The sales process, from prospecting to a signed and engaged client, differs per industry and company. Products and services that are more complex in nature tend to require a longer sales cycle that may include a RFQ/RFP (request for quote/proposal). If this process involves investing staff time without a client commitment or payment, companies must be extremely careful to make sure they properly qualify the prospect. This includes making sure the client has the desire and the financial ability to purchase what you intend to propose in addition to confirming that you are speaking to the right person, who can make the decision and learning who else (competitors) that person is speaking with.

This problem is further exasperated in the small and medium sized companies where often the business owners play a dual role as the key sales person. Owners anxious for the sale invest scarce resources into deals that lack proper qualifying. Leading by example, other salespeople quickly follow in these footsteps and before long the amount of time invested in lost or unprofitable deals slowly erodes margins and affects the financial health of the company. Left unguarded, this structure lacks the necessary quality control between sales and production and can diminish the company’s financial health.

With a down-sized staff every invested effort needs to be properly scrutinized to make sure it is time well spent. Staff time that is invested in unprofitable ventures erode already squeezed profit margins. Morale can be further dampened when employees already fearing their future see their efforts being improperly invested.

I have a client who refuses to properly qualify prospects even though they belief their actions are to the contrary. The clear disconnect is made self-evident when competitors suddenly appear, proposals are presented which are over budget and the “buyer” turns out to be the “influencer” with little power in the decision process. Meanwhile their competitors ask the right questions and using my clients proposals gain a better price and win the deal with less time investment.

This behavior in the good times reduced profit margins as they foolishly invested staff hours chasing unwarranted deals. In the recession it may just cost them their company.