Untruthful Sales Pipelines Will Waste Your Resources
Think about it, for every deal your sales team is chasing that will not close, you could be using those resources for finding good opportunities that will. I’ve seen this simple strategy turn around many a company’s fortune in short order. Chasing opportunities that have little to no chance of closing raises the cost of sales, squanders resources, and leads to discouragement.
Here is the Truth – There are two winners in every deal!
Those two winners are:
- The salesperson who knows that the opportunity is his or hers, and
- The salesperson who knows the opportunity is not hers or his, early in the sales process.
When you can accurately determine the deal is not yours early, your win rate and productivity will skyrocket!
Pipeline Bloat & Happy Ears
Happy ears is the cause of pipeline bloat. Happy ears happens when salespeople do not know how to qualify opportunities early in the sales process and convince themselves (and the company) that their deal is going to close, when it is not. Pipeline bloat gives you hope of a dependable future revenue stream but disappoints when it counts… at the end of the month, quarter and year. How do you know when your sales pipeline has a bloat problem? Generally, when you are chasing RFPs, your close rates are under 33%, and you have too many deals that don’t ever make a final decision.
There’s a huge upside to this!
Don’t be too hard on yourself or your team… this is a very common dilemma. The good news is, that when addressed properly, this problem is very fixable and can literally skyrocket your sales results beyond what you would ever expect! Here’s a rule to remember, “managing a sale cycle is all about getting to the truth, as early as possible.”
Where do you start to see if you have a problem?
Quality First! Let’s start by defining what quality is. My first level definition of pipeline quality is: an opportunity engagement at the decision maker level, where there is a problem that has a meaningful consequence (that your solution can fix), which needs to be resolved within “x” period.
Quantity – There are two pipeline numbers that I consider to be vital indicators to future revenue, they are Pipeline Velocity & Weighted Pipeline Value. If these numbers are not visible and well defined, chances are the company may be working on the wrong end of a revenue problem.
Pipeline Velocity – The single most important metric to a healthy, vibrant, and growing pipeline. Pipeline velocity defined, is the quality and quantity of new opportunities coming into the pipeline in any given period (usually month or quarter) to reach a revenue goal. A salesperson’s first job must be to bring in the right pipeline velocity (quality and quantity) of new opportunities to exceed goal.
Weighted Pipeline Value – Weighted Pipeline Value (WPV) – Assuming the opportunities in the pipeline meet the criteria for each stage, WPV is a simple formula that will tell you the future real total value of your revenue pipeline, e.g. take all your opportunities with a close date of × period multiplied by the probability amount of each opportunity = your revenue forecast for that period. If your pipeline is giving you an inaccurate revenue forecast, it can be traced directly back to your sales strategy and process and whether your sales team has the competencies to execute on it.
Pipeline Review Basics – Keeping the pipeline clean and accurate is an ongoing required discipline to keep your team held to the right standards and your revenue streams on track. To keep it simple there are seven data points to a meaningful opportunity review, they include:
About the author – Actionable, inspirational and real “JJ” draws on 25 years of experience as an entrepreneur, sales coach, trainer and motivator to wage war on sales mediocrity to deliver stellar results. Jeff has been instrumental in helping his clients win multi-million-dollar opportunities from the likes of Siemens, BB&T, Caterpillar, Southwest Airlines, Luxottica, Grupo Modelo, and Ferrero while competing against the Goliath’s of their Industry.