Sales pipelines help us to identify the key elements that contribute to won deals: target clients, leads, opportunities, prospects, stalled prospects, wins, and losses. The funnel transfers fuel from the consumer to a business. Without it, it would be almost impossible to forecast sales, analyse KPIs, identify mistakes or understand your customer base.
There really aren’t any cookie-cutter methods for managing sales pipelines as every business has unique sales processes and ways to qualify leads and identify opportunities. However, there are a few things that all sales pipelines have in common, and you can use them to optimize your sales pipeline management process, and ultimately increase your revenue.
Understand your sales pipeline data
Data is the lifeblood of any business. This is why you must know every aspect of your sales pipeline well. In a recent blog post, “5 Best Practices for Managing Your Pipeline,” Matt Smith discusses the importance for sales managers of understanding the numbers and components of their sales funnel.
Sales managers may be able to easily identify trends by simply glancing at key performance indicators (KPIs). However this isn’t the only thing they should be looking at if they want to accurately forecast the health of their business.
Smith states that in order to accurately predict revenue and create predictable revenue, the sales manager must know the following:
- New leads created per month and their sources
- Conversion rate of leads to opportunities
- Conversion rate of opportunities to closed deals
- Average won sales cycle length
- Average won deal size
- Win rate
- Total number of open opportunities
Smith highlights that accurate data leads to accurate sales forecasting. Using automated CRM systems means you do not have to worry about updating data manually, and you avoid data inaccuracies and silos. Incorrectly entered data, will not only cause a glitch in the way you run the sales pipeline that month, but it will cause a snowball effect of inaccurate trends and predictions for months, if not years to come.
Differentiate forecast and pipeline reviews
Keep your top of the funnel opportunities and end of journey opportunities separate; this means keeping your forecast review meetings and pipeline review meetings separate too.
Pipeline reviews normally hone in on what’s entering, just entered, and previously entered into the sales funnel. Forecast reviews focus on what’s about to exit. While both are equally important, Smith states that sales teams should focus more on what’s recently been added to the funnel, since this is where sales managers have the greatest influence: they are in a position to influence the outcome of these new opportunities. Smith suggests using pipeline meetings to discuss and review things such as leads and stalled opportunities, instead of the opportunities that are about to close.
Identify and clear all clogs
Making predictions based on the amount of leads and opportunities in the pipeline is dangerous, as not every lead and opportunity will be won. That’s why it’s important to do a quick review every now and again to identify weak leads and stalled opportunities. Sales is a numbers game, and the process should involve a lot of quality assessment.
Figure out from past trends what percentage of your opportunities are high quality and likely to close. Get your sales agents to focus on quality leads instead of blindly approaching every lead that comes their way. Give them a more accurate look at the sales pipeline, so they can determine the best course of action to win sales. That is where KPIs like the lead conversion rate and win ratio can help you. By getting rid of bad opportunities, you can prevent clogs and win more deals.
It’s easier to get smaller leads through the pipeline than it is to get larger ones through. More often than not, you’ll find that larger leads are the cause of your clogs. So what do you do to get them through? Inc.Magazine suggests dangling carrots, in other words, providing an exclusive incentive. Some companies offer free trials, while others send helpful free advice in the form of white papers. While they may not immediately know the results of these freebies, one thing is certain – once a customer signs up to your trial or opens your white paper, you are already closer to a win.
Align your pipeline with the buying process
“Getting close to customers is not so much a problem the IT or marketing department needs to solve as a journey the whole organization needs to make. “ – Harvard Business Review
Instead of aligning your sales pipeline with your selling process, focus on designing your sales pipeline based on your customer’s buying process. At the end of the day, the customer is the bread and butter of a business.
Bob Apollo, the founder and principal consultant behind Inflexion-Point Strategy Partners, calls defining your sales pipeline from the buyers’ perspective Complex Sales. It requires sales agents to pay close attention to where each customer is in their buying process and to strategically work their tactics to match the buyer’s position.
When adapting the Complex Sale, Bob suggests that sales agents invest in early engagement, after identifying the customer’s pain point but before starting to consider acting on it. Using the Complex Sale tactic, Bob has observed a profound impact on sales, on average resulting in double or triple the win rates.
Know when to flag a deal
How do you know when a deal isn’t coming back? Low value sales pipelines often include deals leaking from the end of the funnel – after sales agents have spent considerable time and effort on closing those deals.
Apollo suggests focusing on the “qualification” of leads. He recommends establishing KPIs and using them as benchmarks. First, take a look at your successful opportunities and find out how long it takes for them to go from one stage to the next, and what percentage of them convert to a win? Then take a look at your less successful ones and find out what stage(s) they fall out of the pipeline. Once you identify those KPIs, set benchmarks – then re-qualify the underachievers and if they do not meet any of the benchmarks remove them from the pipeline. Apollo adds that successful sales agents usually take time qualifying, while average sales agents lose deals late in their journey.
Managing the sales pipeline should be an integral part of your day. Catching mistakes, shifting stalled leads, focusing on the customer’s buying processes are a few ways to do just that. By making your sales pipeline more efficient, you’ll identify and attract quality customers, and ultimately win more deals.