Pipeliner_Risk_101_Navigating_Uncertainty_042215_pipeliner_export
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- 1. Sales, Zombies, and Revenue Risk. Oh My! April 23, 2015 Andrew Rudin, Managing Principal Contrary Domino ®, Inc. 703.371.1242 arudin (at) contrarydomino (dot) com
- 2. 100%
- 3. “. . . There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say, we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.” —Donald Rumsfeld
- 4. “Mr. Ackerman, if you want a guarantee, buy a toaster.” --From the movie, The Rookie, 1990
- 5. What we will cover: 1. Illustrate a simple risk example 2. Describe risk in a sales context 3. Outline a six-step process for identifying revenue risks 4. Describe actionable ways to manage risk 5. Q & A At the end of this program, you can expect to have: • a process exposing key revenue risks • an understanding of the major revenue risks that many companies face • a framework for managing those risks
- 7. How confident are you that you will achieve your annual quota or revenue goal this year? a) Very confident b) Confident c) Not sure d) Not confident Polling question:
- 8. Simple risk problem: A colleague who has never traveled to your city is making plans to visit. She asks you, “about how long does it take to get from your city center to the departure gate at the closest international airport?”
- 11. Worst case Best case Personal car 3:00 (180 mins) 0:45 Taxi/Uber 2:30 (150 mins) 0:30 Rail/Bus 1:51 (111 mins) 1:10 (70 mins)
- 12. Worst case Average Best case Personal car 3:00 (180 mins) 1:52.5 ≈ (113 mins) 0:45 Taxi/Uber 2:30 (150 mins) 0:90 0:30 Rail/Bus 1:51 (111 mins) 1:30.5 ≈ (91 mins) 1:10 (70 mins) “The Flaw Of Averages” Most Likely 1:00 (60 mins) 0:50 1:31 (91 mins)
- 13. • Mode of transportation selected • Hour of the day • Accident, collision, or other mishap • Weather conditions (winter vs. summer) • Day of the week • Inaugurations, major festivals, etc. • Roadwork, other construction, maintenance • Mechanical failures • Queue at security So, how long WILL it take to get from Downtown DC to IAD? Worst case Best case 3:00 (180 mins) 0:30 What factors into this range?
- 14. Worst case Most likely Best case Fastest! Least volatile Most volatile Personal car 3:00 (180 mins) 1:00 (60 mins) 0:45 Taxi/uber 2:30 (150 mins) 0:50 0:30 Rail/Bus 1:51 (111 mins) 1:31 (91 mins) 1:10 (70 mins) X X X
- 15. Common artifacts of revenue uncertainty
- 16. Delta = Taper = Risk Risk-free sales funnel
- 17. What is the primary reason prospects leave your sales funnel? a) Poor fit for our product/service solution b) Not enough money and/or unmotivated c) Lost to competitor, or did not decide d) Prospect’s priorities changed e) Unanticipated event or unknown reason Polling question:
- 18. Key: acknowledge that specific things are uncertain. That’s our number! Go take that hill! Hey – [stuff] happens! versus
- 19. Put uncertainty to work for your company! “If you’re prepared for flying irradiated zombies that can swim, then you’re prepared for anything.” 6 steps: 1. Start with a deterministic statement. 2. Identify areas of concern 3. Prioritize those areas of concern 4. For each priority, take a view on a related process 5. Determine “worst case,” “most likely,” and “best case” 6. For every minimum value, explain why it’s not possible to achieve a result that is lower, and for every maximum value, explain why it’s not possible to achieve a result that’s higher.
- 20. 1. Start with a deterministic statement. “Our [name of goal] for [period of time] is [quantity].” “Our revenue goal for FY 2016 is $35 million.”
- 21. Putting uncertainty to work for your company 1. Start with a deterministic statement. 2. Identify areas of concern 3. Prioritize those areas of concern 4. For each priority, take a view on a related process 5. Determine “worst case,” “most likely,” and “best case” 6. For every minimum value, explain why it’s not possible to achieve a result that is lower, and for every maximum value, explain why it’s not possible to achieve a result that’s higher.
