June 2007 - Do You Qualify Your Sales Leads From A Sales Or Marketing Standpoint?

by Tom "Bald Dog" Varjan, Organisational Provocateur

We all know that any engagement starts out as a sales lead, and then it's up to us to properly qualify those leads. And at this point we're about to reach a fork on the road of converting leads top paying clients, and we have to decide how we want to qualify them. And here lies a big problem too. Most consulting firms don't have Ideal Client profiles, and try to run after each and every opportunity almost indiscritely.

And as the saying goes, the man who chases two rabbits goes to sleep hungry. And as a former rabbit farmer, I can only confirm this statement.

And what happens when consulting firms operate on an "Any business is good business" basis? These firms often end up with lots of low-margin clients. All the associates are busy beyond imagination, but it's barely enough for the firm to stand still.

What usually happens to client acquisition at many consulting firms is that, as a part of marketing, partners define the ideal client profile, and then as the rainmakers go out to make rain, and since they want to meet and exceed financial projections, they accept any client who offers money. And it's even worse in false consulting firms where there is a dedicated commissions-based sales force. That creates an instant discrepancy between sales folks and the rest of the firm. So, the poor rainmakers often make acid rain that burns holes on the firm's purse and money starts leaking away.

And because of the difference between the sales folks or rainmakers and the other people involved in client acquisition, they assess opportunities drastically differently.

Sales folks usually use the broadly-used 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 pretty self-centred. Qualification is set up from a rather ambiguous perspective. Let's see...

"We can fiddle with any kind of budget the prospects throw at us. They can't go low enough on us not to accept the gig."

"If the budget is low enough, even mid-level managers can initiate the go ahead."

"We can always do a manipulative needs analysis that creates needs out of thin air. And then we can scare them into instant action."

And now let's look into the details...

When I use the term "salesperson" or "salespeople," I refer to anyone who meets prospects with the intentino of converting them into paying clients. But you must understand that in a consulting firm there shouldn't be a dedicated sales force whose sole job is to sell the consultant's services.

It keeps amazing me that consultants who sell themselves as sales trainers employ commissioned salespeople to sell sales training because the highly-esteemed sales trainers can't sell themselves out of a paper bag. But again, bankers also advise business owners on how to run their businesses, although I've never seen a banker who's had real world business education. Yes, some have classroom theory of some kind, but they haven't run businesses. Just a little detail.

So, let's take a quick look at the BANT model, and then we'll compare it to another qualification model. In the BANT model everything starts with...

The Budget

Salespeople have to make sure prospects actually have the budget for the proposed solution. But this is easier said than done. Most prospects are reluctant to share their budgets because they are worried that if they share this piece of information, then salespeople will use it against them, and try 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.

Just walk into Future Shop in North America, and try to buy a basic computer for wordprocessing. The salesperson will do his absolute best to convince you to buy the most expensive model with all sorts of fiendish features and pre-loaded crapware. By crapware I refer to all the preloaded rubbish (Except on Apple computers) which is absolutely useless but companies put on their machines to boost perceived value.

Authority

Salespeople have to make sure they talk to the real economic buyer who can sign the contract, sign the downpayment cheque 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. Again, qualification. Also, for most people it's more comfortable to discuss possibilities with lower level managers. But the problem is that they can't initiate the project, so all the time is wasted. When selling complex consulting services, often there are several buyers in the process, although at the end of the day only one gives the go-ahead.

Here are some of the buyers...

Economic buyers: control the purse strings and the release the money. Several people have input to the decision, but economic buyers are the ultimate decision-makers. 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 investments, 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 to get the gig. Economic buyers usually are senior executives and C-level officers. They seek business solutions.

User buyers: judge 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, and I can do it for myself to save money."

Prospects suffer from symptoms because they don't know how to eliminate them. They try to judge the experts, who do this every day, whether or not they can do it.

