Learn how to sell more by rigorously managing your pipeline of opportunities.
Why is it that top performing sales people rarely struggle to achieve over-quota performance? Almost as by magic, these top performers have an abundance of qualified prospects which they easily convert to new orders, consistently exceeding their sales target every quarter – all seemingly without difficulty. Ever wonder how they do it?
Closer evaluation and analysis reveal the truth – top sales people have are disciplined about managing the movement of active prospects through the various sales stages in their pipeline of opportunities. As a result, top performers have more qualified opportunities in their pipelines. It is that simple.
We defined the terminology we use to discuss pipeline management in our previous post Pipeline Management – Part 1: Terminology,. We suggest you take a moment to read (or review) that post before reading this one.
There are a few more concepts we need to define in order for you to become a master at pipeline management.
- Coverage: (i.e. how many active prospects are required for you to exceed quota),
- Metrics: (i.e. how to manage active prospects as they move through sales stages)
- Communication: (i.e. what to do when an opportunity stalls at a specific sales stage).
Mastering these concepts will enable you to more accurately predict which opportunities will convert to sales and to be less reliant on any one particular opportunity to close in order to exceed your quota.
Coverage: Know Your Numbers
What does losing weight and building a sales pipeline of quality opportunities have in common? Both begin with a specific number in mind and a timeline! Getting to that number will require discipline, regularly scheduled evaluations to measure progress and changes in behavior. Losing 20 pounds in 16 weeks is a result. 120% of quota attainment for the sales year is a result. Think about the activities or steps necessary and the timeline for completion – not the result. Let’s look at this from a pipeline perspective:
- Break down your Numbers : No matter how good we are at selling, we never get 100% of the deals we target. We rarely get 50%. What’s your number? 40%? 30%? Be brutally honest and specific with this number. Here’s an example: To keep the numbers easy, if your quota is 1M in Total Contract Value (TCV) and you get a nice bonus for attaining 1.2M in addition to your regular commission, build your plan to attain 1.25M. In distance running, you train to run “through” the finish line so add a cushion to your end result just to be safe.
- Back your Timeline into it: OK….to hit 125% of your annual million dollar quota your “cushioned” target is 1.375M. Remember: we are, at this point, ONLY addressing your Closing opportunities – NOT your entire pipeline. Your TCV target for each quarter is $343,750.00 or $114,583.00 each month. So what should my entire pipeline look like? These numbers are for illustrative purposes only. Take the time to analyze your own specific metrics. Stare them down & understand them. We only fear that which we do not know.
- Your Total Pipeline should consistently support 4x – 5x your Annual Targeted Quota: Most sales performers manage their business from the bottom of pipeline with a “This is what’s closing” approach to sales. Top performing sales professionals manage their entire pipeline with a weighted value for each stage based on historical data. Your percentages usually change at different Sales Stages. Let’s say 25% of your First Meetings result in a Proposal Meeting and 50% of your Proposal Meetings result in Closing Meetings to bring on the client. A year later, 60% of your First Meetings result in Proposal Meetings and, like the year before, you close 1/2 of them. Analyze your ratios on a quarterly basis to uncover changes and figure out what’s potentially causing them. Lastly, build and maintain 4-5 times quota coverage in your pipeline. Why? because if an Active Prospect stalls, makes another decision, chooses a competitor or something goes wrong, you won’t be scrambling to hit your number. And something almost always goes wrong. Top performing sales professionals recognize this and are prepared for it.
Metrics: Where AM I? Where ARE they? Is this THE END?!!
Sales Stages gives us a road map of where we are in the Sales Cycle. Sales Stages also prepares the prospect for what needs to happen next: on our end….on their end…..and together. Presume that 75% to 50% of First Meetings do not initially progress to Follow Up meetings or Proposal Meetings. The Sales Cycle ends there (at least temporarily). Presume that after a good First Meeting and your prospect agrees to help with data-gathering 2 days later. Silence. You call. You email. You stop by. Crickets. It’s been 2 weeks. The Sales Cycle ends there (at least temporarily).
Presume that after you’ve completed an excellent Proposal Meeting and attempted to schedule a Closing Meeting (you’ve just provided client references) and are asked to schedule a closing meeting with your primary Influencer in 1 week. After the week, your Influencer says that s/he’s in the process of coordinating the Closing Meeting. You ask about the client reference checks and they don’t know the status. You contact your references and they tell you that they haven’t heard from your prospect. You call your prospect back 7 business days later to follow up. S/he tells you the same thing as last time and apologizes. You’re asked to call back in another week. Sound familiar? The Sales Cycle ends there (at least temporarily).
