When salespeople think about the development of a sales pipeline, cold calling and emailing—the traditional methods of prospecting—tend to immediately come to mind. The digital shift, hastened by the global pandemic, also saw the exponential growth of social selling. These are the most common methods of growing pipeline, and they are all proven to deliver results.
However why do a lot of sales professionals—an average of 67%, according to a study done by the TAS group—still have trouble meeting the increasing demands of their quota, year after year?
How do salespeople make quota when the number of people that they’re supposed to talk to is declining, while sales quotas keep going up every year?
One of the leading causes of this problem is a lack of prospects.
Think of it this way:
When there aren’t enough leads at the top of your sales funnel, you would eventually be left with zero opportunities to close deals.
Unfortunately, most sales methodologies begin at a point where there are already prospects that you can convert. What’s not usually taught is how to get those prospects in the first place. In fact, there’s really no defined way of building a pipeline. Different sales organizations have their own pipeline creation process and rules. At times, it even varies per member of the sales team.
The lack of standardization in pipeline creation poses several risks for a sales team. Identifying specific areas for improvement will be more difficult, sales outcomes will be more inaccurate, and there will be a higher chance of erstwhile good leads getting stuck in dead zones.
Salespeople who are knowledgeable in creating, maintaining and improving pipeline will have a higher chance of thriving in today’s cutthroat world.
The sales pipeline refers to your sales process. It’s a term that encompasses all stages of your sales process, starting from your first interaction with a lead or opportunity all the way to capturing a sale.
Sales pipelines vary from business to business. Since each company has unique goals and unique target customers, their respective sales pipelines are going to be unique as well. However, the best sales pipelines have some similarities.
“A sales pipeline that’s effective would ensure you have enough opportunities in your pipeline in order to meet your number,” says Brian Lipp, Partner for Growth at Sales for Life.
It should clearly show the opportunities from a dollar amount, and help you understand what your conversions are on average.
“An effective sales pipeline is structured, with defined steps that help qualify the veracity, authenticity, and accuracy of any opportunity that goes into it,” adds Amar Sheth, Partner for Customer Experience at Sales for Life.
“It’s essentially a strong qualification process. It’s not afraid to move opportunities up towards close, but it’s also not afraid to kick out opportunities aht don’t meet stringent guidelines for being there.”
Many people think the terms “sales funnel” and “sales pipeline” are synonymous. However, these should not be used interchangeably.
The quantity and conversion rates of your prospects as they pass through your pipeline stages.
We have already established that a sales pipeline refers to the stages a lead goes through as it becomes your customer. To move leads from one stage to another, your sellers need to take specific, recurring actions. For instance, during the qualification stage, your sales rep needs to ask questions to assess whether the prospect has the authority, budget, and business needs to buy what you’re offering. These actions constitute the sales process.
While a sales pipeline focuses on actions and stages, a sales funnel refers to the number of prospects and the conversion rate through each one of your pipeline stages. When you visualize prospects moving and converting through a sales pipeline, you get the shape of a funnel, hence the name.
The best way to understand the difference between the two is to take a look at the sales pipeline and sales funnel reports. A sales pipeline report commonly shows the value and quantity of potential deals. A funnel report, on the other hand, tells you what percentage of the leads advanced through each one of your pipeline stages.
Meanwhile, a sales forecast is a projected measure of how a market will respond to a company’s go-to-market efforts. It estimates future revenue by predicting the amount of products or services a sales unit will sell in a given time period.
Other departments within an organization tend to rely heavily on sales forecasts as these provide valuable insights for budget development, production cycle and capacity, quota planning, and more.
Pipeline management is so critical that, according to an article in Harvard Business Review, the growth rate of companies that have a well-defined sales pipeline is 15 percent higher than that of companies that don’t have it.
When you have a well-designed pipeline, you’ll be able to track your leads as they go from one stage to another. As there are many touchpoints and decision-makers involved in a B2B sales pipeline, the valuable insights you will glean will help you make smart decisions and optimize your sales process to increase revenue.
The sales pipeline influences an organization’s sales forecast, and a strong sales pipeline can help you accurately forecast company revenue, leading to better business decisions for the whole company. By knowing exactly where your leads are in the sales process, you can more accurately predict how many of them will convert during each quarter.
“A strong sales pipeline means very strong forecasting,” says Sheth. “Even in contract, some deals can step out. So good sales and revenue leaders try to get to about 98 percent forecasting accuracy rate. That’s just the general best practice that I’ve seen in every sales organization I’ve been a part of.”
