The Zero Dollar Opportunity – 3 Reasons to Ban Placeholders in Your CRM

CRM | Zero Dollar PlaceholderHave you ever been part of a sales organization where the pipeline is loaded with $0.00 value transactions early in the quarter?

The Qualified Sales Opportunity is the cornerstone of sales performance metrics. KPIs that inform us about the effectiveness of our demand generation efforts and improve ability to predict future revenues have never been more important.

  • New Pipeline Creation
  • New Opportunity Creation
  • Lead to Opportunity conversion (“Pipeline Rate”)
  • Average Deal Size (vs. Average Opportunity Size)
  • Length of Sales (Win) Cycle

Anything that undermines the validity of those metrics or distorts them has serious implications. So, why would anyone permit it?

Rationalize the Status Quo

Feeling empathy for the sales rep that may have a very incomplete picture of the opportunity after only 1 or 2 brief phone conversations with a new prospect is understandable. However, Zero dollar opportunities do not benefit sales reps that are held accountable to a pipeline number. Filtering unwanted opportunities out of management reports is simple enough. If company leadership isn’t seeing them, there’s no problem. Why cause trouble?

What is the message you are sending to the sales team about accountability and sales process discipline? What are the unintended consequences of doing nothing about it?

 

Observable “People” Issues

The Gunslinger– Sales pro who views himself as an independent operator and holds his cards close. He knows he will depart some day with the roledex he brought in the door, right after a big year and subsequent big quota increase.

The Team Player– Sales reps do appreciate Business Development Representatives (BDRs) and will nurture that relationship using company funds if left unchecked. Without proper structure and oversight, the BDR can become a personal assistant. It’s in the field reps best interest to make sure his “assistant” is taken care of. Teamwork is to be encouraged of course; good management understands there is a line to be drawn.

The Lead Spammer – How about the BDR that makes his “number” every quarter but neither his field counterparts nor the company ever see the payoff in the revenue column. Measuring a lead qualification team on quantity and conversion to opportunities often leads to inflated statistics unless checked by appropriate gates to the sales pipeline and a diligent manager.

 


Here’s what Peter Gracie, COO of B2B prospecting firm AG-Salesworks had to say at 2013 Inside Sales Virtual Summit:

“Before BDRs pass opportunities to Sales at my company, they need to be able to tell sales reps specifically what pains the prospect is experiencing. How serious that organization is about alleviating those pains. How soon they want their pains alleviated, and most importantly, if they will spend the necessary funds to alleviate those pains. They need to have an introductory conference call scheduled.”


 

7 Better Alternatives to Placeholders

 

Transparency

Hold the sales team accountable for current and next quarter Pipeline.
“It is either in Salesforce or it does not exist” is standard policy.

Pricing

“Start high and negotiate from there” is giving way to more pricing transparency on that part of the seller. Packaging, pricing and tactics for acquiring new customers is a critical element of your Sales Playbook.  An Opportunity check box for new prospects will help you quickly identify and track Average Deal Size for first time customers.

Qualifying Questions

Even the most guarded prospect will cooperate in an exchange of basic sizing information when the request is framed in the prospect’s best interest. “In order to connect you with the best possible…most accurate…etc.”
We may not know the precise size of the opportunity, but we know it’s not zero. If we standardize a conservative estimate, at least we have consistency.

Lead Scoring

The active sales cycle did not begin the first time the prospect visited the company website. If you are having a problem with premature “hand-off” to Sales when the prospect is really a “nurture” candidate, the Threshold Score to enter the pipeline may be too low. Check the weight given to activities such as website visits and white paper downloads.

Entrance Criteria

Sales Stage 1 entrance criteria dictate a Lead cannot be promoted to Stage 1 Opportunity unless it can be quantified in a way that is consistent with an agreed upon approach to initial sizing.

Lead Metrics

The best deterrent to flooding the top of the funnel is a hands-on inside sales manager who inspects the quality of every lead that is converted to an opportunity via a closed loop process. Monitor Lead Close Rate in addition to lead conversion to opportunity (Pipeline Rate).

Sales-Marketing Alignment

The generic “nurture” classification is no longer sufficient by itself. Develop “above the funnel metrics” metrics that show increasing awareness and interest in target accounts, just do not promote leads and suspects prematurely to the sales pipeline. Instead of a quick hand-off, a lengthy period of cooperation may be in order.

 

Conclusion

You cannot allow empathy for the difficulty of the job to override keeping the bar high and demanding transparency and personal accountability. Identifying new demand and converting it to an opportunity requires teamwork, a structured approach and consistency. If your sales and marketing leadership is not committed to cooperation, there is no amount of clever process and automation that will help.

Maintaining a precise definition of Qualified Sales Opportunity is a critical success factor to scaling a company because it enables focus and provides accurate feedback – good or bad. The downside to the zero dollar opportunity or any other placeholder is that it distorts the truth and negatively impacts decision-making.

 

Resources

Article: Pipeline Analytics: Keep it on the Radar
Article: Pipeline: 5 Ways to Determine if You Measure Up

Improve Your Sales Metrics and KPIs


About Neal Murphy

Neal Murphy is the publisher of Enterprise Sales Operations and former VP of Worldwide Sales & Operations with 20 years experience in enterprise technology.

+Neal Murphy +ESO