- 23. Which of the following has the MOST SIGNIFICANT IMPACT on your revenue results: a) Number of qualified leads received by sales b) Number of sales engagements that enter the proposal stage c) Average value per sales transaction d) Length of buying cycle or sales cycle e) Not sure or None of these Polling question:
- 24. “Our revenue goal is $35 million.” • We might not get enough leads. • Our product might not be available when customers require it. • We might not be able to sell at our list price. • The sales team might not be able to engage with prospects. • Our average proposal value might be too low. • The exchange rate for our exports might not be favorable. • Too few opportunities might reach proposal stage. • Our brand might take a bad hit if an employee does something stupid on social media. Identify areas of concern Whining “Lame excuses” “Not a team player.”
- 25. Putting uncertainty to work for your company 1. Start with a deterministic statement. 2. Identify areas of concern 3. Prioritize those areas of concern 4. For each priority, take a view on a related process 5. Determine “worst case,” “most likely,” and “best case” 6. For every minimum value, explain why it’s not possible to achieve a result that is lower, and for every maximum value, explain why it’s not possible to achieve a result that’s higher.
- 26. Prioritize those areas of concern Area of concern: Priority We might not get enough leads. 1 The sales team might not be able to engage with prospects. 2 Too few opportunities might reach proposal stage. 3 Our average proposal value might be too low. 4
- 27. Putting uncertainty to work for your company 1. Start with a deterministic statement. 2. Identify areas of concern 3. Prioritize those areas of concern 4. For each priority, take a view on a related process 5. Determine “worst case,” “most likely,” and “best case” 6. For every minimum value, explain why it’s not possible to achieve a result that is lower, and for every maximum value, explain why it’s not possible to achieve a result that’s higher.
- 28. For each priority, take a view on a related process Concern Related process: Priority We might not get enough leads. # qualified leads received from marketing 1 The sales team might not be able to engage with prospects. # face-to-face appointments held 2 Too few opportunities might reach proposal stage. # of proposals generated 3 Our average proposal value might be too low. Average total $ value per proposal 4
- 29. Putting uncertainty to work for your company 1. Start with a deterministic statement. 2. Identify areas of concern 3. Prioritize those areas of concern 4. For each priority, take a view on a related process 5. Determine worst case, most likely, and best case 6. For every minimum value, explain why it’s not possible to achieve a result that is lower, and for every maximum value, explain why it’s not possible to achieve a result that’s higher.
- 30. (annual basis / Sales force n = 40) Worst case Most likely Best case # qualified leads received from marketing 3,600 4,000 6,000 # face-to-face appointments held 1,920 4,800 5,760 # of proposals generated 960 1,920 2,400 Average total value per proposal $ 35 K $ 45 K $ 100 K 2016 Revenue goal = $35 million Worst case Most likely Best case Revenue $18 million $32 million $40 million Prioritized related process
- 31. Putting uncertainty to work for your company 1. Start with a deterministic statement. 2. Identify areas of concern 3. Prioritize those areas of concern 4. For each priority, take a view on a related process 5. Determine “worst case,” “most likely,” and “best case” 6. For every minimum value, explain why it’s not possible to achieve a result that is lower, and for every maximum value, explain why it’s not possible to achieve a result that’s higher.
- 32. Impossible to go lower/higher because: Worst case Most likely Best case Revenue $18 million This is historical run-rate revenue generated by installed accounts and reseller activity. Maximum churn rate factored $32 million 5% above last year’s revenue attainment. Industry CAGR is 7%. $40 million New plant / delivery capacity would have to be built. 2-year lead time. 2016 Revenue goal = $35 million Delta: Worst to Best = $22 m.
