Success is where preparation and opportunity meet.

—Bobby Unser

The sales team at an IT services company was on the verge of mutiny. Key account managers complained that the right technical staff never seemed to be available to help them win critical deals. Five days after receiving an RFP, 40 percent of opportunities still had no bid manager assigned, and that made a difference. Leads with bid managers had a win rate of 50 percent, but those without struggled at just 20 percent. As many as 5 percent of bids were just abandoned due to the lack of resources. The sales reps also spent inordinate time finding the right expert, assembling the proposals themselves, and going through a complex and lengthy bid review and approval process. As a result, they were spending more than a day a week on proposal development—more than double the industry standard.

The root cause was inadequate staffing of the company’s presales staff. Presales—sometimes called technical sales or solution sales—is the part of the commercial function that undertakes a specific set of activities related to qualifying, bidding on, and winning a deal. A high-performing sales organization should have about two-thirds of its presales team undertaking technical presales activities (crafting solutions to customers’ problems) and the rest involved with commercial presales activities (managing deal qualification, pricing, and bid).

At the IT services company, the technical-presales experts (solution managers) were not assigned to the bids that had the greatest opportunity, and there were frequent interruptions as they were reassigned to the priority du jour. Further, the company’s commercial-presales experts (business managers) had vastly different levels of ability, to the point that win rates varied by a factor of two on similar bids.

To turn things around, the company developed a staffing approach that gave a clear, at-a-glance picture of the availability and specific skills of presales staff a full quarter out. It redesigned its bid review and approval process, making it simpler and faster for smaller deals. It also put in place a 360° feedback mechanism to allow key account managers to provide commentary, suggestions, and recommendations to the technical and commercial presales resources immediately after a bid had been submitted. Some of the changes were quite simple. For example, the new staffing manager contacted key account managers and asked them to rate the performance of their presales teams. This evolved into a more systematic approach with specific feedback streamed into a database. The idea was not to evaluate performance but to learn from each other and improve the allocation of resources and the win rate.

This new approach helped the company allocate presales staff to 15 percent more deals and improve the conversion of its “must-win” deals by 30 percent with the same presales staff. Sales reps’ time on proposal development was halved, and the share of bids abandoned due to lack of presales resources fell from 5 percent to just 1 percent.

CEOs are in a constant quest for growth but often overlook presales, despite its potential impact. B2B companies with strong presales capabilities consistently achieve win rates in excess of 40 percent in new business, which is 10 to 15 points higher than we usually observe.

Although most companies have a presales function, too few deploy it effectively, especially given the increasing sophistication of buying behavior. This behavior has led to more coordinated and thorough buying processes and competitive bids. Add to the mix the new data and analytics tools that are available to improve bids, and presales moves swiftly from being helpful to being essential. In fact, presales specialists are so important that one account manager at a global technology company said, “Every sales leader would say they couldn’t run the business without a specialist. The competitive dynamic is such that if you don’t bring your A-game to the deal, you’re not going to win.”

What exactly, therefore, is the value of presales? When a lead comes in, presales has a crucial role in qualifying it, putting together the best bids, and delivering a compelling proposal. Typically, the larger and more strategic the deal, the more support it should get. These activities actually deliver two to three times more impact on revenue than generating leads. If a strong presales team improves the qualification rate from 50 percent to 55 percent, the impact on revenue is a 10 percent uptick. If the team can move the win rate from 40 percent to 45 percent, revenue impact rises to 13 percent (Figure 10.1). Not only does revenue rise, but there’s a 10 to 20 percent acceleration in the speed at which deals progress through the pipeline. Presales actually goes beyond sales in many leading companies and addresses renewals, too (see sidebar: “Embrace Predictive Analysis to Boost Renewals and Reduce Churn”).

Despite this potential impact, presales is rarely in the spotlight. Yet, for maximum productivity, the function should account for 40 to 50 percent of the overall commercial headcount (Figure 10.2).

