Getting Sales Done #6 – Organize Part 3:  Probability

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Categorizing a sales opportunity to organize all of your opportunities has been the subject of the previous two articles in our Getting Sales Done series. Both have dealt with time as the first factor to use to differentiate opportunities for sales tracking, but time is certainly not the sole factor. If it were, you’d always be working on the next opportunity to close and doing nothing to develop your other opportunities to position yourself for this last phase of the sales cycle.

The factor we’ll look at in this installment is probability – what are my chances of winning this sale?

Probability is a simple concept, just a percentage, really, that in practice evades our best efforts to define. What is the probability that I will win any specific sale? There are a multitude of factors to consider in that question, and every one will change the result.

There are customer factors. How strong is their need? Do they have the budget? Are there decision-makers who recognize the need and the value of a solution? And so on. These are factors that you can evaluate and estimate, but they are out of your control, and likely out of your sphere of influence.

There are solution factors. Does your solution address all of the customers needs? Does the customer believe that? Do you bring other things to the party that enhance or retard your solution? Do you have a history with the customer? A reputation?

There are competitive factors. Who is the competition, and how do you compare to them in the areas important to the customer? How does your price compare? What about your solution versus theirs? Are you better?

And on and on and on. How do you plug all of these into a formula and get that elusive percentage? Well, you can’t. And even if you could, it’s meaningless.

How do you differentiate between 24% and 37%? That’s a spread of over 50%, but in sales, these are essentially the same number. Why? Because the upstream factors are inexact, and therefore they both mean you have only poor chance of winning. To be statistically significant, you would have to be managing hundreds or even thousands of opportunities before the difference would affect your actual closing rate.

And even if you could standardize those factors, most of them are qualitative, meaning your assessment will change with your current mood and understanding. You’re a little depressed today, so your assessment goes down. A good night’s sleep, and it goes up.

So probability is inexact. That doesn’t mean it’s not useful. We’re trying to categorize opportunities here so we can organize them for review and action, we’re not trying to plot the trajectory of the Mars mission. We just need to separate the good from the not-so-good from the bad.

In the end, about six points of reference are the most that we can consistently and accurately estimate, and all we need to utilize. The exact number isn’t critical for all the reasons presented, so rounding up or down to get into one of the six values is reasonable.

The trick is figuring out which of the six values to assign the opportunity to. Your process needs to be simple, it needs to consider all of the customer and solution and competitive factors, and it needs to rely on the best information available.

Here’s our solution. See if it doesn’t address all of the factors of probability.

Ask the salesperson (the source of the best information) will the sale happen (customer factors). Then ask will we win (solution and competitive factors). Limit the answers to low, medium, and high (simplicity and consistency). Plot the answers and you get six values: low/low, low/medium, low/high, medium/medium, medium/high, and high/high. Assign an appropriate number to each, and you’ve got probability assessed for categorization. And for other things like forecasts, but that’s for another article.

Next up in categorizing opportunities for the Organize stage of David Allen’s Getting Things Done process – Priority.

This post is part of the Getting Sales Done series. Here are the other articles in this series:

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