When we talk about a pipeline, we are talking about a list of the deals that we expect to close in the timeframe that is appropriate to your business.
A pipeline is not a collection of sales processes and the relevant steps and stages – that’s your sales process.
Pipeline is simply the word that has come to describe the organised list of sales prospects that we hope to sell our stuff to. We could call it something else – opportunity list or close sheet – but pipeline has become the de facto descriptor.
Organising opportunities to a sales order pipeline
So why even bother with a sales pipeline?
The reason we need to organise our sales opportunities that we are working on and why we need to organise them into a pipeline is because what gets measured gets done. And as business leaders we want to get stuff done.
Furthermore, we want to implement systems that enable us to manage our salespeople in an efficient way.
What should it look like and how should it help? Perhaps we should think about how to create a great sales pipeline in terms of the features/advantages/benefits concept that we use when training sales teams?
A sales pipeline should list the deals we expect to close segmented by the salesperson, product group, process stage and value. We can expand the list up and across, but these are the key metrics that any sales operation needs to monitor if it is to forecast effectively. And here is the key. We wouldn’t need a pipeline if we didn’t care when sales came in.
Sales pipeline monitoring and management tips
The purpose of creating and monitoring a sales pipeline is to assist sales leaders and business principals in their aim to deliver consistent revenues against the organisation’s targets.
At the end of the day, we all have targets – we may have suppliers who have expectations of how much we will buy, we will certainly operate within a commercial trading environment where we start each month with a bunch of fixed costs that need to be covered.
So really, it’s not a pipeline it’s a timeline isn’t it? If we could predict which deals would close and when (and if we had a spectacular lead attribution method as well) we could adjust overheads and predict the margin with amazing accuracy.
We could be profitable every month. We could sell out and do something worthwhile.
Make sure your sales process can be monitored – It’s important that the steps and stages in your pipeline lend themselves to examination and that they genuinely inform on the progression of a sales opportunity.
Make close dates real – don’t allow deals to be rolled from week to week and month as they plump up non-performer’s pipelines.
Don’t mix up a pipeline review with a conversation about what will get closed this month. They’re not the same thing. If you just want to know what the number for the current month is going to be ask the question. An effective pipeline review meeting is about understanding where support is needed and how resource can affect outcome.
Four key metrics to measure the quality of your pipeline
The numbers are still the numbers – the four key metrics that inform on the quality of your pipeline are:
• Opportunity size vs average order size
• Opportunity age vs average time to close
• Pipeline value
• Close ratio
Even the most accomplished salesperson has pipe (line?) dreams. At the end of the day the numbers are the numbers. A high volume of leads or prospects may look good, but can they devote the time needed to advance and close a large volume? Contrary, a small pipeline means your team isn’t spending the time needed on networking or lead generation.
It’s all we have – historical trends are key. Although past glories are not a guarantee of future success, they are all the evidence we have.
The real likelihood – to develop a successful pipeline, you will need to assess each opportunity and the probability that the requirement is genuine. Pipeline review meetings provide excellent coaching opportunities for sales leaders to develop the team. Some general rules about the probability to close tied to the sales stage, number of buying approvers and size of the deal will help keep your probabilities in check.
Don’t forget to qualify out – Don’t let the dead wood clutter up the good wood! Clear out your closet. Take an honestly aggressive approach to keeping the pipeline real. This will help improve the accuracy of the win/loss analysis and associated forecasting abilities.
At Reach Revenue we help our clients to implement innovative and effective plans that deliver sales growth.
For more information about our sales process development and deployment methodology call us on 0203 858 8030 or email John.email@example.com