“If you don’t know your accurate revenue number, you can’t forecast what your profit’s going to be. If you can’t forecast what your profit’s going to be, how are you going to run a company?”
As we’ve established earlier, the sales pipeline is a qualification process. Each stage of a sales process has a list of qualifiers, which a prospect should be able to fulfill before moving on to the next stage.
This transparency allows sales leaders to easily see the progress made by every member of their sales team. By monitoring the progress at each stage, they can more effectively guide their sellers, providing them with the coaching they need to strengthen connections with prospects and move them along the pipeline.
In addition, a strong sales pipeline helps dispel doubts about the company’s performance, creating a healthier working environment.
“If you have a healthy pipeline, teams collectively will be focused on quality work. You won’t see as many challenges with people panicking or feeling stressed, or having fear and anxiety, and that ripples into how people communicate and work,” says Lipp.
“If the pipeline’s not healthy, sometimes you’ll see sales leaders or salespeople themselves making decisions that aren’t as customer-centric or that are not in the best interest of how they should be structuring deals.”
A good sales pipeline provides visibility at every stage of the process. This allows the organization’s sales leaders to better determine the resources needed to move deals closer to the end of the pipeline.
Most importantly, a strong sales pipeline allows sales leaders to make objective, data-driven decisions about assigning sellers to clients based on their experience and skills. Knowing exactly what is required of them allows your team to use their time wisely so as to not waste their efforts, translating into an increase in productivity.
Sales pipeline velocity refers to the speed at which your leads are moving through your pipeline and the value new customers provide over a given period. The less time it takes for your prospects to move through your sales pipeline, the faster you can close more deals.
A well-performing sales pipeline gives you the opportunity to improve specific areas in order to improve sales velocity. It’s easy to see if you need to increase your leads, improve your close rates, increase the average revenue per new customer, or shorten the sales cycle.
It’s important to keep track of sales metrics to see if goals are being met, if profits are attainable, or if deals are proving difficult to close. A healthy sales pipeline will display all the data you need in an accessible manner, allowing you to easily communicate your team’s progress with stakeholders.
In addition to efficient reporting, you can also easily identify the weak and strong points in your sales cycle. This makes it easier to evaluate the sales actions your team has taken, improving your strategies in order to create business opportunities and avoid failed prospects.
If you do extensive research online, you will probably stumble upon a sales pipeline blueprint that promises high conversion rates. Before you proceed, keep in mind that your target customers are unique. Your product may require more or fewer touchpoints, and your sales process may have to accommodate the needs of more or fewer decision-makers.
On top of that, if your product or service is complex, your sales process will be longer, and it may need more stages to keep prospects engaged. That’s why the strongest sales pipeline you can create is one specifically made for your unique business goals and target customers.
The best way to do it is to start with your prospect’s buying journey. Identify what their needs and problems might be and what information they will need to be assured that your offer can help them bring their company to success.
“If you think about it from a customer’s perspective and think buyer-centric, a customer goes through three natural stages,” says Jamie Shanks, Sales for Life’s Managing Partner.
“They ask themselves first, ‘Why should I change? What’s wrong with the status quo?’ And then ultimately at some point, they will answer the question that change is important, and that they need to change.”
“Then they ask themselves, ‘How am I going to change?’ So they start gathering intelligence to make informed decisions. And finally, they ask themselves, ‘Who is going to help me make these changes, and provide me with the solution to implement these changes?’
The process every customer goes through is the same. They move through the following phases:A
This is when the buyers realize they have a problem, or when they identify an opportunity in their market.
During this phase, buyers define their problems or opportunities, make a list of things to look for in a possible solution, and start looking at the various offers in the relevant market.
Buyers have a list of potential solutions in front of them. At this moment they are comparing products or services so they can make the right choice.
Before you go to the drawing board to design a strong sales pipeline, you need to consider these phases and identify:
There really is no such thing as a one-size-fits-all sales pipeline. Different companies have different needs and processes, and as such, the stages of their sales pipelines should reflect how to achieve their goals.
“Your sales pipeline should be reflective of the type of service or product that you provide,” says Lipp. “When you have more complexity, there may be additional criteria or layers into the pipeline creation process because it could be more tactical in nature or it could involve multiple different types of implementations. It has to reflect the complexity and the market segment that you work in, or the type of solution that you bring to market.”
At Sales for Life, we believe that the sales pipeline is actually a cycle.
