The sales process is an inherently risky business. It’s difficult to know if and when a deal will close, what clients really want regardless of what they have stated (i.e., the client may have failed to frame their own needs properly), and what competitors offer in price and quality of deliverables.
Compounding the external uncertainty, we often get in our own way by importing certain kinds of biases into our assessment of the value of the sales opportunities at hand. These biases can include…
- Unwarranted optimism or wishful thinking – personal enthusiasm or a natural disposition to believe that desired outcomes will most likely occur; or, inflating initial estimates of desired outcomes to appear more effective than is warranted;
- Sand-bagging – under reporting potential outcomes to appear heroic when better than anticipated outcomes materialize;
- False precision – reporting anticipated outcomes with an unjustified level of certainty, usually as a single-point estimate rather than a range;
- Availability – recalling values that are memorable, easily accessible, recent, or extreme;
- Anchoring – using the first “best guess” as a starting point for subsequent estimating;
- Expert over-confidence – failure of creativity or hubris (e.g., “I know this information and can’t be wrong because I’m the expert.”);
- Incentives – the SME experiences some benefit or cost in relationship to the outcome of the term being measured, adjusting his estimate in the direction of the preferred outcome;
- Entitlement – the SME provides an estimate that reinforces his sense of personal value.
Without bias-free assessments in our decisions to actively pursue sales opportunities, it's nearly impossible to know how to allocate sales and support resources effectively to maximize the likelihood of capturing sales in a profitable and efficient manner. In short, when given the opportunity to pursue multiple opportunities with limited resources, it’s often difficult to know if any given opportunity is worth the time.
As odd as it may sound in a culture that seems to demand almost endless optimism, the Power of Negative Thinking actually helps us to overcome our biases as well as inform us how to obtain better information about the external uncertainties we face. By “negative thinking” we do not mean cynicism or toxic nay-saying. Rather, we refer to a process that asks us to consider critically the opposite of what we too easily assume (or wish) to be true. While Negative Thinking could lead us to consider the effects of unfortunate outcomes or conditions (the opposite of desired outcomes) on sales opportunities...
|The best laid schemes o’ Mice an’ Salesmen, Gang aft agley|
...it could also lead us to consider the possibility of desirable outcomes or conditions (the opposite of the unfortunate) for situations that we often easily dismiss.
|No, no, boy, that's no way to make a plane. That'll, I say, that'll never...fly!|
But the Power of Negative Thinking goes beyond our merely considering what can happen. We must also consider the “why” and “to what degree” those things could happen. We can account for the “what,” “why,” and “to what degree” in a process called probabilistic reasoning. But that's the second step. The Power of Negative Thinking begins with accurately framing an opportunity, which requires that a sales team answer the following questions:
- What is the real opportunity?
- What are our goals and objectives?
- What are the client's goals and objectives?
- What are the decision boundaries and open decisions?
- What are the sources of uncertainty?
Answering these questions helps the team know that it has the right reasons in mind to pursue an opportunity and what constraints in their current level of knowledge limit their ability to make unambiguous decisions about what opportunities to pursue and how to go about pursuing them.
Probabilistic reasoning helps a sales team then answer these questions:
- What is the likely range of outcomes for the uncertainties?
- What are the effects of uncertainties on sales goals, revenues, and profit?
- How much risk do we face with each opportunity; i.e., how much could we lose by pursuing one opportunity over another?
- What insights can we create for contingency plans or options?
- How do we prioritize our set of current opportunities?
The effect of taking these two steps in a structured way reveals the Power of Negative Thinking so that the sales team can recognize when an opportunity is worth pursuing…or not. Ultimately, not only does the Power of Negative Thinking give the sales team a more accurate assessment of the current state and possibilities they face, they can also develop more effective contingency plans to increase the likelihood of achieving results their organization—and their clients—desire.
Labels: complex sales, decision analysis, sales forecasting