an organizational goal, it triggers counterproductive corrective action on the symptoms, not on the cause.
The Forecast ought to be your uncompromised view on the future, it will not change the weather nor your business but it allows us to choose where to go or which action to take – cultivate your Forecast integrity with caution, don´t allow to compromise it with dishonesty nor load it with wrong ambition.
You can shoot the frog for bad news but like it or not, your Forecast accuracy is ultimately reflecting the level of trust within your organization.
1 Comment
    Andreas Engel

    Andreas Engel

    ​is an experienced business leader working 25+ year in high-tech industry - leading, growing and transforming high-performance sales organizations, balancing short term results with long term strategy to drive new business growth.

    Andreas Engel

    CATEGORIES

    All
    Account Planning
    Alignment Inefficiency
    Art & Science
    Best Practice
    Business Intelligence
    Business Model Innovation
    Challenger Sales
    Contract Renewals
    CRM & Productivity Tools
    Customer Intimacy
    Digital Transformation
    Forecast Accuracy
    Forecast Management
    Growth Mindset
    Industry 4.0
    Information Inefficiency
    Intellectual Property
    New World Of Work
    Organizational Culture
    Pipeline Coverage
    Pipeline Management
    Sales Excellence
    Sales Leadership
    Sales Management
    Scorecard
    Teamwork
    Time Management

    ARCHIVES

    April 2020
    February 2019
    January 2019
    November 2018
    October 2018
    September 2018
    July 2017
    May 2017
    March 2017
    February 2017
    January 2017

© Copyright 2017-2025 - Andreas Engel   |   Impressum   |   Contact   ​| 
  • Work with Us
  • Business Blog