- 33. (annual basis) Worst case Best case # qualified leads received from marketing 3,600 Social platform average unattended lead generation 6,000 Not funded for new marketing outreach in FY 16 # face-to-face appointments held 1,920 Average # of appointments by bottom 50% of sales team 5,760 Assumes two appointments per day by all sales reps # of proposals generated 960 Average # of proposals by bottom 50% of sales team 2,400 Assumes capacity workload by pre-sales engineering Average total value per proposal $ 35 K Assumes next- generation product release will be delayed $ 100 K Assumes maximum seven months before competitor releases next- generation product Impossible to go lower/higher because:
- 34. Calculation of different probability scenarios Input variable 1, 2, 3 . . . Expected Revenue Output 1 Output 2, etc. Unit Production This provides a powerful, powerful planning tool:
- 35. Risk appetite / capacity Dimension Key question Likelihood How likely is it that the risk will occur? Impact If it occurs, what will be the magnitude of the result? Volatility What is the range of the possibilities? Preventable / controllable Can the risks be eliminated or reduced? Recurrence Can the risk recur, and if so, with what frequency? Correlation (+ or -) Does the change in one condition cause a corresponding change in another? Questions to ask about risk:
- 36. “Heat Map” Impact Low High Likelihood High Low Manage Monitor It depends It depends
- 37. Risk management strategies / tactics: • Accept – prospects might not buy! • Eliminate – accept only Cash-on-Delivery • Reduce – volatility, customer churn, ethical risks, fraud • Share – outsourcing / channel sales • Transfer – outsourcing / channel sales / full-commission sales • Add or increase – introduce new product, initiate campaign, government or major account focus
- 38. Planning Pitfalls: • Anchoring – “Our number is based on the estimate we got in 2013.” • Bias and wishful thinking – “I really, really want this result.” • Not enough information – “We didn’t consider the possibility of regulatory impact.” • Wrong information – “Some of our forecast optimism is based on the fact that all of our reps have high Klout scores.” • Using only historical information – “We just take the previous year’s results and multiply by 1.25.”
- 39. Final thoughts: 1. The concerns and considerations you have about risk must be sound, or the numbers don’t matter. 2. The numbers you use must be right, or the results you get don’t matter. 3. The results must be right, or the alternatives you consider don’t matter.
- 40. Andrew Rudin, Managing Principal Contrary Domino ®, Inc. 703.371.1242 arudin (at) contrarydomino (dot) com Thank you for being here, and for your time.
Editor's Notes
- Thanks, Eric, and thanks to Pipeliner for inviting me to participate today. And especially, thanks to all of you for your time and participation in this program. I’m excited to be here delving into this topic. This workshop brings together learnings that I’ve compiled over the past several years, and shares some emerging tools and techniques developed to help companies better understand uncertainty and risk, and how to use it for revenue planning. Just the words ‘uncertainty’ and ‘risk’ can sound daunting, but part of my aim today is to demystify this topic, and to help people recognize not only that risk and uncertainty can be understood and approached, but how effective risk management gives companies a crucial advantage over competitors that ignore it - allowing themselves to be blindsided by situations that could have been anticipated, managed, or mitigated. That misfortune has certainly happened to me, and I’ve compiled a long list of stories, which I won’t share here in the interest of time. Over the next 45 minutes, I will work hard to make sure this program is valuable for you, and hopefully make it a little entertaining, too. I also look forward to hearing your thoughts and comments. So let’s jump right in . . .
- There are many stats about sales performance. We depend on them to understand what’s working and what’s not working. Most of you are probably well aware of the numbers, and I won’t dwell on endless facts and studies. Except this one, which hits to the core of the problem that I am covering today. In 2013, about 58 percent of salespeople achieved quota or plan. Why? @ The gap can be largely explained by risk and uncertainty –coming home to roost. @ Here are some of them. [ ]
- There are many stats about sales performance. We depend on them to understand what’s working and what’s not working. Most of you are probably well aware of the numbers, and I won’t dwell on endless facts and studies. Except this one, which hits to the core of the problem that I am covering today. In 2013, about 58 percent of salespeople achieved quota or plan. Why? @ The gap can be largely explained by risk and uncertainty –coming home to roost. @ Here are some of them. [ ]
- Uncertainty can be mighty hard to explain, but Donald Rumsfeld famously took a crack at it when he was asked about links between the Government of Iraq and terrorist organizations. [ ] Later on, you can parse out the wisdom, because there’s a lot of meat in what he said. In the meantime, let’s go with a more succinct way of expressing it . . .
