Opportunity Cost “the money or other benefits lost when pursuing a particular course of action instead of a mutually-exclusive alternative” (from Dictionary.com). This is one of the first principles you learn in economics. If you choose to pursue something it means, by definition, that you’re choosing NOT to pursue everything else. Time is mutually exclusive.
You need to be as efficient as possible and spend your time wisely. As a sales person you already know that. Now the question is how sort through your various options. How to prioritize your time.
Most sales people are familiar with the acronym “BANT”. It was originally developed as part of IBM’s sales training and stands for budget, authority, need and timeline. It has been used for years as a framework for qualifying opportunities. If you think about it, all four of these terms are related to opportunity cost: can this prospect make a decision to buy — soon? Is it a worthy investment for your time? For a sales person this makes perfect sense to have time at the forefront of your mind. If you’re trying to achieve quota, you need to close a deal this quarter, this month or perhaps even today. You need to develop a feel for timeframes and things that may happen to delay or derail a deal. These are the same objectives for the company so thinking in terms of opportunity cost helps align the whole organization.
BANT covers some key dynamics, but to be comprehensive you should add few other terms to fully optimize the acronym to focus on opportunity cost.
D for Differentiation. Does your product or service stand out from the competition? Can you not only meet their needs, but show them how you will be the best business partner? For example, at Prospero Technologies we provided SaaS applications such as message boards, live chat, ratings, reviews, and article commenting. Initially we were one of the few companies providing these services. But as a the market grew there were a dozens of new competitors each year. As competitors focused on matching our features, we shifted our emphasis to what we had learned really mattered to buyers: moderation tools. While our competition was talking about avatars, badges and message formatting, we highlighted features that ensured branded web sites could block pornography, flame wars, and other inappropriate content. The features were critical to maintaining their brand integrity and minimizing legal exposure. We won many of our deals because that was a key concern for our clients and an area where we excelled compared with the competition.
A for Amount. Like every investor your goal is to maximize your return on investment. Your investment of time. It seems logical that you should prioritize your pursuits based on the amount or total value of the deal. You need to be careful with this one, however. Many sales people can get caught in the “elephant hunter” trap. You invest all of your efforts in one or two mammoth deals that will make your career. The problem is it could also break your career if you haven’t properly assessed your chances of closing the deal. It’s better to pursue ten deals at $100K a piece with 50% probability of closing than it is to pursue two deals worth $1 million each with 20% chance of closing. So, you need to include probability in your calculation of opportunity cost. For those who are really thinking through the economics, the best investment will also depend on the total time required to work each deal. If it takes over a year to close any deal, your only option may be to hunt elephants. For the sake of this illustration let’s assume that the sales cycle is a more typical 3 to 5 months.
R for Rapport. How well do you know the people involved in this deal? Do you have a personal relationship that you trust? Do they trust you? Remember that trust isn’t just enjoying a glass of wine over a good meal. You need to be sure that what you’re offering makes businesses sense for the buyer and the buyer needs to be sure you can deliver on your promises. Ideally you’ll have a rapport where you’ll get honest feedback at every step of the buyer’s review process.
T for Tedium. This is related to “the A for authority” in BANT. Watch out for tedium and bureaucracy because it’s a red flag. It means the “authority” is actually a committee and they’re operating in a mode of CYA first rather than making efficient decisions. Tread carefully when working with companies that require RFPs and have a team of people evaluating different aspects of the deals. In some cases, buyers just want to fill out a competitive comparison chart knowing that they’ve already picked a vendor and just need to show they’ve done their due diligence. You don’t want to invest a lot of time to become column fodder for some purchasing agent. To be sure, there are some markets — most notably government contracts — where RFPs and lots of administrivia go with the territory, but you need to factor this in when considering what you’ll be pursuing.
So, there you have it — a new-and-improved sales acronym: BANTDART. It’s an opportunity-cost-optimized way of managing your sales activities. Take a look at your pipeline and figure out if you’re using your time wisely and start the morning tomorrow with a cup of coffee and yelling BANTDART at the top of your lungs. That’s sure get your co-workers’ attention and will focus your day’s activities on the most productive pursuits.
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