Heads of sales and CEOs therefore need to take a more active role in extracting the function’s full potential. Leading sales organizations do two things particularly well:

1. Focus on quality, not quantity, of leads. They use analytics to unearth the most profitable deals so they don’t waste the time of their precious presales staff.
2. Use expertise appropriately before and during the sale. Savvy customers need access to presales staff to answer their more complex questions, while even for relatively simple transactions, having experts readily available—physically or virtually—can make or break the deal.

Focus on Quality, Not Quantity, of Leads

Finding more deals isn’t a problem. Social media, digital marketing, advanced analytics, and the more pervasive use of inside sales have exponentially increased the number of deals a company can pursue. But more does not equal better. In fact, more can be worse for the organization because it diffuses focus and taxes resources. It is far more efficient and effective to qualify leads so that only the most attractive get far enough down the pipeline in the first place. Companies that fail to qualify leads properly are simply wasting the time of both overstretched presales teams and the frontline sales staff, who rapidly get frustrated when leads go nowhere. This may sound obvious, but in practice, sales leaders are often overstretched and overwhelmed by day-to-day commitments and thus cannot bring the kind of discipline needed to focus on improving their sales ROI.

We know that a good qualification rate is roughly 50 percent—i.e., half of all leads should end up as qualified leads. So how can the sales team figure out which leads to pursue and which to pass over?

Leading companies have long recognized that the quality of leads is more important than quantity, but now the tools exist to screen and score leads appropriately. It is now possible to integrate intrinsic company data (e.g., revenue, profits, growth) with more qualitative data such as recent merger activity, a change of management, or fundamental industry shifts. Combining both types of data delivers a new level of insights, turns a lead from lukewarm to hot, and highlights which deals are potentially the most profitable. Automated systems exist that can run these checks, rather than having individuals make rounds of phone calls. This is an efficient system that improves sales ROI.

Some of today’s best-practice organizations rely on big data and advanced analytics to identify opportunities early on and then prioritize the most desirable at the micro-market level—by geography and segment. They use techniques such as propensity-to-buy modeling, micro-market targeting, account-level opportunity assessment, and churn prediction to separate the high-quality, high-probability opportunities from the rest.

Citrix, a US cloud-services company, was wondering how best to predict its conversions, and the sales team was being overwhelmed by the volume of leads it was receiving.¹ The company started by implementing a customized lead-scoring system that boosted the conversion rate by more than 20 percent. Sales management then took the model a step further and used predictive analytics to assess the likelihood of purchase based on external data about the purchasing company, not just the individual buyer. The resulting analysis revealed that established companies were better prospects than the start-ups it had been focusing on. Lead conversion improved by 30 percent, and as fewer leads now make it down the pipeline, capacity has been freed up to go after additional cross-selling opportunities. Eva Tsai, director of marketing operations, explained, “Sales is prioritizing their activity based on lead scoring. They tackle the highest lead score first and then figure out who else to call from the database intelligence.”

In another example, a company applied sentiment analysis to what potential buyers were saying on social media to find compelling propositions. The presales team first identified keywords and question phrases that indicated a potential sales opportunity for a specific product, application, or service. From this, the company did real-time analysis of social-media data, scanning channels such as Twitter and LinkedIn. Data analysts matched the buyers’ questions and location with the company’s internal data to pinpoint specific opportunities. Those leads were sent to sales reps, along with a simplified set of insights around the buyers’ questions. These solid real-time leads were so good that sales reps were able to close 80 percent of the time.

Use Expertise Appropriately Before and During the Sale

A good conversion rate from qualified leads to bids is 80 percent (not all deals look good upon closer analysis) but, in reality, bid rates are often much lower. There may be too few people processing the leads, capacity constraints, or a sales process that might be just plain sloppy. Getting the right people working on the right deal is vital; even the best products don’t sell themselves, and the more complex the product, the more selling becomes about providing expertise. Just as important is having a knowledge-sharing system where salespeople can easily access best practices, insights based on win-loss reviews, and competitive-positioning analysis. Leading sales executives have come to recognize this and are finding ways to use knowledge as a selling tool (see sidebar “How Microsoft Gets The Right People Working on the Right Deals”).

