How to avoid poor decision making under the pressure of an empty pipeline
Welcome to a short series of opinion pieces, highlighting what I believe are effective commercial drivers for start-up and fast growth creative, marketing and tech businesses.
With over 10 years’ experience in B2B sales & marketing, I am passionate about developing others and fostering a collaborative working environment focused both on individual and collective success. I am now a Partner with leading growth advisory and M&A firm, Waypoint Partners, working with shareholders and leadership teams in the creative, marketing and technology sectors, to grow and realise value.
In the first of what will be a series of articles, I discuss ‘Poor decision making and how to avoid knee-jerk reactions’ in times of desperation.
ARTICLE 1. How to avoid poor decision making under the pressure of an empty pipeline.
If you’ve worked in the leadership team of any creative/marketing/tech agency or service driven business (i.e. SAAS), the following scenario might be uncomfortably familiar:
The new business pipeline hasn’t filled as you’d hoped. The quarterly gross profit forecast suggests you will soon have excess capacity in the team. And thanks to office politics within your client’s organisation, an upcoming project has gotten the chop.
It’s in these situations that any new business lead can start to look like the right lead for you, regardless of potential profitability, client cultural fit, or pre-planned (if there is a plan) segment focusing. You’d be forgiven for considering an ‘inappropriate’ lead when the business pressure is on. BUT, time spent pursuing (or even winning) an unsuitable new client rarely does a business any favours.
Key to not being overwhelmed by empty-pipeline-panic is, very simply, two things: i) clearly defined and focused segment targeting; and, ii) a reliable way of evaluating the value (both in terms of profit and non-profit metrics) of a potential new client.
Defined & Focused Segment Targeting
A new business target list may sound obvious and, to all intents and purposes, it is. Most organisations focused on growth will have spent some time thinking about theirs. But, have you asked yourself the right questions?
· Have you identified one or more specific market segments that are small and focused, in which buyers share the same pain and are able to reference each other when buying?
· Have you got a clear idea of who the “golden clients” would be within that segment?
· Have you thought about selecting a target segment that, in time, your business has a chance of dominating?
· Have you split this focused list even further, by those clients that will bring fortune and those that will bring fame
· How many fortune clients do you need to be able to work on the ones that will make your agency famous?
· Are you aware of the procurement channels, buying cycles and incumbent agencies of the clients you are wanting to target? And how is that informing your overall prospecting plans. (More to come in the second article of this content series).
Lead generation is a particularly time intensive exercise, so it is absolutely key to ask these questions (and indeed many more) in order to determine which ‘sweet spot’ lays in the target segment you’ve identified, i.e. clients that are: primed for a change of relevant service provider; most likely to fit culturally with your business; and for whom you can deliver impactful work, profitably.
Having this ‘sweet spot’ clear in your mind provides you with an informed perspective from which to decide whether a particular new business opportunity is worth pursuing. It gives you the confidence, even when the pressure is on, to turn down a lead that just isn’t right for your business in the long term.
A difficult decision, like saying no to business, is aided by the second tool that I recommend all my clients work with. I refer to it as a Lead Qualification Scorecard and it assists with determining the attractiveness and potential profitability of any given business lead.
Lead Qualification Scorecard
It’s very possible that the business leads coming through the door, aren’t on your tightly defined target list. This is where your Lead Qualification Scorecard can play a key role. [NB: Regardless of where a lead has come from or the health of your sales pipeline, an opportunity should always be qualified through the lens of some sort of scorecard.]
A simple set of questions can help you evaluate the size of the opportunity and determine whether to invest the time and money required to win the client. The criteria of the scorecard needn’t be extensive. The questions asked, though, should be closely related to your business vision and overall business plan. You might want to consider including the following:
· What is the size of the opportunity from the perspective of profit?
· What length of contract is it that you would be pitching on?
· When won, what would be the ongoing potential to upsell other services?
· Does this client fit culturally with your agency and will the team be inspired, fulfilled, through working on this piece of business?
· Is this a fame or a fortune client?
· Are there any synergies with existing clients?
Ultimately, planning sets you on a considered course. And asking the right questions arms you with the information you need to stay on track. Having simple tools in place allows you to keep your wits about you and the business goals in mind, when the pressure is on. Turning down work may feel like a foolish move when the new business pipeline appears to be running a little dry, but my experience has shown that chasing short-term profit without due consideration will, more often than not, stunt long term development and growth.
Keep an eye out for a further three content pieces, each addressing a different part of the sales cycle.
· Article 2: Planning for success: A three-pronged approach to lead generation
· Article 3: Realising success: Converting and refilling the lead generation pipeline
· Article 4: The importance of investing in clients and the related opportunities for growth
To speak to me directly on the subject of sales & marketing or how Waypoint partners could work with your business to unlock future potential and drive growth, please contact me at: [email protected]