A Methodology For Qualifying Leads And Opportunities Helps Everyone Speak A Common Language
No, this is not a sales software pitch. For once, this is not about software but about a system you use to better qualify, prioritize and forecast sales opportunities.
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Sales operations is key to driving revenue these days. If you don’t have a sales operations team, or if you’re not working with a revenue growth agency, then you probably don’t have a progressive lead qualification system that helps you shorten your sales cycle, close new customers faster, push up the average revenue per new customer and exceed your revenue goals.
Additionally, you might be using an outdated lead qualification methodology. When you Google “lead qualification system,” the usual cast of characters pops up. Some of these might seem familiar to you. You might even be using one of them.
Here are a few of the existing lead qualification frameworks. See if these sound like your company’s system. But to really see sales accelerate, keep reading below and check out our advanced lead qualification methodology: pain, power, fit.
Option #1 – BANT (Budget, Authority, Need, Timing) — Devised by IBM.
This is the original lead qualification framework, and it’s still used widely today. Potential BANT questions include: Do you have a specific budget allocated for this project? Do you personally have the authority to make the buying decision? What are the top challenges, needs and pain points that your team is facing at the moment? Is this a priority acquisition for your team at this time?
There’s nothing wrong with BANT. It’s a decent framework and probably the most popular, but what are reps supposed to do with this? It’s more of a questioning guideline than a lead qualification methodology. If they answer yes to the four yes or no questions, then what?
Option #2 – GPCTBA/C&I (Goals, Plans, Challenges, Timeline, Budget, Authority, Negative Consequences And Positive Implications) — Devised by HubSpot to put the sales rep in a more advisory role for informed buyers.
Potential questions from this system include: Do you have specific company goals? Are the resources in place right now for you to implement this plan? How are you currently dealing with these challenges? What’s the timeline for implementation of this plan? Is the budget already being used to solve the problem we’ve discussed? What concerns do you think the company’s authoritative decision-makers will raise? What are the personal consequences or implications for you hitting your goal or not?
I like that this is more comprehensive, and it digs into the consequences, but it still feels incomplete to me. Do you simply look at the answers to know if something is going to close this week, in four weeks or in four months? As a system, it feels incomplete.
Option #3 – CHAMP (Challenges, Authority, Money, Prioritization) — Devised by InsightSquared.
CHAMP starts with the challenges, needs and pains that the prospect is experiencing. Potential CHAMP questions include: What objectives are you looking to achieve by solving this pain? How are purchasing decisions made for products like ours and who is involved in looking at this solution? What are your expectations for the investment necessary to purchase the solution? When were you planning on starting the implementation?
All three of these systems are so similar that it’s like they scratched out the vocabulary from the previous one and used different words.
This isn’t so surprising when you consider the objective of lead qualification. You have to know the right questions to ask to learn where a prospect is in their buyer journey.
The questions absolutely provide insights that should help you place your prospect in the early, middle or late stages of their buyer journey, and then they do help execute a sales process that continues to guide them down their journey’s path.
All three of these methods do provide the questioning framework critical for making a go or no-go decision associated with qualification.
Today’s revenue generation efforts are far more complex than ever before, and the lead qualification system should be further-reaching than simply a questioning framework.
Today’s sales teams need something more comprehensive.
Today’s Lead Qualification Challenges
The buyer journey is far more self-service than ever before. Prospects are working on their own deeper into their buyer journey before reaching out to sales, which makes qualifying leads more challenging.
Here’s a partial list of the challenges associated with lead qualification:
- Prospects have access to much more information. This is good and bad; some of the information may leave them with some incorrect assumptions.
- Prospects have more options and, in some cases, this spins them out into the do-nothing category.
- The buyer journey isn’t linear anymore, so the stages are less relevant, and people move back and forth along the continuum depending on their experience and journey.
- Prospects don’t always give you the complete picture. If you ask about their approval process and your contact tells you she’s the decision-maker, that might be true. But you might also find that board approval is necessary to free up the funds to pay for your services, meaning she’s not the final decision-maker.
- Prospects and people in general are looking for quick information and summaries. They’re not always going to take the time to read everything you send them. But when they need or want something, you had better be able to get it to them quickly.
- With so many software tools available for sales, having a systematic and quantitative way to qualify leads and then using that number to drive forecasting, projected close dates, action planning, resource allocation and pipeline reporting is critical for a lead qualification system.
The Backstory For The Pain, Power, Fit Qualification Methodology
The system we teach clients is called pain, power, fit. And on the surface, it’s going to sound and look a lot like the ones we covered above. But this system goes much deeper. Pain, power, fit comes from an understanding that anything we’re asking our prospects to do or buy requires them to make a change to their current operating model.
