Avoid Survivorship Bias in your Sales Process Evaluation
Most companies misjudge their sales process's effectiveness; they determine whether or not they've hit their goal. But that's retroactive to your goal.
A quality sales process, from initial contact to purchase, continually moves sales opportunities forward, shortens the sales cycle, systemizes the sales team’s sales operations and approach, and tracks the entire process. It helps salespeople organize their sales pipeline, prioritize sales efforts, and ultimately sell more deals.
Most sales leaders do not correctly evaluate their sales processes. Leaders review whether or not they’ve hit their goal retrospectively.
However, the problem started when you began with a low goal initially. If your targets were already too low, you would hit them. Now, the sales leader mistakenly tells the CEO and the sales team that our sales process is successful. But that’s effectively survivorship bias.
What is survivorship bias?
Survivorship bias is the act of focusing on successful sales strategies and goals while ignoring those that failed due to their lack of visibility.
It leads to incorrect assumptions or overly optimistic beliefs, which prevent us from optimizing and improving the sales process, sales team, or an individual sales rep.
In World War II, the US Military examined damaged aircraft from Japanese field artillery, concluding that they should armor the most-hit areas of the plane. Abraham Wald at Columbia University proved this a fallacy and concluded that adding armor to the least hit areas of the aircraft was more effective. Wald argued that by focusing on aircraft that had survived the missions (selection process), the military ignored any shot-down or destroyed aircraft unable to be studied.
Survivorship bias is where we only consider things that pass a selection process, i.e., survivors, sales opportunities, etc., and not failures. This cognitive bias can lead us to be overly optimistic. It can lead us to mistake correlation for causality by extracting common traits in successful data without considering it was also present in failures. You will find survivor bias across the business, sales, and marketing, impacting your effectiveness at each stage of your sales process.
Ideally, a third party should access the sales process. Remember, your internal lens is clouded by survivorship bias.
Implications of Survivorship Bias in sales
Survivorship bias leads to several common mistakes and significant consequences for your sales process:
- Encourages overly optimistic beliefs: When sales metrics only offer a successful subset of a particular situation, it encourages you to believe in a skewed reality of the current sales process. It can cause you to choose strategies that will not play out well for your sales team.
- Leaves out potential client voices: By narrowing your view with customer success or conversion rates, survivorship bias leaves out the vital potential customers’ voices of those who struggled with your sales process, product, or service. How many prospects or potential leads did you think they were a good fit but said “no”?
- Evaluate causation from correlation: If you analyze “success case studies” or “success sales metrics,” your correlations create a false sense of causation. For example, if you look at several of the best buyers in your business, your logic might dictate the sales process formula that lies with these customers’ pain points, email templates, and key decision-makers. This viewpoint fails to consider the sales opportunity that dropped out.
How to Address Survivorship Bias when evaluating the sales process
The best way for sales leaders to address survivorship cognitive bias is to identify and focus on what’s missing. Look at your given data set for a time period, and consider any other possible data points or percentages on the “same progress path” but not present in the final data.
Start with the deals you thought were a good fit for you, but they said “no.”
- Which deals did you determine a good fit?
- Which deals could your sales reps provide a solution to the buyer’s problem?
- What percentage of prospects requested a demo after discovery sales calls?
- What was the churn rate of these individuals?
Importantly, you cannot rationalize the reasons behind their “no sale” before evaluating the prospect in more detail.
For example, you cannot use the following excuses to exclude a potential customer from your sales process audit:
- The prospect made the wrong decision
- The prospect found a better company
- The prospect’s budget was too low, or they did not see the value in the price
- The prospect had unreasonable expectations
- The prospect preferred the other salespeople or company service
These are the lies sales reps, and your organization will tell themselves so that they don’t have to look at the truth. And the truth is, their sales process failed somewhere along the way.
And you don’t want to admit that. And a lot of times, they don’t even know that.
Ideally, a third party should look at your sales process. They should compare you to industry averages and set appropriate benchmarks that are not clouded by your internal lens.
Remember, your internal lens is clouded by survivorship bias.
Do you need to evaluate your sales process?
You have to play to win when you want to grow your organization. Playing to win means thinking up creative solutions – including your sales process.
- Do you know how to find creative solutions to these issues preventing progress, effectiveness, and improvement?
- Do you know how to find more leads?
- Do you want to increase revenue?
Let me be clear, if the solution were in front of you, you would have solved it already.
It’s likely something that you cannot solve without support and help.
Rose Garden is solutions-focused, so if you want me and my team to ignite your revenue, we will do so with our Sales Accelerator.
About the author:
Ali Mirza is the Founder & CEO of Rose Garden, a national sales consulting organization, and featured in Forbes, Inc, Business Insider, The Huffington Post, Business Rockstars, and The Wall Street Journal.
Ali is a highly sought-after public speaker presenting at multiple national conferences on innovative ways to accomplish transformational growth on your sales team.
Rose Garden provides unparalleled support and guidance to growth-minded founders via sales strategy differentiation, world-class sales culture creation, and exclusive playbooks, processes, and scripts to position them for limitless growth.