The Salespersons Complete Guide to Sales Pipeline Management

The Salespersons Complete Guide to Sales Pipeline Management

Sales pipeline management is the fundamental skill, process and methodology that all field based sales reps operating in the complex sales environment need to know, understand, master and conquer. however how many can say they achieve this? Actually, not many. In fact, sales pipeline management is often treated very much as an anathema!

So why is sales pipeline management so often greatly disliked, detested and shunned? Good question, I hear you say, and would you believe there are several reasons? However, before I delve into the dastardly reason for shunning such a noble skill I will first put into perspective the importance of sales pipeline management.

I should point out that unlike ‘safe bank’, ‘pipeline management’ is not or more importantly – should not – be thought of as an oxymoron. There are only three main sales strategies that all sales people, no matter what they sell, have to do. They need to find some customers, they need to manage those customers and then they need to close some business. For our intrepid field sales guys working in fields of complex sales that means. filling the pipeline, managing the sales pipeline and closing the pipeline.

Why Is The Sales Pipeline So Important?

It’s because we have targets to meet, and there has never been a better time to meet your target. It’s no longer just about earning money; it’s not also about keeping your job. Who do you think will let go first. those that hit their number or those that don’t?

Pipeline management is about managing your portfolio of opportunities to meet your target. As a sales rep this is your primary focus. to meet the target. Meeting targets means you get paid. however to keep your job you also need to take religion out of selling. This is the bit where your sales manager puts his hands together and prays you will be making your number!

In this economic climate religion can play no part of selling. you need to be predictable. you need to be able to forecast and mastering sales pipeline management will help you achieve this.

The diagram below shows the sales pipeline management process following the buying phases and the different relationships that are in play depending where an opportunity enters the sales pipeline and then the competitive advantage at the entry point. The sales pipeline needs to be time bound and therefore there needs to be a different set of phases for each sales period.

If you are running a quarterly sales pipeline – and if you are not, then you should – you need to fix your forecast by the end of week 5. and by the close of the quarter after 13 weeks you need to be greater than 95% accurate. and yes it is achievable and yes we do have many customers achieving this level of accuracy.

The sales pipeline is your planning tool too. Showing how you are going to make your number means naming the deals that will be closing. yes binary forecasting. There are only two outcomes in selling. you win the deal or you don’t win. there is no other outcome. ‘Gone away’ is not an outcome. Anyone who puts the reason for not winning the deal because it has ‘gone way’ is doing so to make themselves feel better.

“It’s not my fault. the customer no longer wants to do it. it’s gone away”. Sorry to disappoint. it’s not gone away, you lost it. it probably was never there in the first place. your qualification is suspect. and yes it is your fault.

Is Qualification Important?

Yes, qualification is an important part of sales pipeline management. It is there to be used as a tool to help, however the tool must not use you. There are far too many systems around that try and automate the qualification process. answer the qualification questions and our tool will tell you where that deal is in your process and provide you with a probability of winning.

If you are happy to put your car on cruise control and take your hands off the wheel and then hope you will get to your destination safely. then these systems will be right up your street. unlike your car which will be right up someone else’s backside and suddenly you are in a car crash. Qualification is not there to make you feel good. quite the opposite it’s there to make you feel uneasy. uneasy enough to put a plan together to win the deal.

Although this post is not on qualification. I will share with you the most important qualification question I always ask any sales rep when I am doing a deal review with them. any idea what that is?. well the answer is at the end of this post. along with the second most important qualification question.

Sales cycle diagram

Sales cycle diagram (Source)

Top 7 Tips For Sales Pipeline Management

It’s not an exhaustive list, however I just wanted to provide an insight to avoid Einstein’s definition of madness. well this definition has been attributed to him. and others. “You can’t keep doing the same input expecting a different output.” If you haven’t achieved 95% forecast accuracy already, then no point continuing doing the same thing expecting it to improve. you need to do something different.

So, my top seven tips for doing something different.

1. Sales pipelines are in the very first place personal tools. not corporate. All those running a corporate sales pipeline and just a corporate sales pipeline are unlikely to achieve the forecast accuracy required for these challenging times. make it personal before corporate.

