Sales leadership can be defined as the ability to positively influence the actions and attitudes of the sales team to achieve or surpass their goals. Part of this influence involves how effectively you handle the myriad decisions you face every day.
As a leader you routinely have to make numerous important decisions on a daily basis, including decisions regarding people problems, customer problems and opportunities, upper management issues, setting performance goals, and so forth. Your ability to influence your team is directly related to how you make decisions and, ultimately, on the quality of your decisions. Decision making, especially in regard to leadership, isn’t always easy, but well-calculated decisions can result in achieving your sales goals and in enhancing your overall image as a leader.
So can you become a better decision maker?
The answer is yes, if you use a systematic process for making important decisions. The R.O.I. (Risk/Opportunity/Investment) Decision-Making Process will help you improve your ability to make decisions about problems and opportunities that you face in your quest to accomplish your goals. The R.O.I. Decision-Making Process consists of five steps:
#1: Weigh the Importance of the Decision
Ask yourself how important the decision is. How much time, other people’s time, money, and energy should be expended on making the decision?
#2: Search Relevant Facts and Information
Although this sounds obvious and simple, it is easy to be deficient in completing this step. The natural tendency, and sometimes-unavoidable necessity to make quick decisions, can cause the decision maker to disregard the fact that pertinent information is missing. Once you acknowledge that there are missing facts, you must determine if they’re worth finding and if you have the time to invest in searching for them.
Ask yourself the following questions in searching out relevant facts/information:
- What are the criteria for this decision?
- What information do I need?
- Are the missing facts worth finding?
- How much time do I have?
The most effective decisions are made with as many facts and as much time as the decision requires. The answers to the questions above will determine when you might have to move a little faster than you normally would, or make the best decision possible with limited information.
For example, if a salesperson were in danger of losing his or her third account this quarter, you’d probably want to get out there quickly. If you take time to analyze call reports, or talk to other salespeople or customers, you may not be able to help the salesperson maintain his or her confidence level and you may end up losing even more business. In this case, you may not have all the information up front, but time is of the essence.
#3: Identify Decision Options
In this step, you want to list all of the possible options—before evaluating ideas and selecting one to implement. First, write down a list of obvious options. Then brainstorm creative option additions and add them to your list. Be creative without evaluating any of your ideas. Finally, narrow your list down to two or three of the most doable options.
#4: Use R.O.I. Framework to Compare Options
Now you are ready to compare your most doable options in terms of “Risk,” “Opportunity,” and “Investment”—using high, medium, and low rankings.
Risk: the probability of a decision option leading to failure. How likely is it that you will get your desired result with these options? Rank risk as high, medium, or low.
Opportunity: the impact the decision option will have on results. In addition to how well it will solve a problem, consider how it will affect other issues such as sales performance, your team, and your image. Use high, medium, and low rankings.
- Investment: the cost of implementing the option. Besides the monetary value involved, each option will require a high, medium, or low degree of your time, the sales team’s time, other resources, and so forth. The total of these other costs can be significant. Be careful not to downplay those costs for options that may rank favorably in risk and opportunity.
One common decision-making bias leaders have, is downplaying the non-monetary costs of decisions that otherwise look like Low Risk/High Opportunity decisions. For example, such “hidden costs” or Investments can include longer than expected ramp-up time of new hires, lost productivity implementing new systems or processes, or time out-of-the-field attending in-person meetings.
#5: Select “Best” Option
The last step in the R.O.I. Decision-Making Process is to select the best option based on your Risk, Opportunity, and Investment rankings. There are four components in selecting the best option:
Eliminate High-Risk Options: As discussed earlier in this post, your sales leadership image and results are affected by your ability to make what your sales team believes are “right” decisions. To increase the likelihood of effective decisions, immediately eliminate options that have a low probability of success.
Eliminate Low-Opportunity Options: These options will seldom be your best options, so eliminate them right from the start.
Weigh High-Investment Options: Be sure to calculate the obvious and less-obvious costs of each option.
- Select the option that is closest to the ideal: Low Risk/High Opportunity, and Low Investment.
One quality of effective leaders is that after selecting the best option they implement their decision quickly. Why is time of the essence in implementing a decision? Because it is likely that if you have followed a systematic decision-making process, revisiting a decision after it has been made (assuming no new information has surfaced) won’t improve the quality of the original decision.
On the contrary, you risk losing a valuable opportunity through delay, or letting an existing problem worsen. Moreover, unnecessary delay can frustrate your team and hurt your image as a sales leader.
As a sales leader you have to make numerous decisions every day, some important, others minor. Your ability to influence and lead your sales team in part is a function of how well you make decisions. Using this systematic decision-making process will help you make better decisions more quickly and become a more effective leader.
If you would like more insights on how to improve sales management skills, I encourage you to get a free copy of Developing Great Frontline Sales Managers.