October 26, 2015
by Mark Donnolo, Managing Partner, SalesGlobe
Here’s what happens with sales pipelines: one day management insists that sales people track all opportunities in some form. So, sales people make a list of sales deals that might close. Then, they forget to add a few here and there. Then, they learn to absolutely never add a deal unless it has already closed—because, come on, who wants to look like they’re not closing all of their deals? Before you know it the pipeline is bogus.
Consequently, management spends thousands upon thousands of dollars implementing a pipeline management system, like Salesforce.com or something similar. The thinking is that if it’s fancier than Excel, maybe the sales people will use it more carefully. But they don’t. And then there’s the training and the carrots and the sticks—all to no avail. Despite management’s best intentions, sales pipelines tend to be an exercise in frustration.
Everyone knows why the system fails: there’s nothing in it for the sales rep. Management wants to see the pipeline because they need to forecast. They need to know the deals that might be coming in for a variety of reasons. This includes everything from staffing the projects to having the right inventory to budgeting for the next quarter to setting shareholder expectations. But to the sales person, it looks like a journal of failed sales and missed opportunities, with some wins sprinkled in, because the truth is sales is hard and people often lose many deals.
But not every sales person feels this way. Ironically, the most seasoned sales people not only track clients in a pipeline, they benefit from the pipeline. According to a recent SalesGlobe study, 70 percent of companies say forecasting accuracy is the main reason they use a sales pipeline. However, best-in-class companies have found an additional benefit: key milestones and activities drive the reps behavior through the sales process. Probabilities still exist (for example, ACME deal has a 50 percent close probability) and still reviewed, but the activities are the focus of the pipeline management by the rep.
This is a major differentiating point. Probabilities—the traditional feature of pipeline management—are for sales leadership. Activities are for the rep.
Imagine the difference. In a sales meeting, the sales manager asks sales rep Shannon about her probability to close ACME. If it’s less than 60 percent, she’s probably not going to be excited to answer, and therefore might accidentally forget to enter that opportunity at all. However, if her manager asks her about her activities associated with that account, she’s more likely to answer that she’s working on the “value proposition” stage. The manager is more likely to get an honest answer, and therefore an accurate forecast.
While every sales organization is different, consider these activity-based pipeline stages:
Sales people can’t do this in isolation, however. Dedicated weekly pipeline meetings that drive accountability by reviewing actions, next steps, and confirming 100 percent visibility (no sandbagging) is the key to pipeline and forecast accuracy. This makes both reps and sales leadership happy.
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