- [ ] In selling, as we know well, there are few guarantees. https://www.google.com/search?site=imghp&tbm=isch&source=hp&biw=1440&bih=853&q=toaster&oq=toaster&gs_l=img.12...0.0.1.11581.0.0.0.0.0.0.0.0..0.0.msedr...0...1ac..64.img..0.7.595.y8zvywMSA5g#imgrc=ygeCk8L3PdW2tM%253A%3BgPK0Q7Gxb0DrQM%3Bhttp%253A%252F%252Fwww.cpsc.gov%252FPageFiles%252F72148%252F09081.jpg%3Bhttp%253A%252F%252Fwww.cpsc.gov%252Fen%252FRecalls%252F2009%252FViking-Range-Corp-Recalls-Toasters-Due-to-Shock-Hazard%252F%3B544%3B469
- What we’re going to cover today in revenue risk requires the same rigor as other operational challenges, - whether in project management, energy exploration, social science, or elsewhere. So here’s a quick outline for today’s program [ ] @ [ ]
- Earlier this year, John Golden of Pipeliner talked about risk in his program, Minimizing Risk in your 2015 Sales Process. Today, we’ll build on his ideas. Dealing with revenue risks involves the choice of minimizing risks, @ But later in the presentation, we’ll discuss other options you need for managing them.
- [respond to polling question results] Here’s a risk challenge familiar to most of you, which I’m going to cover very quickly so we can get into the selling scenarios. [ ] Which answer would you give? You can keep it in mind, or just jot it down.
- Since I live just outside of DC in Virginia, I’ll use DC to Dulles to illustrate the example. And if you live in the area, or if have ever experienced commuting here, you already know that answering the question is difficult without qualifying the estimate. Oh, one more thing - I should add that this colleague is an analytic type who really likes accurate numbers. @ So I do some quick research online, and this website tells me to allow about 40 minutes.
- I don’t have any information about how she wants to get to the airport, or when she has plans her travel, so I do some additional checking, and find some estimates on the Metro website. @ This one for 1:10, and @ This one for 1:31. These numbers are valuable to me because they help me build the universe of possible answers I can offer my colleague.
- My next step is to build a table of information for her to use. @ If she drives her personal vehicle, and she’s terribly unlucky with traffic, her journey from downtown to her gate at Dulles could require as much as three hours. @ And if everything goes swimmingly, she can zip out to the boarding area in as little as 45 minutes. A little shorter for the taxi because she doesn’t have to deal with parking. And a little longer if she takes Metrorail and the bus.
- I’m trying to give her A number to use for planning, since she asked me ‘about how long will it take to get to the gate.’ So I average the worst case and best case values and add a column titled ‘average.’ But I quickly spot a problem. it doesn’t take an average of 1 hour, 52 minutes to get from DC to Dulles. It’s less. Really, it’s closer to 60. The same issue for the taxi. @ This exposes what’s called ‘The Flaw of Averages,’ and many people step into this interpretive trap, particularly in sales. @ so I ditch averages and I offer a more nuanced value, called ‘most likely,’ based on my knowledge of each mode of transportation. Now that’s more like it – we can see the worst case possibility, the best case, and what to expect most of the time.
- So far, if you consider all of my estimates, they cover a wide range – 2.5 hours. If you’re a student planning to hang out in DC for a few months, that uncertainty is probably acceptable. You’d thank me for my help, and show up this summer with your frame backpack and guitar. But if you’re a business traveler who has an appointment in a different city that afternoon, that range won’t cut it. Which brings up an important point about uncertainty – what’s acceptable depends entirely on the context of the problem you’re solving. @ When I provide this range, what am I considering? Here are some factors: @ [ ]
- We’ll wrap up this example with a quick trio of recommendations for my colleague: If she wants the absolute fastest way to the airport, she should take a cab or uber. @ Taking her own car is convenient, but it’s also the riskiest because the range from worst to best is so volatile. @ And if she mainly wants to play things safe with a predictably dependable way to get to her gate, taking Metro is her best bet.
