Sales Risk Management is identifying, quantifying, and mitigating risk found in the sales process. It is, perhaps, one of the most underutilized sales tools. Not only does Sales Risk Management protect profits, it also helps build and protect long term customer relationships.

Most businesses do not recognize the risks of a sale. And, even if they do identify risks, they don’t understand how to mitigate those risks and don’t utilize mitigation methods.

The most obvious area of mitigation is contracts. Most managers and salespeople believe this is the realm of the lawyer, and not really their responsibility. Sales Risk cannot be controlled by sliding a contract across the table to a lawyer. A lawyer may know the legal aspects of a contract, but good contracts are built on business; product; and industry knowledge, experience, and practices.

Contracts are very important. However, they are not the end-all to Sales Risk Management. The sales process includes six steps:

• Information gathering and analysis
• Understanding and reading a customer
• Offering the right product at the right price
• Communicating in a way that leaves the customer with no doubts about you, your product, or your company
• Executing a contract
• Follow up (Delivery, Installation, Documentation)

Each step carries its own inherent risk. Some might not seem connected at all: a blunder in documentation or the receptionist being rude to your customer during a sensitive negotiation and they decide your company is not for them (and you don’t know why).

These risks grow exponentially when a company starts conducting business outside its home country. How will subcontracting and transportation be handled? What kind of obstacles or misunderstandings will be caused by language? What laws, where, and who will resolve potential disputes?

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