The most moronic manifestation of this problem is when prospective clients want to hire web designers or copywriters, and insist on seeing their portfolios and writing samples. What the bloody hell gives them the right to judge something they don't know dick about.

And then upon looking at some web design samples, our moron announces, "I don't like this designer's colour schemes."What this poor bastard doesn't know is that thr colour scheme is the result of the collaboration between the designer and the owner of that website.

What is the next step after this? Going to a restaurant and, before ordering, asking to see the chef's portfolio of dishes in nice colourful photographs? Although the pictures may look great and glitzy, but if those dishes killed a truckload of guests who have eaten them, then you're in deep shit before you can say Jemima Puddleduck.

Web designers ditto. They design great sites, but how have those sites contributed to the improvement in their owners' businesses. Most business websites are a waste of money.

As Mark Twain once put it...

"Thunder is good, thunder is impressive; but it is lightning that does the work."

Portfolios may look impressive but the real results reside (or are missing) a lot deeper.

While economic buyers want to talk about possibilities and potential ROI, lower level flunkies want to see portfolios, writing samples, spec sheets, technical descriptions. Why? Because they don't require buy/no buy decisions, so they don't end up in the ego-crashing situation when they have to admit that their budgetary authority is as mush as a stale muffin.

Also, they are focused on getting the job done at a tactical level. They tend to ask lots of "how to..." questions. 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 in your arguments. They're likely to ask retarded questions like, "How do you plan to install a new server considering that you're not a Microsoft certified server installer."

Most of them are obsessed with means and ignorant to ends.

Technocal buyers: 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 for their bucks, while technical buyers seek to spend the lowest amount of buck, even if all it gives to the company is huff and puff. (As opposed to a healthy and happy bang). In their eyes, when an applicant's resume matches the skills on the project specification sheet, the applicant, provided she also accpets the artificially created compensation, can be hired. But this is retarded because, just like with users buyers, buyers 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, that is your tight hamstring muscles are pulling on your lower back 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.

Yes, there are lots of people who believe that past performance is the best predictor of future performance, but I also have another message to them from Mark Twain...

"When you find yourself in the majority, pause and reflect."

There are far too many variables that impact performance, and making an umbrella statement that the past equals the future and nothing can be done to change it is rather Freudian.

Need: is the other part of the qualification process. But it can be very misleading...

Personal trainer: Fred, you're 450 lbs with a resting heart rate of 115 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.

Prospect: Yeah, but I'm not ready and willing to change right now.

Personal trainer: When then?

Prospect: I don't know. Some day, but not now.

Complex sales situations are similar. Many companies may desperately need your services, 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 consulting 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 increased 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 research done by Mike Schultz of the Wellesley Hills Group, 53% to 88% of buyers of professional services are willing to switch to new service providers. Here are some more results on various professional services...

• HR consulting: 80%


• Management consulting: 76%


• Marketing, advertising and PR consulting: 69%


• Training firms: 59%


• Financial services: 57%

Now tell me if this is not scary. Over 50% of your clients would be willing to drop you like a hot potato if something better came along. 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.

So, we've seen that using BANT is not exactly the best way of qualifying prospects.

An Alternative Qualification Approach

Yes, on the surface of it, you may make good money on each of your projects with the BANT qualification approach. But 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 these clients. There is not much point in accepting jerk clients regardless of the money they are willing to pay.

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 managing partners want 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 managing partners who shift blame on a group of frontline warriors who work hard to sell other people's services.

When managing partners say, "We pay our salespeople for performance", they automatically admit, that salespeople are the only people in the whole firm who are accountable for their work while the others are paid for putting in face time. 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 folks 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 sales folks and the rest of the firm. The two different compensation methods create two clearly separated silos in firms, 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, Russel Kern of the Kern Organization suggests the APNRP method, which stands for Attributes, Position, Need, Readiness and Preferences

The shift in qualification is important because the sales folks must know where these leads are in the lead nurturing process. A big problem is to call a lead sales-ready and hand it over to the sales folks before it's really sales-ready. Also, it's vital that marketing passes the leads on to the sales folks at the right point in the lead 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 criteria...