- Extending these considerations into sales is easy, since we’re all used to working with it through funnels, forecasts, and pipelines. All of them represent risk and uncertainty. The challenge is how to identify and quantify uncertainty, and clarify our understanding so that uncertainty isn’t just a gray, opaque blob - or worse, something that shows up as a crater in a past quarterly revenue chart. Funnel source: https://www.tipsandtricks-hq.com/internet-marketing-sales-funnel-101-5127 Pipeline source: https://whyaim.com/?attachment_id=2268 Forecast source: http://www.managers-net.com/plowman/forecasting.html
- In a traditional sales funnel, as we know, not everything that goes in at the top – in this case, leads – results in a purchase at the bottom of the funnel. That taper is risk. @ The comparison funnel I’m showing here is the holy grail of marketing – the nirvana that we all strive for – but find so hard to achieve: a straight sales funnel. A risk-free funnel. Every lead that goes in at the top results in a sale. Sure, there are some steps along the way, but here, nothing leaks from the funnel. If that were the case, there’d be no such thing as performance gaps, and we could all take our afternoons – or, depending on your lifestyle – mornings - off.
- Dealing with risk isn’t always easy. It can create culture clashes within business development organizations. Managers often say something like “Go take that hill!” to spur on their team. @ On the other extreme, we hear, @ “Hey, Stuff happens. The problem is, you can’t take action about the risks you face without knowing what they are. So here’s the key to a happy medium: @ [ ] https://www.google.com/search?site=imghp&tbm=isch&source=hp&biw=1440&bih=853&q=demanding+boss&oq=demanding+boss&gs_l=img.3..0l3j0i5i30j0i24.6747.8260.0.8584.14.12.0.2.2.0.62.677.12.12.0.msedr...0...1ac.1.64.img..0.14.681.SJG8nniXS3o#imgrc=otUt-E1Sm-tYlM%253A%3BhiRFsh2EPV3iTM%3Bhttps%253A%252F%252Faharrell2000.files.wordpress.com%252F2012%252F07%252Fdifficult-boss.jpg%3Bhttps%253A%252F%252Faharrell2000.wordpress.com%252F2012%252F07%252F27%252Fare-you-a-demanding-boss-how-is-it-working-for-you%252F%3B280%3B185 https://www.google.com/search?site=imghp&tbm=isch&source=hp&biw=1440&bih=853&q=shrugging+employee&oq=shrugging+employee&gs_l=img.3...118209.121089.1.121343.18.13.0.5.1.0.79.785.13.13.0.msedr...0...1ac.1.64.img..5.27.1404.Kb--cH4EFak#imgrc=T0ROa3399WWItM%253A%3BB5iXKuiZ2v6j1M%3Bhttp%253A%252F%252Fwww.timeshighereducation.co.uk%252FPictures%252Fweb%252Fa%252Fp%252Fo%252Fconfused_shrugging_ma_450.jpg%3Bhttp%253A%252F%252Fwww.timeshighereducation.co.uk%252Fnews%252Fconfused-if-so-please-forward-on%252F2007104.article%3B450%3B300
- I urge everyone NOT to sweep uncertainty under the rug, but instead, to put it to work! @ Recently, I saw a bumper sticker that read “If you’re prepared . . . “ Be assured – I’m not recommending you maintain that level of paranoia. On the other hand, isn’t supreme confidence a great feeling to have? Effective revenue risk management is more practical - knowing what risks you face, prioritizing them, and having the will to address them. And when you do that, your all-important optimism will be more credible, because people will know it’s grounded in reality. @ There are six steps I recommend to clients, and I will cover each one of them. The first one shouldn’t be difficult, because most companies already do this [ ]
- You can take any deterministic statement, that is, any expression containing a quantifiable goal or objective over time, and apply the same process. Here’s a typical way to construct a deterministic statement. [ ] @ This translates to a declaration familiar to everyone on this call. [ ] Fill in with your own number.
