According to recent research from CSO Insights, on average fewer than 50% of the deals that had been confidently forecasted by sales people ended up closing at the value or within the timeframe originally predicted. Of the remainder, many were lost to the competition - others declined significantly in value, were deferred to a future quarter or simply decided not to buy.
As they point out, for all the apparent sophistication that may be used to assess the likelihood of winning business, for most companies their forecast accuracy is worse than the odds they would get from simply flipping a coin to make their decision.
But there may be a light at the end of the tunnel. The same study identified a subset of sales forces that consistently achieved win rates of more than 75%. What set these organisations apart, and what can we learn from their experience? CSO Insights observe that they did the homework necessary to chose the right deals to pursue in the first place, and then employed the appropriate methods to engage the prospects.
In other words, they systematically identified their most valuable prospects and addressed their most important issues - and aligned their sales and marketing efforts around facilitating the buying process. They were able to qualify bad deals out early in the process, rather than waiting until the end of the sales cycle to discover that they were never going to buy.
Evidence-based pipeline management
We've observed a further characteristic of the most effective sales organisations - they manage their pipelines and generate their sales forecasts on the basis of observable evidence of buyer behaviour, activity and commitment. Instead of depending on the often unreliable hopes of their sales people, they insist on tangible proof of the buyer's intent.
This isn't just reserved for the forecasting process - the discipline applies throughout the pipeline, from the moment that a new opportunity is added. They also tend not to associate any value with the deals in their pipeline until there is evidence of money, authority and need - on other words until the prospect has reached the evaluate stage.
Revaluing the sales pipeline
As you might expect, when first implemented these principles tend to have a dramatic effect on the value of the pipeline. The total value of the pipeline appears to come crashing down. But the truth of the matter is that most of the revalued deals were never properly qualified in the first place, and gave a falsely positive picture of the situation.
Armed with a more realistic picture of the true pipeline, the sales team can focus their attention on closing the well qualified opportunities, and on advancing each prospect to the next stage in the decision-making process. The marketing team can focus their attention on generating more well qualified leads that reflect the concensus between sales and marketing about the characteristics of their most valuable prospects. Progression through the pipeline now depends upon observable evidence of each prospect's behaviour, activity or intent.
Intelligently investing resources...
With a clear appreciation of your prospects' buying processes, it is possible to eliminate the wasted effort that plagues the production of so many sales tools and marketing campaigns by investing resources only on those activities that have a clear and measurable impact on facilitating the prospect's decision making.
The sales focus is equally clear - where is the prospect in their decision making process, and what could be done to accelerate their progress to the next stage? How can we eliminate the obstacles and constraints that might be holding the prospect back? And what can we do to ensure we emerge as the lowest risk of all available options - including a decision to "do nothing" instead?
How does your pipeline management compare?
Does your pipeline management process reflect a crystal-clear understanding of how and why your prospects choose to buy? Are all of your sales activities and marketing campaigns devoted to accelerating their buying process? How do your processes compare with the best - and what could a best-in-breed approach do for your revenue performance in the coming year?
And what about the dynamics of your pipeline? Are you able to instantly see what's changed in your pipeline since your last review, and why? Can you identify the deals that should have moved, yet haven't? And are you able to see exactly where your efforts need to be focused to achieve your forecast?
Recommendations
- Align the key stages in your CRM system to the key steps in your prospects' buying process
- Insist on tangible evidence of prospect commitment before allowing sales opportunities to be promoted to the next stage in your CRM system
- Don't include value deals in the pipeline until you have established money, authority and need
- Systematically track and measure how long it takes deals to pass from stage to stage in the pipeline
- Systematically track and measure conversion rates from stage to stage in the pipeline
- Measure forecast accuracy at every level in your sales organisation
Could we help you to take an evidence-based approach to pipeline management? We
would be happy to arrange a brief exploratory conversation - see below
for how to get in touch.
How does your organisation compare?
Why not download this 15-point checklist
and see for yourself how your organisation compares to some of the best
in breed? We can't guarantee that completing the checklist will give
you all the answers, but we think that it will at least help you to ask
the right questions!
Are you ready to learn more?
Please continue to browse the site and when you are ready to talk, contact us here or call +44 845 519 0295. We look forward to hearing from you!