As you know, for human beings, change is hard. Pain, power, fit starts with that premise. How do we measure someone’s ability to approve a change, pay for change and then get their company to participate in that change? It’s a difficult premise, for sure.
People in leadership roles who routinely act as agents of change — managers, statesmen, salespeople, entrepreneurs and parents, to name a few — are finding it increasingly difficult to get attention, arrive at consensus and, most importantly, achieve results.
This is almost entirely due to applying their precious resources toward achieving change that might happen, rather than focusing their attention on pursuing change that will almost certainly happen.
What’s the most important difference between successful, productive people and people who are less productive, work much too hard or, sadly, fail in most of their endeavors? It’s that the first group instinctively prefers pursuit of the sure thing, while the second group fails to prioritize their attention.
This begs the question: How do you distinguish between situations where change will happen versus situations where change might happen? How do you decide where to apply your time, money, attention, political capital, credibility and/or goodwill?
The answer is pain, power, fit. It’s an organizing principle for evaluating whether and how to apply resources toward the achievement of any kind of change — which, if you look carefully, sounds a lot like the objective for a lead qualification system.
The Details Behind Pain, Power, Fit
First, some vocabulary. Pain is a critical problem or significant opportunity. Power is the wherewithal to solve the problem or to realize the opportunity. Fit is a suitable solution with a comparative advantage.
These are the characteristics that exist in every change. When these factors exist, in fact, change is virtually unstoppable. Imagine what this knowledge can do for us as change agents. We suddenly have an insight into the nature of things that we can use as a prism for evaluating whether this action or that decision is likely to lead to a successful and fruitful outcome.
Applying pain, power, fit is as simple as asking a few questions about whether or not the conditions for inexorable change are present, and if not, determining what you can do to create or enhance those conditions.
Pain: A critical problem or significant opportunity.
Critical: Is there a sufficient cause for movement to action?
Recognized: Does the power recognize the pain at a level that will cause them to act?
Specific: Is the problem so well-articulated, bounded and quantified that the risk of change is constrained to an acceptable level?
Power: Wherewithal to act on the problem or opportunity.
Wherewithal: Is there authority, reach and/or resources sufficient to act alone?
Leadership: What is this authority’s propensity to act?
Credibility: How credible is the change agent with the power?
Fit: A solution with advantage.
Suitable: Does the solution solve the problem within environmental constraints?
Advantage: Does it have a comparative advantage over other options?
Timeliness: Is the solution offered in a timely context?
Pain, power, fit uses a scale from 0 to 5, with 5 being the highest.
Here’s a usage primer for scoring opportunities.
Pain – To score a 5 in the pain category, your opportunity needs to meet all three of the pain criteria. The pain has to be critical, meaning the company or contact has a direct and immediate desire to act. The power needs to have recognized that the situation is dire and immediate action is required. The pain has to be specific and well-articulated, controlled and limited so that any risk associated with acting is controlled.
Here is a practical example from one of our clients.
The client needs an accounting firm because they recently decided to move on from their current firm. If they don’t replace their firm, they’ll miss certain filing milestones and they might be out of compliance or in a tough tax situation later in the year. This makes their pain critical.
The lack of an accounting firm is recognized across their leadership team. They’ve discussed it and tasked the CFO with finding a new firm immediately. They are clear about the specific requirements they’re looking for in their new firm, and they have an existing budget and a search committee to find the new firm.
Power – To score a 5 in the power category, your opportunity needs to meet all three of the power criteria. The person or people you’re working with need to have the wherewithal to leverage their authority or reach and/or activate the resources to act.
The people or person you’re working with needs to have shown leadership in a similar fashion previously, and they need to provide clear direction on their ability to act in a similar way to solve this issue or challenge. Finally, they should be credible in the explanation of their decision-making process and all of the players, especially if the change agent is not power.
Here is a practical example from the same client.
The CFO at this company typically interviews and recommends professional services firms, so she has the wherewithal and authority to make this decision on her own. In this case, the management team would ratify that decision, but it’s rare they would go against the recommendations of the CFO.
This decision is clearly in the area of responsibility and accountability for the CFO; she’s made this decision before and the rest of the management team trusts her leadership in this area. Given the historical references to previous decision-making processes like this one, the CFO has a reasonable amount of credibility around her explanation of the process.
Fit – To score a 5 in the fit category, your opportunity needs to meet all three of the fit criteria. The fit has to be suitable, meaning your solution solves as many of the prospect’s issues and challenges as possible. The fit has to deliver an advantage over other options, including other competitors, look-a-like options and doing nothing. Finally, the fit has to be timely, so the benefits of your solution need to be aligned with the prospect’s own timeline and goals.
Here is an example from the same client.
The professional services offered by the accounting firm are perfectly suitable and aligned with the services the CFO needed. The experience of the team, the experience of the company and the vertical expertise all match perfectly with the needs of the CFO and her company.