- Next, you should identify areas of concern. What jeopardizes the outcome? What issues or challenges could confront you or your team in your effort to ‘take the hill?’
- If you’re starting out with these concepts, a good first place to look comes from John Golden’s program on minimizing risk in sales processes. His four components offer a valuable template for identifying opportunities to address.
- Identifying areas of concern is very often a whiteboard exercise. Bring your entire business development team into the room, put your goal on the whiteboard, and start asking what about? What about? What about? Write down what you learn. Pretty soon, you’ll get a clearer picture of your risks. Write down everything, because in the next step, you can pare some back. Some of what you learn from your team reflects what you’ve shared in the polling questions, plus some more . . . @, etc. This step will seem uncomfortable for some people. I understand. We can struggle with this process because we don’t want to undermine a ‘can do’ attitude. Especially, we don’t want to establish any doubt that we can win. Hard as it might be to bubble up these artifacts of uncertainty, it doesn’t mean anyone in the room has to be less rabid, tenacious, or goal-focused. Done right, @ This is not whining. @ This is not lame excuses, or @ Emblematic of not being a team player. Successful revenue achievement means situational awareness, and this is an indispensable step for having it. https://www.google.com/search?site=imghp&tbm=isch&source=hp&biw=1440&bih=853&q=whiteboard&oq=whiteboard&gs_l=img.3..0l10.1525.2669.0.2967.10.8.0.2.2.0.138.721.6j2.8.0.msedr...0...1ac.1.64.img..0.10.738.7wTu-C-nSFM#imgrc=CGhAVRN4DVdXEM%253A%3Bgxc3AR3FPLKUYM%3Bhttp%253A%252F%252Fpcs-tech.pbworks.com%252Ff%252FInterwritePanel.jpg%3Bhttp%253A%252F%252Fpcs-tech.pbworks.com%252FInteractive-Whiteboards-and-Pads%3B504%3B508
- After fleshing out what’s concerning to achieving your goal – whatever it is – you can now PRIORITIZE those concerns by ranking them from most serious to least.
- . . . . And here’s one way those concerns might be listed in terms of priority. This is all about uncertainty and risk, so “might” is the operative word here. I’ve kept it in every sentence. In this example, lead flow, engagement with influencers and senior executives, advancing to proposal stage, and focusing on larger revenue opportunities are considered most crucial overall.
- Each of these concerns has one – or typically, more than one activity related to it. Which brings us to Step #4, For each priority, take a view on a related process.
- Which can be organized like this . . . To simplify the example, I have used only one related process, but in practice, you should discover the most consequential processes for addressing the concern. For example, [ read concern, explain related process ]
- Next, just as we did with the airport problem, come up with the worst case / most likely / best case values for these processes. Remember, be aware when you use averages for ‘most likely’, since they don’t always apply, and using them can cause misleading results if you move to more sophisticated probability analysis, which I’ll touch on briefly in a moment.
- So, in this example revenue goal of $35 million, I have estimated a range of $22 million – From $18 million in sales if the company has a poor year, to $40 million if its revenue engine is hitting on all 8 cylinders and the turbo-charger kicks in. But based on some assumptions that I hope are solid, I think that $32 million will be most likely outcome - $3 million shy of plan – an issue that clearly needs to be addressed with senior management as we develop strategies and tactics for managing the risk, and for ensuring that actual revenue achieved matches the company’s financial goals. @ Similarly, we can project values for related processes. This example uses annualized figures, and a direct sales force of 40 people. @ [ read lines 1,2 ] @, @, and so forth.
- The final step is to test the validity of the extremes for each estimate. That means explaining why the ‘worst case’ can’t go any lower, and why the ‘best case’ can’t go higher. This is important because it helps managers understand volatility. In general, variables with lower volatility are considered less risky, and the opposite is true for variables having higher volatility. So the more that’s understood about the range of possible outcomes, the better we can figure out what needs to be tightened in order manage risk.