Keep in mind that a sales pipeline measures and manages activities, and that it’s not set in stone. In time, you might find that you’ll need to remove unnecessary stages in your pipeline, or add stages that you actually need.
At this stage, the customer has realized the opportunity or the problem they’re facing. As they look for solutions, they become aware of your business and how it can potentially provide value to their organization, and will reach out to your sales team.
At this stage, the lead has been profiled and verified by your sales team. They have been ascertained to have a genuine need for your product or service, and are more likely to have specific questions for your sales department.
At this point, the probability that the lead will become a customer is just at 10 percent. As the lead moves through the stages of the pipeline, your chances of closing the deal increases accordingly.
When a lead is in the Building Consensus stage, its interest is firmly established and it’s now actively looking for more information about what you’re offering as they evaluate the necessity of your product or service.
“They start doing due diligence, they start reaching out to the peer-to-peer network, they start talking to their peers, they start speaking to defenders,” says Shanks. “They gather all this intelligence to understand how change would actually happen.”
This is a crucial stage that requires the entire buying committee to reach a consensus about your product. Sellers should guide their customers to settle on a solution by providing value instead of resorting to more aggressive persuasion methods.
Here, your seller will submit a proposal that addresses the customer’s needs, and will negotiate the terms of the deal so both parties will be satisfied.
Before you start celebrating, keep in mind that nothing’s set in stone yet. Even though it seems like the deal is already in the bag, your seller actually just has a 50 percent chance of closing the deal at this point. No matter how promising your seller’s interactions with their lead was, there’s still a big chance that the lead can back out.
When you get a firm response from the lead, it’s time to proceed to the next stage.
Proceeding does not always mean closing.
“A customer can proceed by doing nothing, by trying to solve it internally, or by buying something to help them solve that problem,” says Lipp.
If it’s the first two situations, the lead goes back to the first stage—awareness.
“This cycle goes around and around,” says Lipp. “A lot of traditional pipeline management processes are very linear. In my opinion that’s not reality. It’s much more cyclical in nature.”
On the other hand, the moment you get a “yes” from the lead, your chances of closing the deal drastically increases.
“When the verbal agreement comes in, that’s at 75 percent. It’s not closed yet, but it’s getting there,” says Sheth. “Then, when it’s in contract, it’s at 90 percent…it’s gone to contract because red lines have been discussed, terms have been discussed, pricing has been discussed—all of that’s firmed up, it’s gone into contract.
“And then, when the contract is signed and comes back, it becomes a 100 percent closed deal.”
Closing a deal is what every sales professional works toward. This step of the process should result in a mutually beneficial agreement between the customer and the seller, and as such, it may include activities such as negotiations and delivery of a quote or a proposal.
Once a deal is closed, the account is passed on to an account manager or a customer success representative. The sales team should be on hand to ensure a smooth transition and onboarding process, guaranteeing that the customer receives the product or service that was purchased.
The sales team should also continue communicating and reinforcing value to customers even after the sale is closed. They can do this by seizing opportunities to upsell and cross-sell, as well as securing referrals from satisfied customers.
Once you’ve established your buyer’s journey and have mapped the stages of your sales pipeline, it’s time to use the knowledge you’ve gathered to build your own.
01 Identify the total number of opportunities that pass through your pipeline.
A strong sales pipeline should provide you with valuable insights. One of the most important insights is the conversion rate. When building a pipeline, you need to be aware of the two approaches to conversion rate, both of which are valuable.
First, there is the overall conversion rate, or the percentage of opportunities that go through all the stages and purchase a product or service from you. Then, there’s a conversion rate for each stage or the percentage of opportunities that go to the next stage.
Another important factor is time. You need to know how much time prospects spend in your entire sales pipeline, specifying the average time spent in every stage. Experts call this pipeline velocity, or how fast prospects move through your pipeline.
The percentage of opportunities that go to the next stage of your sales pipeline
Overall Conversion Rate
The percentage of opportunities that go through all the stages of your sales pipeline
The speed at which leads move through your sales pipeline
If you are building a new business pipeline, the first and best thing you should do is to conduct extensive research. Look for relevant industry reports and success stories.
If you already have an existing sales pipeline, you need to hold a meeting with your marketing and sales teams to go through your historical data and key sales metrics. Conduct thorough research to get more accurate predictions.
This process might take some time, but it’s a crucial step that will help you predict which opportunities are more likely to close and how much time it usually takes for a prospect to advance to the next stage. It will also help you accurately forecast your company revenue.
