Tomicide Solutions July 2006: Who Qualifies Your Prospects? Sales Or Marketing?
By Tom "Bald Dog" Varjan
The very basis of any business development activity is to qualify the opportunities and prospects that come our ways. Sadly far too many businesses accept any client with any opportunity, saying, "Any warm meat with a wallet and a pulse beat is good enough for us." And since they have no criteria as to who they want to work with, they end up with lots of work and high sales but ridiculously low margins.
What usually happens in business development is that marketing defines the ideal client profile, and then the sales folks go and start collecting prospects. But the problem is that there is a discrepancy in their compensation structure. The marketing folks are paid salaries, whereas the sales folks are paid a commission.
What that means is that sales folks are compensated for instant results so, they don't have time to fiddle around with ideal client profile and similar nonsensical minutiae. They want to make money and see money in their own piggy banks... Right now.
Therefore marketing and sales folks evaluate opportunities drastically differently.
Sales folks tend to use the well-established BANT system. BANT is short for Budget, Authority, Need and Time frame. The problem with this model is that it is 100% financially-focused. And it's pretty superficial. The message is that, "We accept anyone with a pulse beat a wallet and a need."
Budget
Salespeople have to make sure prospects actually have the budget for the proposed solution. But this is easier said than done. Prospects are reluctant to share the budget because they are worried that if they share this piece of information, then salespeople thry to sell them something that is very close to the absolute upper limit of that budget.
Just think of a typical computer retailing shop. You go in and state you're looking for a computer. The salesperson's first question is, "What sort of budget do you have in mind? If you're a bit rusty on recent computer prices, and give an over-generous budget, the salesperson will fill it in for you by trying to sell you the most expensive computer you don't need but your budget can handle.
A good few years ago I was shopping for a digital recorder at a musical instrument store. This was before digital dictating machines. I told the guy that I needed the recorder to record my speeches, but he kept pushing me higher up on the price ladder, saying how extensive percussion and keyboard sections I could have on the more expensive model. He tried to maximise my budget by trying to sell me something I didn't want and didn't need. Well, but it would have been great for his commission.
Authority
Salespeople have to make sure they talk to the person who can sign the contract and initiate the project. But a lot of time is wasted because salespeople falter on this puppy, and if they can't see the economic buyer, they go and see someone at lower levels. Also, it's more convenient to discuss possibilities with lower level managers. But the problem is that they can't initiate the project, so all the time is wasted. In selling big-ticket solutions in the B2B world, there are usually several people who are involved in the decision-making process. There are several buyers.
Economic Buyers
The role of economic buyers is to control the purse strings and release the money. That is, they are the real mahatmas when it comes to speaking to the right people. You can't get "righter" people. They can both initiate and veto projects. Their role is to control overall project costs, but the good news is that they usually measure the potential return and justify the investment in comparison the expected impact. They focus on the organisation's bottom line, so if you can "show them the money" then you have a pretty good chance. Economic buyers usually are senior executives and C-level officers. They seek business solutions.
User Buyers
The role of user buyers is judging the validity and the expected impact of your solution. And here is a problem. If someone in the company knew the exact impact of the symptom the company is experiencing and the magnitude of improvement the removal of this symptom would mean, the company could heal itself. It's like going to the dentist and telling her, "You're wrong. I don't need a root canal. I just need a new filling."
You suffer from the symptoms because you don't know how to eliminate them. Then don't judge the expert who does this every day. User buyers focus on getting the job done. So, by now you see why you should ignore them. They usually are mid-level managers looking for solutions in their own area of expertise.
So, IT managers don't want you to talk about improving interdepartmental collaboration because they don't understand that stuff, thus, can't shoot holes on your arguments.
Technical Buyers
The role of technical buyers is to play the role of the judge and screen out potential service providers. They focus on applicants' expertise and project specifications. And this is where the problem lies. While the economic buyer is concerned about acquiring value for the company, technical buyers focus on preserving budget.
Economic buyers seek to acquire the biggest possible bang, while technical buyers seek to spend the lowest amount of buck. In their eyes, when the applicants' resumes match the project's specification, then they can be hired. But this is retarded because, just like with users buyers, they don't know what the real problem is.
They have been given a symptom the company is suffering from. Let's say you suffer from lower back pain. Considering that you don't know the problem, only the symptom, who do you see? A chiropractor or a podiatrist? The real problem can be either a back problem (see a chiropractor) or a leg problem, causing "referred pain" in the lower back (see podiatrist).
So, we have one more reason to go over the head of this technical gatekeeper straight to the economic buyer. The last you want is to be selected based on your resume and portfolio.
Need
Need is the other part of the qualification process. But it can be very misleading.