2. Follow the buying process, not the sales process. Most corporate pipelines have the sales activities (not even process) as the sales pipeline stages. This is the equivalent of ‘fools gold’. Understand where the customer is in the buying process and measure your sales pipeline against these stages.

3. Put the responsibility of forecasting squarely on the shoulders of each and every sales rep. get them to show how they are going to make their number. Fix the forecast at the end of week 5 of the quarter and measure their forecast accuracy at the end of week 13. Publish the results.

4. Use the grown up forecasting technique – binary forecasting. You are either going to win or not. Only those scared and out of control use factored forecasts. Factored forecasting is for wimps who don’t want responsibility. If the sales rep names the deals that they say they are going to close, then guess where they put their focus. This one action alone improves the chances of winning those deals. because the deals get the attention.

5. Sales managers need to add value to the team, not by helping them on specific deals, however helping them make their number. Manage the team by looking at how each sales rep is going to make their number. Don’t get seduced by the ‘dark side’ – focusing on the big deals – focus on how each person is going to make their number using binary forecasting.

6. Make sure each and every sales rep has a full funnel. The sales funnel feeds the pipeline. With personal sales pipeline management you will be amazed at how full the funnel can become. With just a corporate view. your funnel, if indeed you use one, will invariably be underground. and underground is out of sight and out of mind.

7. Commission. Sales reps are motivated to sell more and earn more commission. in theory anyway. However, very few companies use the commission plan to motivate. Sure they will tell you how much you will be paid, however not how much you could be paid if certain deals close. it’s called commission forecasting. Not many sales reps need to be told that deals need to be closed to make a target, however if they could forecast how they could earn by closing certain deals then this motivates them.

Why Is Sales Pipeline Management So Often An Anathema?

The answer to this question lies somewhat with the top 7 tips listed above, however looking at the 3 main aspects I shall start with the biggest problem. Management. it is the all important word in our dualistic phrase – sales pipeline management, however, in this context I’m referring to sales management. those responsible for “the organising and controlling of the affairs of business”.

Management needs to add value and sales managers are no different. however, how do they do that you may ask. well. ask questions about your big deals. ask lots of questions about your big deals. the big deals are important. right? Maybe they are, maybe they are not.

If they form part of your plan to make your number then they are important. and if they are not part of that plan and you have identified other deals that will make your number than they are not that important.

Sales management often becomes misguided by focusing on high deals. They get seduced by the dark side. focusing all their effort on the big deals that don’t have a hope of closing while smaller deals are passing you by and being snapped up by the competition. A clutch of small deals will make your number just as well as a large deal and are often easier to close.

However, if the sales manager is looking just at deals and not how each member of the team is going to make their number then they get disorientated. Think about it. If you have 20 opportunities in your sales pipeline and your manager has five people, then he has to look at 100 opportunities.

If the Sales Director has five sales managers, then she needs to look at 1,000 opportunities. So, how do they select which ones to look at? It’s often the big ones.

So, they ask questions and sales people don’t like answering them as we get distracted and most questions in our opinion are unwarranted and so to keep them off our back we are reluctant to put too many, or any, big opportunities in the sales pipeline as it just gets management too excited.

“Setting goals is the first step in turning the invisible into the visible.” –Tony Robbins

Meanwhile due to the lack of big opportunities, management finds other ways to get excited. they have an inside belief that there needs to be 3x the value of the target in the sales pipeline and so messages go out saying fill the pipeline. So the sales pipeline gets filled with anything to get management off our backs.

The other problem with putting large opportunities in the pipeline, particularly when they are likely to cut across target setting sessions. is that we don’t want to get lumped with a big target based on what we have in the pipeline. so bets avoid the temptation and not put them in.

The other thing management get excited about is the lack of activity, and so we need stuff in the sales pipeline to show that we are doing something. even if the stuff is dead. It gives us breathing space to recover.