02 Determine the target number of opportunities you’ll need at each stage to attain your quota.
When building a pipeline, you should never forget about your end goal. What’s your average deal size? How much revenue are you expecting to generate monthly, quarterly, and yearly?
These numbers will tell you how many deals you have to close to achieve your revenue goals. When paired with the probable conversion rates for every stage and pipeline velocity, these numbers will provide you with a general idea of how many leads your B2B lead generation strategy has to produce.
“Building pipeline is a reverse-engineering exercise that starts from a goal or an outcome. You have to reverse-engineer where you want to be over a time period.” says Shanks. “Let’s assume that the time period is over the course of one year. So the reverse-engineering exercise involves gathering data points from that goal, or that outcome, which is typically measured in revenue.”
Let’s say your target is $1 million in one year and your average sales price is $100,000. Here’s a simplified version of our strategy.
Step 1: Compute for the number of proposals you’ll need to create to reach your goal.
For example, according to your data, one out of every three proposals turns into an opportunity.
So: (1,000,000 / 100,000) * 3 = 30
Therefore, 30 is the the number of proposals you need to send to reach your goal.
Step 2: Compute for the number of leads you’ll need to reach your target number of proposals.
If one out of every four sales-qualified leads turn into a proposal, you need to multiply the number you’ve determined in Step 1 and multiply it by four.
30 * 4 = 120
Therefore, 120 is the number of sales-qualified leads you need to engage.
Step 3: Compute for the number of sales-accepted leads you’ll need to reach your target number of qualified leads.
Following the same equation, if one of every five sales-accepted leads turns into a qualified lead, you just have to multiply 120 by 5.
120 * 5 = 600
Therefore, 600 is the number of sales-accepted leads you need at the start of your pipeline.
“To understand pipeline is to understand the factors of your goal: The units necessary to achieve that goal, the average sales price, and the probability of moving from stage to stage,” says Shanks. This allows you to get a singular number called the Pipeline Coverage Ratio: The number a seller uses to see if they’re moving towards their goal or if they’re falling short of their plan.
“This means that, all things considered, you are afforded the opportunity to lose some deals and win some deals, just like what happens naturally in sales. And so, if you are falling short of that particular number, then you either have to attract more leads, increase prices, or you have to get better at winning deals to increase the probability of wins.”
“If you haven’t naturally found a way to improve either of those three variables,” Shanks continues, “then science would tell you that you are most likely not going to achieve your plan.”
03 See what the opportunities that convert have in common (e.g. actions taken by sales reps, responses from prospects) and recalibrate your sales process accordingly.
Every stage of your sales pipeline encompasses the actions your sales representatives take and your prospects’ responses. It’s useful to identify repeated behavior if you already have access to historical data. If you are starting from scratch for your new business, you can come back to this step so that you can draw relevant conclusions and make necessary optimizations to your pipeline.
When looking at historical data, you need to find similarities in your prospects’ behavior. The goal is to identify behavioral patterns and understand your sales reps’ actions that shaped them. This qualitative data will help you fine-tune all the stages of your pipeline and tell favorable sales reps’ actions from less fruitful ones.
By going through the previous steps, you now have all the information you need to create a sales process framework your sales reps can use to close more deals.
Remember: Every sales reps’ action at every pipeline stage has to be driven by data and shaped to communicate your message in the most efficient way.
Spending your budget equally on all stages is the best way to ensure long-term results and generate a stable revenue stream.
We couldn’t stress enough how important it is to keep your sales pipeline full. Having plenty of sales opportunities prevents you from relying on bad sales practices that could harm your bottom line, such as offering discounts or guilting prospects.
A full sales pipeline allows you to confidently set the price your product deserves, knowing that there are plenty of other opportunities you can fall back on, resulting in a larger average deal size, more referrals, and positive feedback.
Spend time every day to look for new leads on LinkedIn, look for buying triggers in the news, and reach out to new prospects via email and phone.
Consistency is critical. If you let yourself take a day off one time, you’ll be tempted to do it again a week later, and the week after that. Next thing you know, you don’t have any new leads in your pipeline.
Block time on your calendar, set an alarm on your phone, ask another salesperson on your team to keep you honest, write “prospecting” on your daily to-do list—whatever it takes to stick with it.
Working non-stop to attract new customers is exciting, but if you want to increase revenue without ramping up your lead generation efforts, upselling existing customers is the easiest path for one simple reason: trust.
With new customers, you need to establish trust before they’ll even listen to you, let alone buy your product.
In comparison, your existing customers already trust you. If they bought from you once, they’re much more likely to buy from you again.