Personal trainer: Fred, you're 450 lbs with normal heart rate of 85 beats per minute. You need to lose some weight or, based on statistics, you run a 31% (just made up this number) risk of being killed by your heart.
Personal training prospect: Yeah, but I'm not ready and willing to change right now.
Personal trainer: When then?
Personal training prospect: I don't know. Some day, but not now.
Complex sales situations are the same. Many companies may desperately need your stuff, but are they ready and willing to change, and start using your stuff instead of staying with the status quo? The need is a very shaky qualification point. And if you try to make them buy, using traditional manipulative techniques, you can get kicked out permanently.
Time
Time also has a lot to do with companies' willingness to change. Have they reached a point in their existence when living with the status quo is more painful then kicking it all over and building a new situation, if necessary, from scratch? Maybe. Maybe not.
The typical B2C sales cycle is 1 to 60 days. In contrast, the typical B2B sales cycle is 30 days to 2 years. SiriusDecisions (2005 Sales and Marketing benchmarking Study) also reports that, during the last five years, B2B sales cycles have stretched by 22%. In the B2B world, most prospects are long-term buyers.
Only 13% of all enquiries buy within 90 days. 45% buy within 12 months. And 42% buy beyond 12 months. And the sales cycle is like lovemaking. If you try to rush it, you can easily ruin the experience pretty badly and often forever.
According to Wellesley Hills Group's research, 53% to 88% of B2B buyers are willing to switch to new service providers. So, as you see, even your own clients are pretty fickle, and the ones that are still only considering being your client are even more so. You have to be very careful with them.
Yes, on the surface of it, you may make good money with this approach on each of your projects. The problem is how profitable projects really are, and what you actually keep after paying your expenses. Also, consider how sexy and exciting your project are, and how pleasant to work with this client.
There is not much point in accepting jerk clients regardless of the money they are willing to pay.
An Alternative Qualification Approach
The reason for changing the evaluation process for prospects lies in the major differences between marketing and sales. In most companies marketing folks are paid salaries and sales folks are paid commissions.
This happens because management wants to single out a group of people who are single-handedly responsible for the company's success, and when something doesn't go according to plans, these same people can be blamed and fired. Personally I think this is a rather dirty practice by incompetent managers and executives who shift blame on a group of frontline warriors who simply implement what comes from high above.
When managers say, "We pay our salespeople for performance", they automatically admit, that salespeople are the only people in the whole company who are accountable for their work. All the others can come and go as they please, chat by the water cooler and sip their coffees all day and get away with it. Only sales folks get punished when the monthly quota is not reached.
Because of this difference, marketing and sales qualify opportunities differently. Marketing folks can be more objective about the qualification process because they are on flat salaries. Sales folks have to sell something... anything to someone... anyone or they don't eat. With this, they have an emotional engagement in every opportunity, and want to turn that opportunity into commission.
I've mentioned it several times and mention it again, that I firmly believe that paying commission for sales folks is a coward act from management and ruin any possibility of collaboration between marketing and sales. The two different compensation methods create two clearly separated silos in the company, and none of them can operate at top performance.
When marketing starts with a new lead, it has to be qualified according to marketing specifications. Later when the lead has reached that point, the BANT method may come into the equation, but first we have to find an alternative.
So, what qualification system can we use that is more long-term focused? B2B direct marketer, Russell Kern of the Kern Organization suggests the APNRP method which was developed by Bill Hell of CMP Media. It stands for Attributes, Position, Need, Readiness and Preferences
The shift in qualification is important because sales must know where these leads are from Marketing's perspective. Also, it's vital that Marketing passes the leads on to Sales at the right point in the nurturing cycle.
Using the language of lovemaking, if you go south too soon, then you miss out on some of the greatest bits and bobs of the exercise. I leave the rest up to your imagination. So, let's see this new qualification criterion...
Attributes
Is this lead a definite match against our Ideal Client profile? Can we see a possible fit for working with this client?
The whole idea is that the lead starts out the nurturing process at marketing, the department that generated it. But will this lead be nurtured at all or will it be abandoned right away? This is why the lead's attributes are checked against specific, pre-determined criteria. At this point a rough match can also be made as to which of your company's services this lead is likely to be needed.
Position
Can this person make a go/no go decision and does she have the authority to sign a cheque for it? We've talked about different buyers. This must be the economic buyer.
While the Attribute was about the company, Position is about the person associated with the lead. While there are user buyers and technical buyers in most B2B sales processes, there is one economic buyer with her hands on the purse strings. She makes the final buying decision. Yes, there will be several people evaluating your offer, but what really counts is the economic buyer.
Need
Think of the lower back pain in the previous section. All you know is that your back hurts and you see a professional to eliminate an undesirable situation. In the hectic B2B selling world, buyers are far too busy to deal with future desires. They're up to their eyebrows with alligators that have to be kept under control.