- For the revenue goal in this example, I estimated an $18 million worst case, because this is what my example company would achieve by doing little more than keeping up their website and processing sales transactions. They could make this revenue even if every top producer suddenly left on sabbatical, leaving a skeleton crew of inexperienced, newbie reps. For the best case on the right – the high value assumes full capacity at the manufacturing plant. Producing more units would require a plant expansion, which won’t happen next FY.
- And I’ve made similar explanations for each value on the chart . . . @ , @ You get the idea – the worst/best values selected must have solid reasons behind each, or the numbers won’t be meaningful for planning. Imagine how revenue results might be improved if the WORST CASE for , say, average number of proposals generated, could be increased by 1,000 over a one-year period. How much improvement? The answer requires statistical analysis, which goes beyond the scope of today’s program. But I’ll give you a flavor for what I’m talking about . . .
- When you tackle revenue uncertainty in the methodical way I have described, you have the opportunity to use powerful analytical tools for measuring potential impact of strategic and tactical changes. From simple things like the revenue uptick you might achieve from increasing the number prospect opportunities brought to the proposal stage, to more complex problems such as the revenue impact of pending legislation, or the effects of mergers and divestitures in your market space. @ Hang in there with me. I’ve limited the geeky stuff to just this slide: - First, we take uncertain variables like the ones I showed, and fit a distribution curve to the possible values like you see on the left. - then, you can produce pro-forma calculations, iterating thousands different possible scenarios. - finally, as you see on the right, you can forecast outcomes of interest, including expected revenue, unit sales volume, and net profit
- The decisions that managers make regarding risks is where the rubber meets the road. @ [ ] , etc. @ As with the airport example, risk characteristics are meaningful WITHIN CONTEXT. It’s impossible to say whether a risk is good or bad – it’s just a risk, and you shouldn’t decide what to do with it until you know its context. This confusion is the source of many sales performance problems. Some companies knowingly take on revenue risks they can’t afford or absorb. Others are clueless about the risks they have. And, amazingly, some are too conservative, and actually don’t take on enough. “We’re just sitting tight for right now, waiting it out to see what the economy does . . . “ – If you’ve been in sales for a while, you’ve probably heard this. And probably more than once.
- Using your most volatile risks as a starting point, you can construct a ‘heat map.’ @ Risks that are high likelihood and high impact – that is, they will probably occur, and when they do, there will be a major effect on results – those risks are prime candidates to be managed. @ The opposite for low likelihood and low impact. @ And the ones that are mixed – what to do depends on the company’s situation in the market.
- With risk, you have choices about what to do . . . Please bear in mind that these items are not ranked in order of importance or effectiveness. It’s just a list of choices: @ [ ] , etc.
- And, when addressing uncertainty and risk, I’ve experienced some really common pitfalls, and have committed many of them myself. See if any of these quotes I’m about to read ring a bell. And now that you have the perspective of how numbers are used in an analytical framework, think how these mistakes can distort planning: @ [ ] Further reading - http://customerthink.com/do-you-mangle-what-you-measure-eight-pitfalls-to-avoid/
- I’ll wrap here with these final thoughts . . . @ [ ] , etc.
- Above all, I thank you for your time, and sincerely hope you gained value from today’s program. @ As always, I encourage you to question the answers, whether it’s here, or elsewhere. https://www.google.com/search?site=imghp&tbm=isch&source=hp&biw=1440&bih=853&q=question+the+answers&oq=question+the+answers&gs_l=img.3..0j0i24l2.6873.9607.0.9931.20.13.0.6.6.0.97.939.13.13.0.msedr...0...1ac.1.64.img..1.19.974.PaKER9TZ5Q4#imgrc=Mbc0-faY848BWM%253A%3BRnixkCouUoSOQM%3Bhttps%253A%252F%252Fc2.staticflickr.com%252F4%252F3394%252F3526522573_8f40a675b6.jpg%3Bhttps%253A%252F%252Fwww.flickr.com%252Fphotos%252Fwalkn%252F3526522573%252F%3B500%3B371