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 you don't accept clients just because they throw money at you. Position your firm and be selective. For instance, years ago when I was consulting with some BMW dealerships, we created a new rule that salespeople wouldn't even set an appointment with prospects until and unless prospects fax in a written proof that they have the means to buy their chosen vehicles.

All of the sudden salespeople had quite a bit of time on their hands, and, clicking into marketing mode, started interacting with past clients and pending prospects. They drastically shortened their sales cycles.

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 the your company's services this lead is likely to need. But of course it's tentative.

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 before and this one must be the economic buyer.

While the Attribute is about the company, Position is about the person associated with the lead. While there are use buyers and technical buyers in most B2B sales processes, there is one economic buyer with his hands on the purse strings. He makes the final buying decision. Yes, there will be several people evaluating your offer, but what really counts is the economic buyer.

Need

Does this lead have a clearly defined symptom it suffers from? Re-read… Not a problem but a symptom. This is why the symptom. Think of the doctor. You don't go to the doctor because you want to be healthy some day in the future. Your go to the doctor because you feel rotten right now. You don't even know your actual problem. 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 and they have to be kept under control. You can read more on this in Jill Konrath's book, Selling To Big Companies.

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 amputation of the leg. And any doctor who gives in to the patient's self-diagnosis is a charlatan. And so is any consultant who blindly gives in to prospects' requests, "We need you to facilitate our annual strategy retreat."

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 in humans...

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. I feel healthy. Get lost and leave me alone!"

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: "I'm aware of my weight issue, but I'm not willing or able to begin to do anything about it 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 within the past six months and the person is still in the process of change.

Stage 5: Maintenance: Forming a habit after the change has been made for over 6 months. Continued commitment to sustained 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 one and start again when ready and willing.

Nine Main Change Processes

During the seven steps of change, there are 9 processes we go through.

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 situations and either quit or commit to full change.

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. Rewards: 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. For 45 years I was addicted to sweets. Although I managed to restrict me sweets consumption to only Sundays, I still regard it as an addiction. Then 2006 Boxing Day something happened (Don't ask me what for I still don't know) and I lost my interest in sweets. Totally. I don't know what it was, but it wasn't willower. It was something deep inside that overwrote the 45-year old message with one single stroke.

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 go down the toilet, marketing folks stop generating their self-aggrandisement-filled slogans and "awareness-creating" "brand stuff," and all this colourful rubbish is replaced with specifically requested documents sales folks can actually use to do their work better.

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. When they sit down with buyers and quantify the cost of the problem, the previously cited low-ball budget can instantly double or triple. Of course, this only happens if you do value-pricing, and don't fall for this per diem and time plus materials nonsensica.

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. It's basically two processes within the same continuum. Just as lovemaking has its own separate processes within the same continuum, so does client acquisition. And just like in lovemaking, in client acquisition too, the transition from one process to the next should be smooth as a baby's arse or…

Marketing folks 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 system.

And now for something completely different... It's time for tea.

"Dynamic Duo" Mentor Programme... ...has 3 openings for January and 5 for February 2010. Click here to continue to the fiendish details.

Recommended Reading

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich

By Tim Ferris

Average North American consultants work about 55-70 hours a week. However, many of them don't even earn what they used to earn in their former 9-to-5 jobs in 40 hours with all the benefits and vacations times. What the cricket is happening here?

I believe Tim has some of the answers in this book. Besides all the tactical "how to..." stuff, what this book provides most of all is a mindset. It's not that consultants should outsource everything to India or China, but there are masny tasks in any consulting firm that can be outsourced in a rather profitable manner.

Now some may say they lose control over the outsourced tasks. If this were true, brain surgeons (the kind of people who love being in control) would do their own accounting and fix their own cars because they fear they would lose control to an accountant or car mechanic.

Now go and grab your copy of The 4-Hour Workweek.