A quick way to assess the risk in your new business pipeline
If you win relatively few large contracts, forecasting new business is never easy. A common approach is to multiply the value of the potential opportunities by the percentage of likelihood, often itself linked to how far along the pipeline the opportunity has progressed. However, this approach has been consistently flawed wherever I have seen it in use.
Alternatively, you can look at opportunities from the customer’s (buyer’s) perspective.
As buyers, before we can start the buying process, we must:
• know what we are looking for and what it will achieve.
• have agreement to go ahead.
• understand the business case and financial constraints.
• know when it needs to be available.
• know who will be reviewing the options and ultimately make the buying decision.
• understand the need for change, if necessary and the risks involved.
As a seller, if you have any chance of predicting when a deal will close, it follows that your sales team should be able to answer these questions:
• What specifically is being offered to the prospect?
• Does the customer have approval to start the buying process?
• Why are they buying and what problem will the solution solve?
• What is the project timeline?
• Who is going to be making the decision?
• Who are you competing with?
• Does the customer have a good reason to switch from their incumbent supplier?
• Why should the prospect buy your solution?
If your sales team do not yet know the answers to these questions, any prediction of value or timings will be so unreliable that it is not worth making.
Instead, focus all your effort on helping the sales team to answer these critical questions. Do they have a plan for answering them and what are their next steps? Your confidence in their answers, the truthfulness of their response and their genuine confidence in success is in my view, a far more reliable predictor.
If you want more information and advice on getting ‘contract-ready’ or advice on winning more work from tenders, contact us on +44 (0)203 918 8550 or email firstname.lastname@example.org