At my previous company we did some analysis of the sales pipeline and found a number of things out, 4 of them being that:-
- Any deals that had been in the pipeline for over 9 months didn’t happen and would just closed out as lost.
- 80% of everything at stage 1, so 10% of the way through the sales stage, never made it to the next stage. So 80% of the total pipeline never turned into revenue.
- 80% of the pipeline in quarter 4 just got rolled on year after year. In other words a deal in say December 2017 would have the date to December 2018.
- But every year we made our number. In fact the deals that were won tended to be in the pipe for 3 months and entered at sales stage 4, so 40% of the way through the sales process.
If this sounds like your company then you are not alone.
What did we do armed with those 4 pieces of data? First we got permission from the powers that be that we could tidy the pipe up. I don’t think they really understood the mess as we got complaints from removing $20 Million of pipe which was from the sales people who had left but the pipe has still been sitting there.
Next the sales leaders were taught (again) to use the tools available to track pipeline and to challenge the pipe of each sales person.
So why is your sales pipeline is stuffed with wishes, hopes, and dreams?
Many reasons, sales people often create pipe to make it look like they are busy. Sales people chase deals they can never win. Answering RFPs is an great example, RFPs are written by suppliers and if you didn’t write it then you are not in control of the sale.
Sales people can also chase what I call ghosts, to either look busy (they might be looking for another job), or they are just lazy.
I remember working for a company that had a number of consultants “on the bench” so 8 of them sat in a room answering a bid that could never be won. Don’t misunderstand being “busy” with being “effective”.
How many sales people have left the company and when you re-allocated the pipe to somebody and there was nothing there?
Manager beware, pipeline reviews are crucial. You need to challenge why pipe isn’t moving through the stages. What can you, Sales Enablement, Marketing help to move it forward? What qualification criteria have been applied? Is enough pipeline entering at an early stage to replenish the closed business?
You should be able to arm yourself from the CRM with close rate, sales speed through pipe, the number of deals you need at 10% to make your number. While there are people out there that sales is about “gut” and not facts and figures. I agree analysis paralysis can be a problem with many sales departments. But for the sales leader to understand that the win / loss rate is actually 1 in 3 and not the ratio we keep telling ourselves.
An internal social media system (we use Slack) is essential so that everybody in the company gets involved and communicates and engages. Salespeople often have “happy ears” and having the pre-sales people on the same conversations on social, helps for the conversations to be more grounded.
I’ve written before about how (internal) social has enable us to increase our forecast accuracy. Which you might be surprised increases the status people see sales internally. We aimed for a forecast accuracy of 95% and above, quarter on quarter.
I’ve written before about having a prospecting culture, we are a social selling company so we don’t need to make cold calls or send cold emails. Our business comes through inbound or referrals. Either way, whatever prospecting method you choose, there has to be a culture other wise you will go through lead feast and famine.
We use social Selling as it gets away from the “it’s January get on the phone” or “cold calling day” mantra that doesn’t work. Social selling provides each salesperson with a (always on) demand generation culture for life. Every salesperson is responsible for their own demand generation, which is certainly easier and short, medium and long term, rather then the short termisim of cold calling.
So how do you stop your sales pipeline being stuffed with wishes, hopes, and dreams? Get a sales prospecting culture that does not mean “feast and famine” as well as having the tools to enable you to effectively manage your pipeline at a high level as well as by sales person. Then have the processes in place so that sales people expect to be challenged about their contribution and expect to contribute.
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