Disappointing? Perhaps. Frustrating? You bet. Reality? This happens all of the time. When your prospect disengages from the Sales Cycle, it does not mean that the the sales opportunity is dead. Simply, the Sales Cycle has ended (at least temporarily) and how you handle this fact both internally and with your prospect is important. Remember that a healthy dose of pessimism from the beginning will keep you from becoming dispirited. Some thoughts:
- “Inactive” does not mean “Deal Lost”: When your prospect disengages, presume best intentions – on their part. Competing priorities, internal emergencies, an unexpected shift in staff or management may all be contributing factors. It means that this opportunity cannot be included in your current Active Pipeline of forecasted accounts, nothing more. We’ll discuss how to best communicate this to your prospect in the next section
- A small action taken by your prospect today is 5 times more valuable than their promise to take action in a week: Action taken by your prospect shows commitment and engagement. As an example, if data-gathering is an important step after a good first meeting, it makes sense to start that process immediately. Your prospect may not be able to complete the entire data-gathering with at that time, yet their desire to move forward is increased. Why? S/he’s invested at this point and it’s likely that the data-gathering process will be completed shortly. Compare this to “I’ll send over the files electronically next week because I’m walking into a meeting now and then need to prepare a financial presentation that our CFO asked for later this week.” We’ve all seen this movie before. The ending hasn’t changed.
- When in doubt – Call it Out. Then Take it Out: The First Meeting as described in Part I outlines your sales process, what your prospect can expect and the order/timeline in which they may expect them. It is your responsibility to restate that this process was communicated during the First Meeting. They agreed that this was both acceptable and reasonable. It is your responsibility to restate this again (pleasantly and professionally, of course). Again, ask when you may expect the data, what the meeting date availability is – whatever the next step demands. If this doesn’t galvanize action on your prospect’s part, move the opportunity to inactive.
Communication: You want me to tell them WHAT?!!
Most sales professionals are optimistic people. Hope and belief are positive traits and often sustain us in times of personal adversity. In business, this can work against you – if you let it. Remember that top performing sales professionals have the discipline to confront the reality of the behavior they have observed with their prospects. If your prospect has committed to a specific action as part of your process and has not, and you’ve asked them again (pleasantly and professionally) and STILL no action on their behalf, well….you got your answer. You may not want to acknowledge it or believe it yet you must: Your Active Prospect has become Inactive: What now?
- The Laws of Attraction: If you hunt, stalk, chase or make a pest of yourself to your prospect, they will run and hide from you. It doesn’t work. Worse, the likelihood of them re-engaging again in the future is quite slim. Rather, email them (if you’ve called them) or call them (if you’ve emailed them) and offer your prospect the Exit Ramp.
- The Exit Ramp: The Exit Ramp is an elegant, professional tactic that allows your Influencer to disengage from the Sales Cycle without embarrassment or bad feelings on their part. The Exit Ramp communicates that you are acknowledging that something has changed since the beginning of the Sales Cycle. It also acknowledges that you are stepping back from the process as well; your other prospects and clients need your attention at this time. State that before “you close their file, you’d welcome the opportunity to discuss why this occurred and help in any way to keep our dialogue moving forward. If I don’t hear back from you, that’s fine too.” Close by thanking them for their time to this point. DO NOT repeat DO NOT offer to “follow up with them in 3 months to see if anything has changed on their side”. If you do this, your prospect (likely an Influencer) will thank you for your understanding and suggest that you do “just that”. Again, we’ve all seen this movie before. Same ending.
- Please Allow Me to Introduce Myself: Now that the opportunity has been moved to Inactive, let it cool down. Wait about 3 months. If your prospect hasn’t reached out to you prior to this point (and it is entirely possible they have), any proactive attempt to re-engage should be with the Decision Maker only. S/he’s likely to have heard of you (if you haven’t already met) and they should be your only point of re-entry for this opportunity. Don’t move the opportunity from Inactive until you have had the chance to meet with the Decision Maker in-person. The outcome of that meeting will dictate appropriate next steps
Keeping your pipeline from getting clogged with the time wasting notion that “They haven’t told me – NO”. Not hearing “No” is no guarantee that you will ever hear “YES”.
- What is your process for keeping your forecasted opportunities moving forward?
- How do you prune or weed out those opportunities that languish in your pipeline?