6-steps to reduce the variance between what's approved and what gets closed

How does one ensure that there is least variance between what is approved and what goes into the contract. Here are 6 tips from us.

“So, did you want me to leave the order for additional 4% discount?” My manager was justifying our sales VP why we had to go below the approved price in the heat of the moment. As often happens during a deal closure, the sales team goes into the negotiation meeting but ends up closing the deal below the approved price/discount. The recent 10+ CXOs I met underlined this to be their no. 1 challenge with sales compliance.

But let’s look at it from a practical perspective. With the competition waiting outside the cabin, is it feasible to walkout? Will the sales guy be celebrated if they came back and said, “we left an unprofitable deal!”.

So, what’s the solution?

Quite rightly every organisation provides a reasonable leeway to the sales team during closures. But if the difference is material then, by all means the senior management would want to be consulted. What can the senior management do so that the Sales team is clear what’s do-able and what’s not? Here are a few ways in which the sales approval process can be supplemented to ensure more transparent and flexible deal closures vis-à- vis the approvals.

1. Auto proposal generation – In the pre-sale process, the pricing approval and the proposal generation are two distinct process generally owned by different people, though the sales team is the common factor. Why not have both these process on an integrated platform so that the pricing and other approvals are embedded directly into the proposal without any intervention.

2. Pre-populated contract – When I worked at Oracle, the post-sale process used to include an Oracle OD (Ordering Document). This document was generated by contracts & commercials team and included the agreed pricing along with all the terms & conditions which are a part of the contract. No order at Oracle was recognized without the OD signed by the end customer.

3. Check-lists – I’m a big believer in simple solutions to complex problems. Had touched upon the efficacy of checklists in ensuring process adherence and exceptions earlier. An organisation can develop e-checklists for each of its key milestones in the bid development process. E.g. Before the Bid P&L is sent for approval the Bid Manager should check – have the effort estimates been reviewed by PMO. Has the solution architecture being signed-off by the key OEMs. Has the Finance and Legal observations applied or the reasons for exceptions notified. Similar e-checklists can be made for other key steps in the bid development process.

4. Process automation – This is my pet peeve. Introduce even a basic level of workflow that captures the deal details and approvals. So that when renewals come up you are not pulling your hair to find what had happened during the initial deal. So that that the comments/ observations of all bid participants are properly recorded for perpetuity. So that you are not unduly reliant on people, emails, spread-sheets. More here.

5. Self-attestation – This is the most controversial one. Few years back, a $ 3 bn US MNC I know introduced a process of having its sales managers attest that they have not given any other written/oral commitment to the customer, beyond what was captured in the contract. This was not well received and the company had to withdraw it couple of quarters later. This is a bit dicey and not always recommended.

6. Pricing and Proposal segmentation – Once a proposal is uploaded into the proposal repository, it is retrieved only for its content. Very often companies miss capturing the details related to pricing, architecture, efforts, BOM, vendor pricing, etc. These can be analysed to create baseline clusters/cohorts/segments for various pricing and technology components. The business finance can then determine if the current estimates are in line with the baseline and if not, can investigate for deviations or exceptions. For e.g. implementation of a billing system for a telecom operator with 100 mn subscribers should be in the range of 1000-1200 man months. The per unit price of vendor-x for an “intermediate” level of workload should cost $ 150-200K.

Risk mitigation is the core purpose of any compliance system. Simply put there should not be any material surprises later. With a sales compliance system all the relevant stakeholders (Management – Sales – Operations – Finance) can be sure of *WYAIWGS!

*what you see, is what you get (WYSIWYG) is a common term used in business reporting and data visualization technology meaning the data shown/reported, represents the source data correctly. Our version is - What you approve, is what gets signed (WYAIWGS)

Comments and observations welcome at hello@pricebid.co.