There are two questions you can expect from any prospect if you ask for their involvement in any sales activity: "What's the size of this deal?" and "What's it going to cost to get it?" They want to know all the numbers that will be added and subtracted from the revenue that the pending sale will generate. You should want to know the same things about any business opportunity you undertake, especially if it requires a time-consuming presentation.

What's the ultimate reward of a sales presentation? In the short term, it may only be a single sale. In the long term, it's a series of sales. But you can't just look at the upside.

There are at least three specific risks involved with preparing and making any sales presentation. Let's look at each one.

Risk No. 1: Financial
How much do you think it costs for you to deliver a presentation to a prospect? To find out, use the following formulas for each of the following four "direct" cost categories for any given presentation, then add up all four of your totals for the total cost of any given presentation:

  • Category 1: Your time (in hours) x hourly rate = $X. Take your last year's total earnings (base and commission plus any bonus), and divide that number by 2,000, which is a rough estimate of the average number of working hours in a year.
  • Category 2: Technical support (in hours) x hourly rate = $X. Will you require assistance from any technical support personnel?
  • Category 3: Administrative support (in hours) x hourly rate = $. Will you require any assistance from any administrative personnel?
  • Category 4: Management support (in hours) x hourly rate = $. Will you require any assistance from any of your managers? Will they be required to be present for all or any part of your presentation?

Risk No. 2: Opportunity
While you and your support personnel are preparing for and conducting this presentation, guess what? You won't be doing anything else. That means passing on other opportunities that come your way during this time. Here are two important questions to ask your prospect's top officer before you devote any time to a presentation:

1. Ms. Robertson, what's likely to happen after our presentation if you like what you hear, see and feel--if you're convinced that our ideas can help you overachieve between now and (the end of the month/the end of the quarter/the end of this fiscal year)?

2. Ms. Robertson, what will you need from our team in order to be convinced that we are the best choice to be your business partner?

You must get answers to these questions before you or any of your team members spend any time developing a presentation. If you want a rough estimate of the opportunity price tag at stake, take 10 percent of the revenue you generate on a monthly basis, then add it to the total of your financial risk.

Risk No. 3: Political

Internal politics can be poisonous to a sale. They can also make a sale happen. Over the years, I've developed my own system on how to determine "who's who" in the world of internal organizational politics. Here's my system in one sentence: Find out who the boss is of the person you're calling on.

Let's say you're getting ready to give a presentation to BigCo. You take the time to find out who is on the board of BigCo. Much to your surprise (and horror), you find out that three of the five board members are customers of your biggest competitor.

Before you invest any time and resources on your presentation, you must pick up the phone, make an in-person visit, send an e-mail or leave a voice-mail message for your target prospect's top officer. Ask something like the following: "Will the fact that three of your five board members are customers of my largest competitor have any impact on your becoming a customer of mine?"

Use what you learn about the board to pose a positive, direct and meaningful question to your target prospect--a question that solicits this top officer's opinion and gets you the answer you need to put yourself in the best possible position.

Now you must find out how long the incumbent top officer has been in command and where she/he came from. Here's why: Suppose you find out that the person you are targeting your presentation to came from an organization that was one of your competitor's strongholds a few years ago? Then you must also ask something like this: "How much of an influence will your past experience with XYZ Co. have on your decision to become a customer of mine?"

Keep in mind that "best possible position" may not translate as "first place." Sometimes it's better to cut your losses than to continue to invest your time and your organization's funds and resources.

As you can see, it will be difficult to come up with a "hard dollar" cost for the political risk of your presentation, but you may want to add the total revenue potential of this sale to the total of your financial and opportunity risk.

The Overall Risk
Take a look at your total financial, opportunity and political risk, and ask yourself the following:

1. If my presentation is a smashing success, what's the probability of making the sale?

2. If I had to pay for the expense of making this presentation out of my own pocket, would I still deliver the presentation?

If you decide to move forward, I also recommend putting together a discovery agreement--a proposed agenda for your presentation that contains your understanding of the goals, plans and objectives of the target organization. The vast majority of top officers have zero tolerance for incompetence. I also know that top officers need to always feel that they are in control. The discovery agreement lets you address both concerns. It's a brief synopsis compiled in bullet points listing your understanding of the unique challenges, initiatives, needs, goals and plans that are now facing this organization. The discovery agreement is basically a hedge against incompetence.

Note that the discovery agreement does not explain or introduce your ideas. That's what your presentation will do later on in the process.

Take a look at your sales forecast, and select the next prospect that is ready for a sales presentation. Take the steps I've outlined at the beginning of this article and perform your due diligence and mathematics. Then determine the overall risk and prepare your discovery agreement.

In next month's column, I'll go into more detail about the actual presentation.


Anthony Parinello is the author of the bestselling book Selling to VITO, the Very Important Top Officer. For additional information on his speeches, Sales Success Kits and newest book, CEOs who Sell, call (800) 777-VITO or visit www.sellingtovito.com.