There will always be sales opportunities that are considered riskier than others, but sometimes it’s hard to know. Prospects suddenly go silent, and the deal that was definitely expected to close doesn’t. In fact, nearly 60% of sales leaders flag unexpected deal slippage as their top challenges.
Why is this one of the top challenges? Deals don’t always close as expected, or they close in unpredictable ways.
All opportunities have an element of risk, some may have fewer elements of risk than others, but it should be acknowledged there is some form of risk for every opportunity.
Do you recognize any of these red flags?
This checklist gives five red flags management can keep an eye out for when they’re assessing opportunities in the pipeline, or building the forecast.
1. Stage age doesn’t match up to company averages
The stage names for organizations will vary, but for each stage in the pipeline, there is a reasonable amount of time for an opportunity to remain in that stage. What is deemed reasonable will vary and sometimes extenuating circumstances will keep an opportunity in a stage for longer than normal. If normal stage age is 60 days, and the current age is 65, this is not something to immediately flag, although it may be worth having a discussion with your sales representative to understand if and when the deal is going to progress.
On the other hand, there are other times when it is very clear that an opportunity is stalling, and progress seems to have halted. Let’s take an obvious example: Crane PLC is in the first stage, Qualification, and yet, the stage age is 342 days! Even if an organization has a long sales cycle, this opportunity is way outside of the norm and has been flagged to indicate that it needs to be reassessed or removed from the pipeline altogether.
2. Projected close date has changed more than once
If a date is continuously pushed back, this is certainly a red flag. There are a number of reasons why this could be happening: the prospect has suddenly gone silent, it’s taking longer than expected to get the go-ahead from the decision maker, you’ve sent the contract it just hasn’t been signed yet.
This isn’t to suggest the opportunity won’t successful close, just that it is at risk. Identifying, tracking and understanding which opportunities are at risk will decrease the likelihood of surprises. This can be especially important when it comes to planning the forecast–you won’t assume the deal is definitely going to close.
3. The opportunity has been moved in and out of the forecast more than once
This ties into the projected close date being continuously pushed back, and perhaps there is something going on with the deal. Sometimes an opportunity will be included in Q1 forecast, and then included again in Q2. Maybe management hasn’t noticed if the close date has changed, but they should be able to see and compare opportunities that have been in previous forecasts. Opportunities that are included in multiple sales forecasts need to be reassessed to confirm whether the deal is likely to close or has been lost.
4. Projected close date is considered unrealistic
Organizations have normal sales cycle, and every once in a while there may be a “too good to be true” opportunity. This opportunity may exhibit unusual characteristics and quickly moves through the sales funnel. This deal is perhaps a sure thing and the prospect just wants to move things along quickly, but if the opportunity is outside “normal behavior,” it’s important to keep an eye on the deal and make sure it does successfully close.
5. Change in circumstance while deal progresses
If the team you’re dealing with has changed, the decision maker has gone silent, or you’re suddenly receiving pushback from the prospect, these are all reasons to assess the current deal. Remain optimistic but cautious moving forward.
Of course, your organization will have their own red flags to assess opportunity risk, these are only some factors to take into consideration when assessing opportunity risk. The goal is to determine what common risk factors are in your organization, and decide what action is necessary to mitigate the identified risk and have a plan to put into action.
What other types of risk factors does your organization take into consideration when assessing deals? After a risk assessment, do you feel more or less optimistic about forecast accuracy? We’re very interested in your comments, or start a discussion with Vortini to learn more about how we deal with at-risk opportunities.
Jess is a communications professional and Vortini’s lead content/web developer. Her current interests lie in the intersection of sales technology and machine learning. In her free time she reads a book-a-week, practices yoga, and is an avid gardener.