Corporate sales pipeline management is a game based on wits and cunning where sales management are trying to catch you out and find the truth. and therefore you can’t be trusted to forecast because if you are wrong the manager takes the hit. therefore when it comes to putting the forecast together you will be consulted and then the manager weaves their magic on the numbers and adjusts them to get to the right number.

Some deals you call are not included and some deals you have not called are included. it all becomes a sticky mess outside your control. and it’s no wonder you keep your own private sales pipeline to monitor what is really going on. and if only management could get their hands on it!

Customer Relationship Management systems are sheep in wolf’s clothing. For field based sales teams they generally add little value, yet they demand so much data and give little in return. The clue is in the name Customer Relationship Management. The name is not Sales Management. CRM systems are content free databases that do nothing more than aggregate data.

In fact they do worse than that. they claim they add value by doing nothing more than aggregating data. If you think I’m being unreasonably hard on CRM then they should not be making these fanciful claims that CRM adds value to field sales people.

The problems start with sales pipeline Management. yep they have a pipeline, however it can’t be used to manage anything. it just provides a list of deals by sales stage. yes, sales stage, not buying phase. Managing the sales pipeline by sales stage is akin to getting an alcoholic to manage a pub. not a good idea. However, there is also aiding and abetting going on with the way the forecast is cobbled together using factoring techniques.

Each sales stage has a corresponding percentage chance of winning and this percentage is multiplied to the value of the opportunity and hey presto you have a value for your forecast. add all the different opportunities together and you can see where you will finish the quarter. your pub manager with the personal problem is now drinking your profits. and the factored sales pipeline is as much use as the bar manager after a day of profit sharing!

All sales reps know that factoring is not a good idea and yet CRM in the whole forces them into it. However, they now have a system that provides a list of opportunities to the manager and an even greater list to the sales director. Where do they focus their time?. on the big ones. however know they want you to update all the actions, meeting notes and strategy and. it goes on.

Don’t get me wrong, I’m all in favour of sales guys planning to win deals. however filling in CRM data has nothing to do with winning deals. it’s about feeding data to a beast for no return and so sales reps don’t like doing it.

Now look at my top 5. which seems to have morphed into 7 and ask if CRM does any of them and you will be hard pushed to find a system employing the outlined principles. So change the management view and focus on the magic 5 and then change the system to allow personal pipelines. The personal sales pipeline will allow the sales rep put all their leads and opportunities in one place. They will have a full view of their whole sales effort.

This one view will follow the same methodology and therefore will allow everything to be in sight and in mind. Allow the corporate system to be fed by the personal systems and as long as each rep is showing how they are making their number and showing a healthy funnel then let them hide what they want. it means they are in control. However following the magic five also means they can’t hide. and point 3 means they will look pretty slipshod if they sandbag.

“Your attitude, not your aptitude, will determine your altitude.” –Zig Ziglar

You follow the buying process and different tools come into play. There are a set of tools that are used to involve the customer and a set of tools that are used to manage the opportunities that you need to close to meet your number. You will see qualification as one of the tools used to manage if you remember. and it’s many words ago. I promised to share my first qualification question.

The initial qualification question I would ask when starting a deal review with a sales rep is. “When is the deal going to close?” Pipelines need to be time bound and the close date is the most important piece of information that you need for accurate forecasting. therefore that leads me on to the second most important question. “does the customer agree with the close date?”

This question is so important as it is the first indication that the customer is prepared to commit. If they don’t agree then there is no commitment and if there is no commitment then something is wrong. they may not like you. they may not have authority and therefore you are speaking to the wrong person. they may not want you to win and therefore will not commit to you. there may not be a deal. whatever it is there is something wrong and you need to find out.

However, if they do commit then you have a date to work towards and the customer will know this, however they have made a commitment and as you know, selling is all about getting commitment from the customer and therefore sales qualification is testing this commitment at various points along the customer’s buying phase.

If you don’t get commitment it doesn’t mean that you are not going to win, it just means you are not in control. and if you are not in control. How can you forecast?

About author

An Australian guest blogger and writer, Emma writes on her own small business blog, as well as guest posts for many other brands and mastheads. Emma lives in Melbourne with her two cats, where she frequents live theatre and wine bars.