It's a hard time predicting when an opportunity they’re working on will become cash. And having a good handle on when to expect the cash to come can be just as important as how much to expect. Why do you think Popeye would always lend Wimpy money to get a burger? Because he knew he’d get his money the next Tuesday.
If you can gauge about when it’s coming that can help you plan a more effective money management strategy. And a good way to start improving your ability to predict when deals your working on will become $$$ is to define a few things.
Milestones and Stages
If there is more than one person responsible for selling and/or interested in knowing what’s in the pipeline you’ll definitely benefit from identifying a few basic milestones you may go through when trying to close a deal. The above diagram lists a few as an example. Don’t get scared thinking you need some long drawn-out sales process to follow, but think about maybe 4 or 5 stages you go through on a regular basis when selling. Once you identify these come up with a short description of what it means when the deal is in this stage of the game.
In most cases there probably are a set of activities and tasks that need to be performed when you complete a milestone and move on to the next stage. Take the time to identify the tasks, how long they should take, who should perform them and what other resources may be required. That way you can begin to gage how long it should take to move on to the next stage.
Probability to Close
For each milestone you hit it’s important to ask what are our chances now to win this thing. So for example when you’re at the Needs Analysis stage you it’s pretty early on so you might only have a 10% likelihood of closing the deal. But if you get to do a face to face presentation with the decision maker then you jump to a 40% possibility of closing the deal. It may take you some time to tie some pretty accurate probabilities to the stages but it’s worth it in the end.
Reason for Losing
When you do lose a deal it’s just as important to understand why you did as it is to understand successful conclusions. Try to find out and track why you lost. Also keep track at what stage things fell apart so you can better estimate your probability to close rates.
There are other things you can do but these are a few easy steps that can help you better understand when to expect the cash to roll in. And basically any CRM application worth its salt can help you do this pretty easily. Don’t expect to be Karnak and know exactly when the bucks are coming, but this should help you do much better in predicting when deals morph into actual dollars.
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About the Author: Brent Leary is a Partner of CRM Essentials. Brent also hosts Technology For Business $ake, a radio show in the Atlanta, Georgia, USA area about using technology in business.
Brent is a member of the Small Business Trends Expert Network.