The selected firm has a unique delivery model, a higher level of expertise from the team that would be working with the CFO and deep expertise in their industry — all advantages over any other option. Finally, their solution is timely. They are ready to get started immediately, align the delivery of services with the timing of the CFO and provide financial incentives for any delays in delivery.
When you look at all of this together, there were no other options. This firm was the only option for the CFO to select, and the pain, power, fit score would have reflected that. The decision was obvious.
Now that you know how to apply the system, let’s talk about how you use it to score opportunities, handle account planning, improve forecasting and drive better decision-making.
It’s very easy. The three categories (pain, power, fit) are all scored 0 to 5, with 5 being the highest score you can get in a single category. This means the top score for an opportunity is 15. To get a 5 in a single category, all three of the defining criteria need to be present. The more uncertain a rep is around each of the three criteria, the lower the score.
As an example, if we’re talking about scoring power on a specific opportunity, they may have the wherewithal to make a decision, but your rep is questioning their leadership and credibility. Perhaps they don’t have the respect of their peers or they’ve made a bad selection in the past. This means they cannot score a 5, but perhaps a 3 would be more reasonable.
Remember, this is not a lead scoring model, it’s a sales opportunity scoring model. The numeric score applied to your sales opportunities allows you to trigger a number of new plays.
I don’t know about you, but forecasting revenue has always been challenging. You ask the reps and they say, “Yes, it’s going to close this week.” You ask them to give you a percentage guestimate and it’s just that — a wild-ass guess. You might even be taking that percentage and assigning it to the expected value of the revenue from that new customer and forecasting with that data.
You’ve seen this before. If you think a deal has a 50% likelihood of closing and it’s worth $400,000, you forecast $200,000 in revenue. Unfortunately, that’s not an accurate way to project or forecast, because you are either going to get all of it or none of it. In no scenario would you get half of the revenue.
Pain, power, fit (PPF) allows you to forecast based on the PPF score. Only those deals that score 14 or 15 are likely to close imminently (within a week or two). Depending on your sales cycle and business/prospect buyer journey, you might even be able to get those that score in this range to forecast closing in days.
Opportunities that score 11, 12 or 13 are more likely at least 30 days out, and again, based on your business could be even further out before they close. Any opportunities that score 10 and under are still in active development and not ready to be forecasted or projected at all.
PAY SPECIAL ATTENTION: This is one of the aspects of PPF that I like the best. It provides a common language across the entire company. When a manager asks a rep “what’s likely to close?” it’s no longer a guessing game. Who are your 14s and 15s? That is the only question. There is no ambiguity in the question or the answer. If the opportunity isn’t a 14 or a 15, you’re not forecasting it in your revenue projections for the month.
A lot of work goes into planning, managing and proactively working with prospects, especially when you have a long sales cycles, a complex sales process and/or high dollar values. Focusing reps and the other resources in your company on the best opportunities is key. You want your sales effort to be highly efficient across all sales reps. This could mean significant savings over the year.
Now you have a system for prioritizing who you allocate resources to and how you focus your reps’ attention, time and energy.
Opportunities who are 14s and 15s should be in the final stages of signing. Your work is primarily done here.
But for the 11s, 12s, and 13s, that’s where you want to be spending time planning. How do you better engage with power? How can you help them understand the cost of delaying their decision? How do you help them understand your differentiators better? How do you create a set of services or solutions that better meet their needs?
This work is important, and the better you do, the higher the scores — and the higher the chances of closing them.
This might require executive-level involvement, or you might choose to deploy some customer service or technical resources to work with the prospect. Perhaps you plan a private webinar to help them better understand how your solution delivers its value. These proactive account planning activities produce a better prospect experience, and it should improve their score and move them close to signing.
Integrate PPF Into Your CRM
Hands down, the best way to install PPF into your sales process is to install it into your CRM. Regardless of which one you use, add the PPF score and make it easy for the reps to simply enter the numbers and score the opportunities.
Now you can report on all of the 14s and 15s for revenue projection purposes. You can flag the 10s, 11s and 12s for account planning sessions and even track their progress quantitatively as those plans roll out.
Sales managers can coach sales reps on the application of the scoring methodology and make scoring a mandatory requirement during sales meetings. It shouldn’t take long for reps to be comfortable scoring, and it should be an immediate upgrade to any sales leader’s ability to more accurately forest revenue and goal attainment.
I’m hoping you see this as a more complete system, one that provides much more value than simply qualifying prospects with questions.
This kind of work falls squarely in the area of sales operations, an area that most companies desperately need. Systems, processes, methodologies and tools that make sales run more efficiently ultimately help companies install the revenue generation machine that produces scalable, repeatable and predictable revenue growth.
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Posted By Author Mike Lieberman, CEO and Chief Revenue Scientist
Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.