Failing To Eliminate The “No Decision” Factor

Problem There are two significant ways to grow a company's net revenue: - Create more sales opportunities - Convert more sales opportunities Creating more sales opportunities is extremely important to top-line revenue, but it can be an expensive proposition. Consulting groups estimate that the Cost of Client Pursuit for a $100,000 to 200,000/year client is somewhere between $35,000 and $100,000. Double Your Sales By Eliminating “No Decision”

Problem Despite these costs, salespeople spend the vast majority of time, effort, and money on creating new sales opportunities, while failing to improve conversion rates. In general, they fail to take advantage of the one conversion element with the greatest impact – one that is easy, costs almost nothing, and can be implemented immediately. Most importantly, this element has a far greater effect on net revenue than does the creation of new sales opportunities. It is called the “No Decision” Factor. Double Your Sales By Eliminating “No Decision”

“No Decision” Factor Years ago, a landmark Ohio State University study showed that, in 30% of selling situations, nothing is purchased. This figure is for full-time, professional salespeople. Since most business people are only part-time salespeople, the percentage of opportunities in which they lose out to “No Decision” is likely to be closer to 60% or 70%. Why is eliminating “No Decision” so important? Businesses with trained salespeople spend numerous years and significant dollars approaching prospects – nearly 1/3 of which will NEVER make a decision that leads to a sale – yet businesses rarely have a clue as to which one-third that is.

Double Your Sales By Eliminating “No Decision” Selling Fur Coats in Miami Imagine that you sell fur coats over the phone (using an auto-dialing system where you can't view area codes), and it turns out that 1/3 of your prospect list lives in 90° Miami – but you don't know which one-third that is. Without a process to discern each prospect's location, your company will continue to sink time, effort, & money into a “dry hole” – resources that could be directed at live prospects in Chicago, NY, & Boston. For most professionals, it's certainly not as easy as asking prospects where they live. There are two simple processes, however, that will painlessly eliminate your “No Decision prospects” and enable you to replace them with viable leads. Let's take a look at the profound effect eliminating “No Decision” has on a company's net revenue.

Impact on Net Revenue of 30% “No Decision” Factor Chart A 30% No-Decision Factor No-Decision Factor Eliminated Gross Annual Pipeline Value of 100 Prospects in Pipeline $20,000,000 Less No-Decision Factor$6,000,000$0 Net Pipeline Value Less No-Decision Value$14,000,000$20,000,000 Closing Rate (40%)$5,600,000$8,000,000 Cost of Sales ($35,000 x 100)$3,500,000 Net Revenue$2,100,000$4,500,000

Impact on Net Revenue of Increase in Client Opportunities This example demonstrates how a 50% increase in client opportunities still has less of an effect on Net Revenue than eliminating the “No Decision” Factor does. Chart A Chart B 30% No-Decision Factor Gross Annual Pipeline Value of 150 Prospects in Pipeline $30,000,000 Less No-Decision Factor$9,000,000 Net Pipeline Value Less No-Decision Value$21,000,000 Closing Rate (40%)$8,400,000 Cost of Sales ($35,000 x 150)$5,250,000 Net Revenue$3,150,000 30% No-Decision Factor Gross Annual Pipeline Value of 150 Prospects in Pipeline $30,000,000 Less No-Decision Factor$9,000,000 Net Pipeline Value Less No-Decision Value$21,000,000 Closing Rate (40%)$8,400,000 Cost of Sales ($35,000 x 150)$5,250,000 Net Revenue$3,150,000 30% No-Decision Factor Gross Annual Pipeline Value of 150 Prospects in Pipeline $30,000,000 Less No-Decision Factor$9,000,000 Net Pipeline Value Less No-Decision Value$21,000,000 Closing Rate (40%)$8,400,000 Cost of Sales ($35,000 x 150)$5,250,000 Net Revenue$3,150,000 30% No-Decision Factor No-Decision Factor Eliminated Gross Annual Pipeline Value of 100 Prospects in Pipeline $20,000,000 Less No-Decision Factor$6,000,000$0 Net Pipeline Value Less No-Decision Value$14,000,000$20,000,000 Closing Rate (40%)$5,600,000$8,000,000 Cost of Sales ($35,000 x 100)$3,500,000 Net Revenue$2,100,000$4,500,000

Approach As companies have started implementing best practices in Management, Operations, and Information Technology, it is equally important that they start embracing best practices in Sales, thereby maximizing firm revenue and profits. It is critical that they understand the concept of “No Decision.” “No Decision” primarily results from selling against a problem of low priority, about which the prospect has the luxury of doing nothing. Your salespeople must be able to expose this early by 1) exploring the Cost of Doing Nothing, and 2) understanding Stakeholder Alignment. Double Your Sales By Eliminating “No Decision”

Approach "Stakeholders" are people primarily within the prospect company who have professional and personal reasons to care about the decision under consideration. The outcome will affect them; they literally have a stake in that decision. Every prospect possesses a giant bucket – the “Issues I Should Handle Someday” bucket. The Cost of Doing Nothing (“CoDN”) process involves a series of pointed questions that quickly reveal whether or not a prospect has a problem about which he or she MUST do something. Done correctly, this process will have your prospect crystallizing, in his or her own mind, that the problem you're discussing needs to be transferred to the much smaller “ISSUES I MUST HANDLE TODAY” bucket. Double Your Sales By Eliminating “No Decision”

Approach Stakeholder Alignment is, at its core, an extension of this process. It helps one guide his or her “champion” (prospect stakeholder who has already acknowledged that the CoDN is unacceptable) through a process that quickly reveals whether or not the other stakeholders in the decision share the champion's opinion about the CoDN being too high. The latter process is instrumental in evaluating the validity of formal selection processes, such as “beauty contests,” many of which are set up merely as a lever to get incumbent vendors to lower their rates. Using these two processes helps you discover, prior to hundreds of hours wasted on preparing a presentation, that the CoDN is too low, and that this prospect will NEVER buy from anyone new. Move on! Double Your Sales By Eliminating “No Decision”

Exploring the Cost of Doing Nothing For a consultation on doubling your revenues by learning how you and your salespeople can efficiently eliminate “No Decision,” please contact: Craig Levinson, President Levity Partners, LLC US: COL: Double Your Sales By Eliminating “No Decision”