And here we have to discuss one more important distinction. The distinction between "needs" and "wants". The patient may want only some painkillers to reduce the pain (symptom), but considering the root cause of his symptom, that is, advanced gangrene in the leg, the doctor knows that the patient really needs the amputation of the leg. And any doctor who gives in to the patient's self-diagnosis is a charlatan. And so is any professional who blindly gives in to prospects' requests.
Marketing passes the lead to sales when there is a clearly established symptom the lead experiences and want to be eliminated.
Readiness
Are prospects ready and open to discuss their symptoms with someone who could eliminate them?
And here we can take a short journey on how people change.
In the world of counselling and therapy, a model developed by Dr. James Prochaska and Dr. Carlo DiClemente is broadly recognised and applied. So, let's see the stages of change...
Stage 1: Pre-contemplation - Blissful Ignorance
At this point people are not convinced they need to change at all. It's a state of blissful ignorance. Definitely no change is in the pipeline within the next six months.
Example: "Ignorance is bliss and my weight is not a concern for me right now"
Stage 2: Contemplation - Sitting On The Fence
Convinced but not committed. Change is planned within the next six months. Uncertain whether or not to change. Not considering change within the next month
Example: "Yes my weight is a concern for me, but I'm not willing or able to begin losing weight within the next month."
Stage 3: Preparation - Testing The Waters
Making a plan to make the change within the next 30 days. Some behavioural changes have already taken place.
Example: "My weight concerns me. I know the benefits of losing weight, and I'll start in the next month or so."
Stage 4: Action
The change has taken place in the past six months. Already in the process of change.
Stage 5: Maintenance:
Forming a habit after the change has been made for over 6 months. Continued commitment to sustaining new behaviour.
Stage 6A: Termination
Leaving the past behind and live in the new world with no danger of ever returning to the old habits.
Stage 6B: Relapse - "Fall from grace"
Resuming old behaviours. This time the change didn't work out. Back to square 1 and start again.
Nine Main Change Processes
1. Consciousness Raising
This stage involves providing and gathering information about the unsafe nature of the current behaviour and the positive impact the new behaviour can offer.
2. Dramatic Relief
In this stage people identify and express their emotions regarding the risk inherent in the change process. By expressing their emotions, actually they actually relieve themselves of the burden of the old habits.
3. Environmental Control
In this stage people evaluate how the change will impact people around them. This is when smokers start thinking of their children's health in their smoked-up homes. They reconsider social norms and establish themselves on a new moral footing. They start listening to other people's opinions.
4. Self Re-Evaluation
This is when people re-assess their whole situation.
5. Commitment
Here people feel a certain level of inner encouragement, and they realise they can do this and make the change.
6. Social Liberation
Here people seek out other people with similar problems and by becoming change mentors to others, they guarantee their own success.
7. Helping Relationships
Setting tighter relationships with people who need help.
8. Reward
This is a reward system contingent of the sustained new behaviour.
9. Countering
Here people measure the "for" and "against" of the change. The key is to keep the balance in favour of the "for".
Some Considerations About Change
Behaviour change is almost never one clearly isolated, discrete, single event. People move gradually from being uninterested (pre-contemplation stage) to considering a change (contemplation stage) to deciding and preparing to make a change.
Most people go through the stages of change several times, through mini relapses, before the change becomes truly established.
People in the pre-contemplation stage appear to be argumentative, hopeless or in denial, and the natural sales practice is to try to convince them, which usually generates objections. People get ready to change at their own pace and in their own tine. Any effort to speed up the process is like wrestling with a pig. The pig gets pissed off and you get dirty.
Preferences
How do leads want to be contacted and with what kind of information? In this stage marketing must establish the method of communication with leads and what sort of information they are seeking. This is the stage where flashy full-colour brochures, most of which is empty chest-beating and self-aggrandisement, go down the toilet and are replaced with specifically requested documents sales folks can actually use.
Summary
In the traditional BANT qualification process one element is budget, but it's irrelevant what we are guessing here because the sales folks, at the right time and in the right context, will find out the exact amount.
I've heard somewhere that marketing is getting people to the door and selling is getting them through the door. So, it's easy to see that getting people to the door requires a different qualification process from getting them through the door.
Marketing can use the APNRP method to bring prospects to the door, and then the sales folks can use the BANT method to select who to bring through the door. Marketing should pass leads to Sales only when prospects fully qualify on APNRP. And again, as we've discussed it so many times, try to automate as much of the process as you can.
The idea is not to manage a sales army that chases lots of tyre kickers, but running a small sales-commando that precisely maps and follows super-high calibre leads while the rest is taken care of by the automated lead nurturing process.
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
