Most senior executives have found themselves reflecting on the past quarter’s results and questioning the projections for future quarters. Quarter or year-end discounting, a flurry of end of quarter deal closings and just plain wishful thinking are all common behaviors that cast some legitimate doubts over the future quarters’ forecast.
Having confidence in your pipeline is the key to meeting or exceeding sales quotas. In just about any economic environment, missing sales goals is not a situation any executive team wants to end up in but all too often, there’s that quarter or year-end surprise. Here are a few best practices to consider:
- Have Enough Opportunities – Depending on the length of your sales cycle and your win ratio, this will vary. As a rule of thumb, if you don’t have at least three times the amount of opportunities in the pipeline as your sales goal, you may be looking at a pipe dream instead of a pipeline.
- Grade the Opportunities – Not all opportunities are created equal. You must have measureable fact based rules for assigning values to each of the opportunities. Using historical data to grade the opportunities in the pipeline is critical to creating an accurate forecast. Using standardized milestones for each opportunity in the pipeline is the primary tool for assigning a grade.
- Create an Opportunity Profile – Using historical data to understand the characteristics of different types of deals in your pipeline will keep your team focused on making sure they have a portfolio of A, B and C opportunities. Concentrating all your resources on a few “A” opportunities can often lead to disappointment or reduced margins if you need to discount to salvage too few opportunities in the pipeline. An “A”, “B” or “C” opportunity can be upgraded with a new budget year, a new decision maker at the customer company or just by creating a new urgency to benefit from the value of your solution.
- Ongoing Business Development – Waiting till the pipeline is getting empty or till the end of the quarter is a recipe for failure. The amount of time spent on business development may vary, but having salespeople spend 10-20% of their time every week or month is a good rule of thumb. Opportunities in the pipeline are constantly being closed, downgraded or deleted. Business development activity is a critical step to maintaining the pipeline. By doing ongoing business development, you are more likely to reconnect with an opportunity that is in the process of going into play.
- Define your Sales Process – Having a clear view of how long it takes different types of opportunities to move through the pipeline is essential to managing your opportunities. While sometimes a sales cycle may be compressed by an offer to discount, more often than not, the buyer just bakes in your new offer into the negotiation and proceeds to move towards a decision on their same timetable. If you offer a discount too early, they may use that as a starting point for future negotiations.
- Ongoing Inspection – If the management team doesn’t inspect the pipeline regularly, it shouldn’t expect to have a high degree of confidence in hitting the goal. It’s only human nature that sales teams will pay attention to the things that their management focuses on. If there is a focus on evaluating opportunities, the sales team will make sure they have opportunities. The goal is to close sales, but leads and opportunities just don’t magically appear.
Managing a sales pipeline is an arduous task that requires diligence, detail and discipline. The alternative is to resort to strategies that have failed the test of time like “Spray and Pray”, “Hail Mary” and wishful thinking. There’s no time like the present to schedule a pipeline review. The longer you wait, the more likely you are to miss your goal.
Flannery Sales Systems helps organizations develop and implement a repeatable sales process. Improving the effectiveness of your sales organization is the key outcome we provide to clients. We would welcome an opportunity to explore your needs and understand where you could benefit from improved skills and sales processes. Flannery Sales Systems works with a broad cross section of industries and we are confident we can enhance your results.