In addition, upselling is more cost effective since you don’t have to spend as much on marketing materials. According to the 2016 Pacific Crest SaaS Survey, the median Customer Acquisition Cost for upsells is just $0.28 per $1—a bargain compared to the $1.18 spent to acquire $1 of revenue from a new customer.
So take the time to regularly check in with your existing customers. Keep providing them with value and and identify win-win opportunities to upsell them.
Social selling is necessary to survive and thrive in today’s modern, digital sales environment. The sooner you embrace this, the faster you will meet quotas, grow your pipeline, maximize your profitability, and elevate your team’s skills.
The SPEAR Selling strategy is an effective way to fill your sales pipeline and prospect more efficiently. First, a seller needs to be accountable for their own territory by visualizing their Total Addressable Market (TAM). This allows them to see clearly where gaps and opportunities lie, and they can apply signal intelligence against accounts in their TAM so they can objectively Select and Prioritize the most promising prospects using data-based Signals.
From there, the seller moves on to Planning—developing executive business plans for the top accounts. Engagement starts after, powered by synchronous and asynchronous video.
Next, the seller Activates customers by applying the signal intelligence and the stories they have created against their accounts. The seller should gauge the customers’ feedback—also known as buying intent—before moving to the Reprioritize phase, wherein the seller will redevelop their TAM based on all the data they have gleaned.
Your current customers are the best source of your next customers. They believe in your value proposition; if they didn’t, they wouldn’t have bought your product.
So once a customer has crossed a certain lifetime value with you, ask them to refer you to someone in their sphere of influence who can use your product.
“Traditionally, when B2B salespeople ask for referrals, they would ask the customer to determine who they should be introduced to,” says Sheth. “That’s actually very dangerous. It’s not a smart thing because the customer now has to think about it, which means that there’s a high likelihood that this request may not even be fulfilled.
The best way to go about it, Sheth continues, is to aim for an introduction to a specific person.
“if you could find out who they’re connected to using the power of social media, then you can ask for strategic referrals,” he says. “Using tools like LinkedIn, you can determine who they’re connected to and ask for a strategic and precise referral. This way, you can enter accounts of your choice, not just the choice of the customer.”
You should likewise be wary of the timing of your referral request.
“Once you ask for a referral, if you get a no, you can’t really ask again,” says Lipp, who believes that referrals are earned after value has been delivered to a customer.
“If you try to influence referral too early, that comes across as self-serving. If you try to influence a referral in the middle of complicated work or when everyone’s working to fulfill and drive the value to the customer, that also comes across as self-serving.”
“Referrals naturally happen if you earn them. And you earn them by doing a professional job in driving value for the customer, rather than processing your own self-serving agenda.”
a. Grow deeper in existing accounts
In time, you’ll observe that your team closes more deals with companies from a certain industry. If you close six times more deals with mining corporations than food companies, then it makes sense to focus on mining corporations.
The same logic applies with roles within a company. If you’re 46% likelier to win the deal when you work with the learning and development (L&D) team versus the culture team, you should get an introduction to an L&D employee ASAP.
b. Focus on account retention
Account retention entails building relationships with your customers and maximizing revenue from every single one of them. But it’s not a one-way street: You have to provide more value to your existing customer base as well.
Your sellers should ensure that the customers they have acquired will have a great experience with your company and will stay satisfied with your products and services. Some strategies include improving customer support, offering discounted renewal rates, and rolling out multi-channel engagement campaigns for existing clients.
The simpler and easier prospecting is, the less you’ll dread doing it—and the more efficient you’ll be.
There are several CRM tools that you can use to make sales pipeline management easier. Set reminders and create automated emails to reach out to prospects and move them further along the pipeline, even after the deal goes cold. Automation lets you focus on warm leads while keeping an eye on cold ones, as well as prospects with longer buying cycles.
There’s a wide array of sales tools that your team can use for prospecting. Don’t feel limited by your existing CRM software: You can (and should) leverage the dozens of available tools in the market to optimize your pipeline. Here are some you can try:
Salesforce: A customizable CRM that allows you to create a bespoke platform for your organization’s unique needs, with hundreds of third party integration options for both paid and free apps.
Microsoft Dynamics: A CRM software package that boasts a wide portfolio of applications that can work with your existing Microsoft system for a fully integrated solution.
Hubspot: A free CRM platform with a reporting dashboard, insights, deal tracking, and pipeline management, all on a centralized and user-friendly interface. Customers looking for more advanced features can also opt for a paid version.
