By Keenan, CEO, A Sales Growth Company
The last few years have radically transformed the sales process in many ways. The ups and downs of companies are often directly correlated to how well organizations are adapting to these changes. Nowhere is this clearer than in a crucial, but all too often ignored, part of the sales process: deal management.
As I work with businesses of all sizes to help them evolve for this new reality, I see how many potential huge sales fall through the funnel. I tell business leaders that sales are won in discovery, but lost in deal management.
As a readwrite.com report put it, while businesses have been undergoing changes, deal management is still largely handled with “the same old tools and strategies. Yet, they get more complicated. This leads to unnecessary additional costs and losses… Many businesses are losing millions of dollars each year because complicated deals are handled using outdated techniques.”
Mastering deal management requires work, but it’s necessary. For businesses to succeed and be healthy, they have to tackle this problem as quickly as possible. This is especially true for the B2B businesses, since business-to-business deals often take much longer than B2C (business-to-consumer) deals, and can involve huge sums of money.
Investors are in a powerful position to push businesses to address their deal management problems.
What is deal management?
Once a potential deal enters the sales pipeline, the obvious goal is to get it all the way through to a conversion. But deals don’t move forward on their own. The process of pushing a deal through the funnel takes dozens of active steps.
Deal management is the process of making that happen. Effective deal management starts with a solid deal methodology (mine is called Gap Selling). It includes clear deal success criteria; a repeatable deal review process; opportunity scores highlighting the health of a deal; and reporting that tracks velocity and conversion rates.
The first-line manager has primary responsibility for this, but others on the team have important roles too. For example, higher-ups need to be able to track progress, address setbacks, help ensure that sales representatives pull through, calculate the likelihood of a deal closing, and gauge progress toward quota.
Companies struggle with ineffective deal management for all sorts of reasons. When they fix these problems, big results follow. One company I worked with had this as a priority, and ended up with its two biggest sales months in the organization’s history, as well as a doubling of its sales record.
Studies show that emerging technologies can improve deal management. The best ones are built with a natural user experience that keeps track of everything including typed, handwritten and spoken notes, and allows teams to collaborate, tracking every step.
How investors can help
When’s the last time an executive or investor relations representative addressed deal management in an ? Sales funnels are the lifeblood of B2B businesses. When you get a chance to ask questions, bring up the deal management process.
It helps to know the lingo so you can get straight answers. Ask where the leakage is greatest in the pipeline. Organizations spend millions, or even billions, of dollars on customer acquisition costs (CAC) only to have a lot of that money leak out of the pipeline due to failed deal management. I’ve seen businesses lose up to 90% of those costs when customers end up doing no deal or buying from a competitor. This only stops when deal management plugs the holes.
In making investment decisions, get all the information you can about this. The more a business understands the challenges of deal management in today’s environment, and the more proactive it is about overcoming those challenges, the more successful it’s likely to be.
In my book Gap Selling, I explain that the “gap” is the difference between a buyer’s current state and their desired future state. To be the company that gets a buyer to that future state by providing the product or service they look for, an organization needs to take excellent care of that buyer on every step of the journey.
With top-notch deal management, a company is far more likely to win deals, outgrow the competition, bring in profits, and see share values rise.
Keenan is CEO and president of A Sales Growth Company, and author of Gap Selling: Getting the Customer to Yes.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.