Every profession has a defined set of concepts & processes and Sales is no different. Sales is a step by step process which the sales professionals follow to bag contracts. In this field, managing the sales pipeline is as important as maintaining the sales team of an organization. A Sales pipeline is a systematic & visual representation of product’s sales cycle. Sales pipeline is also called Sales process engineering because it refers to the rigorous processes & careful analysis that gives insight to the words “sales is a science”. Sales pipelines are designed with the sole intention of improving the ways of selling & making the time of salespeople more productive. According to Wikipedia, a sales pipeline is described as “the systematic application of scientific and mathematical principles to achieve the practical goals of a particular sales process”.But before going deeply to how sales pipelines can be strengthened let’s see how the idea came into existence.
A.I.D.A – The first Sales pipeline Model
It is said that American advertising advocate Elias St. Elmo Lewis, a legend who got inducted into the advertising hall of fame in 1951, was the one who developed the concept of A.I.D.A which is very similar to that of a modern sales pipeline model. He charted the customer journey as passing through the stages of
- Attention – Making the customer aware of the existence of the product in the market.
- Interest – When the customer shows interest by knowing how it can benefit him or her.
- Desire – The step where the customer develops favorable disposition towards the product.
Action – The choice point where the customer makes the final decision whether to buy or not.
The idea formulated in 1898, which is still considered as one of the holy rules of sales by marketers, is the basis of all sales pipeline models which were later introduced. The main reason being that, it is the step by step process through which actual sales happens and by monitoring it’s aspects salespeople can improve their techniques & methods for closing their deals.
Influence of scientific methods in Sales pipeline Model
It was in the years of 1920s to 1960s that analysis & synthesis were applied to all business processes including the Sales pipeline model due to the evolution of the modern corporate life. The 1980s & 1990s saw further development in the Sales pipeline model where Pioneers like Paul h. Selden attempted to demonstrate the applicability of the theory & tools of quality management to the sales function in his book “Sales Process Engineering, A Personal Workshop”. And in 2006, Michael Webb who has more than 20 years of field sales, management & B2B sales training experience wrote “Sales and Marketing the Six Sigma Way” which explains how scientific, measurement orientation of process excellence could help salespeople sell. He pointed out the role of processes in sales, earning customer’s attention, their time & trust to earn money. He indicated that the customer’s actions determined whether value or waste of time has been created which can be viewed if proper data analysis is done by providing examples of B2B companies whose management used data to make changes that improved the conversions by 100% or more. His book proved that the data- oriented tools of science helped customers to buy & salespeople to sell.
Scientific methods help people to solve problems, in which ever field it is. Sales is no different and with time companies have understood it & they have started to implement it in their salespeople’s processes. Sales, which was once based on intuition and gut feeling is being crafted into a scientific technique through the process of analytics of data which can be well seen in any modern day sales pipeline of organizations.
“47% of high-performing sales organizations think they need to adopt a process to streamline proposals, contracts, ordering, quoting and sales collateral workflow” – (source).
Most important metrics(KPIs) that drive modern Sales pipelines
Qualified Leads in the pipeline
It’s important to have a good number of leads in the pipeline because it is the first variable that will affect the over-all amount of deals closed. But the quality of the leads should also be noted since that’s the only way to forecast which leads are closing as expected. The company can focus on increasing or changing its marketing activities in order to ensure that quality lead generation happens. This is one of the first factors that go in to calculating over-all pipeline velocity.
“50% of sales time is wasted on unproductive prospecting” — The B2B Lead (source).
The second metric that needs to be explored in the Sales pipeline is the win ratio for Sales team. In any realistic situation, a large number of prospects will drop out from the pipeline while moving through the cycle. Once the team’s total winning ratio is identified, the company can begin its attempts in trying to improve it through the process of right sales coaching & focus on the team.
Normally, if we consider any sales processes larger deals move slowly & smaller deals move quickly. The size of the opportunities that businesses focus on usually depends upon the price of the product, target customer profile and more. By doing the analysis of data the metrics of Deal size can be sorted out. By using the data of the past deal’s closed by sales team the average size can be predicted.
Average sales cycle time
It’s very important to calculate the sales cycle length so that companies can work on decreasing it. Mainly because longer the sales cycle, it’s less likely that the deal will be closed. If it’s taking too much time for the sales team to push the leads through the pipeline, converting from stage to stage, the sales velocity will be killed. The company will be able to increase the total pipeline velocity by decreasing the final metric.
Getting more out of the Sales pipeline by proper management.
“CEOs who prioritize sales pipeline management outstrip their peers by as much as 80% in terms of revenue and profitability” – (source)
To help businesses increase overall productivity & to assist Sales managers to stay organized and in control of their sales figures, an effective Sales pipeline management strategy should be maintained. The Sales pipeline can guide the user through each stage of the sales process from the first contact made to the prospect to the closing of the deal. Having clear idea on how the team uses the pipeline can help managers in better defining, analyzing & engaging each opportunity which is critical for success. Let’s go through the ways in which the Sales pipeline can be enhanced to get more out of it.
Determining the goal based on numbers
The sales manager should have a clear idea about the number that the team should hit. It’s not possible to develop a proper strategy for the pipeline without knowing what the target is. Companies should plan on their pipeline by keeping three or four times their revenue target unless the company is in the early stages of outbound prospecting.
It’s true that things change depending on the salespeople who get on the phone & talks to customers or hit the road & bring in business but having an idea about how much should be achieved always helps.
Keeping regular & effective review meetings
In order to get the true worth of the Sales pipeline, managers should hold regular review meetings. Following the pipeline regularly and making sure that everyone in the team is familiar with it, helps to avoid surprises & will benefit the whole team by staying ahead in the game. There is a certain way of approach that should be followed while performing the review meetings. The information that can be churned out from the pipeline can turn out to be huge.
It’s better to break down the meetings to Inspection sales pipeline review meeting, where the managers go through the cycle of leads along with the reps to access the authenticity of the information for sales forecast and coaching sales pipeline review meeting, where the managers go into a detailed analysis to look for areas where the reps are feeling difficulty to mentor them in solving it.
Identifying where it’s leaking
Not all prospects are going to get converted. Business leads may include poor data quality, people who aren’t decision makers, who don’t have the budget or are not ready buy at the moment. This turns the Sales pipeline into a leaky one and reduces the efficiency of sales. But beyond these inescapable fallouts there will be some loss that can be prevented by analyzing why people aren’t buying the product if that’s an actual reason.
Investing in an additional sales resource or changing the techniques can be done to attain success. By proper analysis, it’s also possible to identify the opportunities that can be recycled to prospects for approaching again. Managers should identify all the preventable leaks in the pipeline for maximum optimization.
Boosting average conversion rate
Even if a 1% increase happens in the conversion rate, it’s an increase in profit for the company. Since it is not easy to generate leads, enough care should be taken to make sure that it gets converted.
This can be done by ensuring that the leads entering into the top of the sales funnel are of good quality by offering more targeted, niche lead bait, by introducing tactics that move the proposals to proposal stage and by introducing tactics that make it easier for the prospect to decide which will be a time saver for both the prospect & the sales rep.
Closing the deal
It’s true that driving sales is one of the toughest professions out there. But those who are good at it find it as one of the noblest. It should be ensured that the time put in by the people who run after leads don’t go to vain. The sales pipeline won’t be any better than a map without a scale, if enough strategy & thinking isn’t put behind it to reap the benefits. The managers should ensure that the Sales pipeline is used to improve the sales reps performance, prioritize opportunities as well as understand the conversion behavior in the company’s sales process.