What is your opportunity definition?

Let’s start with a quick experiment: select an opportunity from the early stages of your pipeline right now.

Don’t overthink it. Just pick one.

Great. Can you (or the owner of this opportunity) provide a solid case that justifies its existence?

We talk a lot about forecasting inaccuracies, the importance of constant qualification and pipelines turning into pipedreams. However we often fail to ask, and answer, a very basic question that every sales organization needs to address:

What is our opportunity definition?

Or put differently: when are our sales people allowed to convert a lead/MQL/prospect into an opportunity that enters the pipeline?

Before we go on, let’s pause and reflect. While there are numerous definitions available for the three terms below, I find these ones quite good.

• A lead is “a company or person that might be interested in your products or services”
• A Marketing Qualified Lead, or MQL, is defined as “a lead judged more likely to become a customer compared to other leads, often based on lead intelligence”
• A sales qualified lead, or SQL, is defined as “the decision from sales, after a series of interactions, that an opportunity with a $ value and a time frame exists”

Let’s zero in on the SQL process. Why is it important to establish an agreed upon opportunity definition?

First of all, the pipeline is not meant to be a dumping ground for anything and everything that happens to come your way. Just because somebody watched a video and had an interesting heat map does not mean they are ready to buy right now, or within your sales cycle, or, really, ever. You provided something that sparked an interest and they engaged with your (perhaps gated) content. Does this mean we have an opportunity on our hands?

Similarly, the mere identification of easily identifiable hard facts does not equal high probability. You may have (perhaps bought) a list of companies that meet tangible ideal customer profile criteria – they tick all your boxes on annual revenue, number of employees, industry and geographical location. A compilation of companies that aligns with your target market is a great start, but naturally we need to figure out which ones that are willing to invest in our products and services. 

We spend an enormous amount of time, money and resources on the wrong deals; the more noise you add, the harder it will be to listen, prioritize and focus on the customers you are in a strong position to help, add value and close. 

It goes without saying that the general idea is to understand what value you can deliver that clients that are willing to pay (a premium) for. In order to do so you need to identify who your target customers are and what they (not you) really appreciate that you bring to the table.

However, this is merely the starting point. Even if you have a good understanding of these aspects, how well do you qualify your prospects in line with your ideal customer profiles? When you make a decision to go after certain types of clients, you also decide to stay away from others – unfortunately, we tend to stray more often than we’d wish. 

What’s in a sales qualification process?

So, what is the magic formula for an opportunity definition? Is it BANT, or any of the other qualification acronyms now available (click here for a separate post on this very topic)? Frameworks are incredibly helpful, however in complex sales it tends to be a little more, you guessed it, complicated. To some extent, the SQL process is always a best guess as we do not operate in a lab where we can control all variables. That said, what we have found when helping our clients structure their prospecting campaigns is that a mix of the following provides a good foundation.

Tangibles

As mentioned earlier, qualification criteria should involve hard facts, which in turn should be based on your ideal customer profiles, which in turn could be identified by doing a Win/Loss analysis and applying the 80/20 rule. If that sentence made little sense, here is the checklist:

• Look through your won and lost deals for the past 12 months 
• Figure out what your most profitable customers - the 20% that generate 80% of revenue (lower sales costs, higher win rates, shorter sales cycles etc) - have in common
• Perhaps even more important: use the same method to identify what characteristics your least profitable customers share. Call it the reverse 80/20 
• Document the tangible facts for both – use these criteria as prospecting qualifiers and disqualifiers, respectively

Best practice questions

When qualifying prospects, a number of questions need to be asked and answered. Best practice questions include:

• Can we demonstrate sufficient value?
• Can we deliver with profit?
• Can we compete?
• Do we have enough good arguments for this opportunity likely closing within our average sales cycle?

Naturally, the devil is in the details. You will need to define what sufficient value actually means – will you be able to put together a compelling business case and quantify the benefits of your offering? How will each sales person know when they should compete and when to stay away?

We highly encourage the use of data and analytics to make smarter, more informed, data-driven decisions around the questions above. It will help you pinpoint the circumstances of where you can compete (and not), where you in fact are delivering value and stand out from the competition and which types of sales projects that have the highest profit margins. 

To find out how Membrain's sales software lets you manage the prospect qualification process, click below or read more here.