Rick Page - in his book of the same name - reminds us that when it comes to winning Complex Sales, “Hope is Not a Strategy”. Of course he’s right - and when it comes to managing B2B sales pipelines I have also become convinced that Inconsistency Cannot be a Foundation. Here’s why...
The sales pipeline - if accurately managed - is the clearest indicator of the health of any sales organisation. And yet a recent report from the highly regarded CSO Insights suggested that fewer than 10% of all the sales organisations they surveyed were managing their sales pipelines in a truly effective manner.
There’s clearly a great deal of room for improvement. Over the years, I’ve been observing and collecting best practice from some of the most effective B2B sales organisations. I’d like to offer 7 simple prescriptions for successful sales pipeline management. How does your organisation compare?
1: Adopt Clear Consistent Stage Definitions
Having clear and consistent stage definitions is absolutely fundamental to successful sales pipeline management. You must be absolutely sure, through proactive discussion and regular inspection, that every member of your sales team is interpreting and implementing the stages in exactly the same way. In fact, I’d go so far as to suggest that without consistency as a foundation, no organisation can hope to successfully manage its sales pipelines.
2: Promote Opportunities Based on Evidence
Progression from one stage to the next must be based on observable evidence of buying behaviour on the part of the prospect. You must establish at least one unambiguous milestone between each pipeline stage and the next - and insist that sales people do not move any opportunity forward until that milestone has been proven to have been achieved. In the absence of evidence, it’s all too easy to fall back on hope - and that’s no basis for managing a pipeline or a forecast.
3: Monitor Real Stage Close Rates
The “percentage probability” field that is automatically populated in most CRM systems according to the stage the opportunity has reached is almost always precisely wrong - and often suffers from the same ambiguity as to what it really means as do stage definitions. I recommend that you use the field to reflect the actual percentage of deals that close from this stage and that you update the values with the latest actuals on a quarterly basis. If you don’t know that data, you need to start collecting it today.
4: Pay Close Attention to Age in Stage
Deal velocity - the speed with which opportunities move through your pipeline - has been shown to be one of the most powerful predictors of sales success. Research by the TAS Group has shown that losing deals hang around in pipelines for 150% longer than winning ones. Your pipeline review process must allow you to identify deals that have been “stuck in stage” for longer than the average winning deal - and encourage you to pay particularly close attention to them.
5: Insist on Timely Updates
In a recent blog, Joe Galvin of Sirius Decisions identified the “Elephant in the Room” when it comes to pipeline management as data quality. Tolerating random, inaccurate updates of pipeline data by sales people does nobody any favours - least of all the sales person concerned. Sales managers must insist that sales people keep key opportunity data up-to-date in a timely fashion - and in particular prior to the weekly sales pipeline review. Out of date data simply cannot and should not be tolerated.
6: Focus on Repeatedly Deferred Opportunities
We’ve probably all observed it - sales people who keep putting forward “the usual suspects” as being primed for imminent closure, quarter after quarter. Invariably, the sales person has either failed to comprehend the realities of the opportunity, or to react to them. Either way, the presence of repeatedly deferred opportunities is a bad indicator. If your salesperson can’t define and execute a successful closing strategy, or qualify the deal out, you need to do it for them.
7: Make CRM a Sales Enablement Tool
In case all of the above just sounds like beating up on the sales person, I’ll add a seventh prescription: make sure that your sales people see your CRM and pipeline management systems as sales enablement systems, and not as a sales administration system. Don’t ask them for any information that isn’t likely to useful to either you or them when it comes to implementing a successful sales strategy. And make both your review process and the CRM system itself is an opportunity for learning, smart thinking and effective collaboration.
How does your current pipeline management regime stand up against these seven tests? And how much more accurate could your sales forecasting become if you put them all into pace?