A McKinsey survey shows that consumer-packaged-goods companies that deploy more functional experts in presales teams have higher-than-average category growth (Figure 10.3).²

Smart sales leaders bring in the right presales experts at the right time, which means they need not only a clear view of their deal priorities but also the discipline to consistently assign their best presales talent to those critical deals. In too many companies this sort of flexibility does not exist, and putting the wrong person on a deal creates a sizable opportunity cost. Sales managers need to know who has the sector expertise, when to bring technical know-how, and when to bring in someone who understands the business value.

There are now resource mapping and allocation tools that can help get the right people to the right place. A dedicated staffing manager with access to everyone’s calendars is a relatively simple way of bringing transparency to the process, along with a utilization-management tool to maximize the efficient use of everyone’s time. Having better profiles for presales staff helps match the person and the bid.

Top sales leaders also implement central knowledge-sharing resources to draw on previous bid experience and create a source for relevant materials needed during the bid process. This approach has two compelling benefits. First, it increases win rates by using the whole company’s best thinking, drawn from experience with similar offerings (and those of competitors) across the sales cycle. Second, it lowers costs by ensuring that key proposals and materials are prepared centrally rather than forcing field reps to continually reinvent them.

Sales managers at an IT services provider established a centralized knowledge center staffed by experts that supports the sales force through a single point of access. It has three tiers of support: self-service access to best-in-class standardized tools and support material, such as pricing and total-cost-of-ownership guidelines, standard contracts, etc.; phone, e-mail, and chat access to an expert who can then pass the question to more specialized resources or “practice experts” if necessary; and dedicated subject-matter experts, who are accessible only through referral by the experts. This structure gives sales leaders a clear idea of the nature of the demand for experts.

In addition, the company also set up “mega-deal” teams that focus on the biggest sales opportunities at priority clients and prospects. At the core of the team is a small group of experts and specialists, so the biggest deals get dedicated subject-matter experts who also have experience working on precisely the sort of complex deals and competitive negotiations that are at stake.

Although this technical sales support is most associated with B2B sales, it can apply to B2C, too. Apple’s product geniuses may be the best-known examples, but some car dealers send the product expert, not the salesperson, out on the customer’s test drive to answer questions.

A European telecommunications company decided to merge its mobile and fixed-line store networks to increase cross-selling between the two customer bases. It knew from the start that existing sales staff would not be able to sell the unfamiliar product despite having radically simplified its portfolio.

Initially, the company tried to build knowledge among store personnel through traditional training programs, but these didn’t deliver the results sales leaders wanted, so they took a more innovative tack. The company decided to create “store rangers”—experts who would be fully conversant with both mobile and fixed-line value-added services, such as home security systems. The company created one team of rangers to cover all the stores in a particular territory. They were proactive, talking to clients and selling based on their expertise. This has not only increased sales with those individual customers, but has also provided on-the-job training for the full-time store salespeople. Cross-sales took about a year to ramp up, but eventually resulted in an increase in overall sales of more than 30 percent for the store network.

■ ■ ■

The quality of the proposal far outweighs the volume of leads as a growth driver. This fact alone highlights how critical presales allocation should be in any company’s sales strategy. Taking positive steps to qualify leads also maximizes the potential of the presales team. Working on leads that go nowhere is a waste of their talent, and the opportunity cost is enormous as valuable leads are not even approached. Improving lead quality also saves time for the front line who will embrace the presales work ever more enthusiastically if their calls lead more frequently to sales. CEOs who can work with their sales leaders to focus on the quality of leads and to ensure the right presales experts work on the right deals, will deliver impressive results as Clemens Blum from Schneider Electric sets out below.

In the next chapter we turn our attention to the relationship between sales and marketing. They should be pulling in the same direction, but getting that alignment takes effort.