Playbooks by XANT: A sales engagement solution that manages lead follow-up and prospecting cadences, automates administrative tasks, and uses data to predict when and how to engage buyers for the best outcome.
Outreach: A popular, user-friendly sales engagement platform that’s packed with prospect engagement features such as call recording, auto dialing, lead scoring, and data management.
Insights and Reports
Clari: A revenue operation platform that automatically gathers data from across your organization—everything from emails and meetings to marketing campaigns and CRM data—and uses AI to create dashboards and execution insights.
Tableau: A desktop-based data analytics and business intelligence tool known for being easy to deploy, customize, and use.
Microsoft Power BI: A suite of easy-to-use products and services for quick and seamless business intelligence, data visualization, and reporting.
Top-performing sales teams manage their sales pipelines religiously. By regularly reviewing their entire sales process, they can make incremental improvements to their bottom line.
Look for prospects who have been in your sales pipeline longer than your average sales cycle.
Letting go may be difficult at times, but more often than not, it’s necessary and healthy. This holds especially true for dead leads, which could have one or more of these characteristics:
Send follow-up messages.
According to a survey conducted by TeleNet and Ovation Sales Group, it took an average of 3.68 cold call attempts to reach a customer back in 2007. In a study by TOPO published in 2015—just eight years later—the average number of cold calls a seller must make before reaching a client has risen to 18.
And as today’s customers have more choices than ever before, it’s safe to say that the number will only keep rising.
Sellers need to work harder to help buyers make the right decision about a product or service. However, 44 percent of sales professionals give up after just one “no” from a customer.
“If you want to get people out of the ‘dead zone,’ you have to get into the mindset of the customer and start giving,” says Shanks. “Provide them with competitive intelligence reports, market best practices, upcoming pitfalls, challenges, roadmaps of what it’s like to be in the first hundred days of success. That’s the type of information you need to be focusing your energy on.”
Lipp adds that sellers should aim for a balance of consistency and sensitivity when following up, lest customers see them as annoying.
“You have to be mindful of how often you’re reaching out, how long you do that, and how you’re reaching out,” he says.
“And if you’re not getting any engagement, you have to be respectful in walking away.”
Ensure that your data is accurate and updated
A sales pipeline should be able to give you an overall view of your business at a glance. New leads are added, customers move from stage to stage, deals are closed, and unresponsive leads are taken out on a daily basis, and your sales pipeline should reflect these changes.
Keeping your pipeline regularly updated can be time-consuming, but it’s necessary. Otherwise, your sales pipeline could easily become messy and outdated. This could have several repercussions, ranging from inaccurate reporting and team inefficiencies, to lost sales.
Your sellers should monitor your key sales pipeline metrics and set aside some time to review them on a regular basis. In the next section, we’ve enumerated the most important metrics your team should track.
Metrics are important as they provide you with insight into what’s exactly going on in your sales pipeline. You need to know what’s happening in real-time, both with your sales pipeline and your customers.
“Any CEO who wants to keep sales strong during tough times needs insight into customer problems and priorities. Without that insight, you’re left to make decisions by guessing,” says sales strategist Liz Heiman.
“While you might be able to get away with that when the wind is in your sails, it isn’t good enough right now. In a tight economy, the CEO (or anyone leading a sales team) needs to get a firm grip on sales.”
One of the metrics your sellers should pay extra attention to is the number of prospects currently in their pipeline. You already know how many opportunities you need to generate to meet your revenue goal. You now need to maintain the same number of prospects at all times.
To achieve this, you should work hand-in-hand with your marketing department to fine-tune the lead generation process accordingly.
If you are selling different products and scalable services, you will also need to keep track of the average value of a deal.
This refers to the average amount of money clients spend on your product or service, and will help you accurately assess whetheror notyou need to generate more leads.
Each potential contract in your pipeline has its own value.
To calculate the average value of a certain deal, you need to divide the total value of your clients’ orders by the number of all the closed deals during a certain period of time.
For example, if a seller was able to close 5 deals totaling $50,000, then the average value of each deal is $10,000.
Pipeline value refers to the revenue your pipeline could generate if your sales reps manage to close all the deals currently in it.
You can calculate it easily: It’s the sum of the value of each deal currently in your pipeline.
This metric is important to assess the ROI of your sales efforts. You can also quantify the value of the dead leads, which indicates the health of your pipeline and calls for optimization if it negatively affects your ROI.
Sales velocity, as we’ve already established, refers to the average time your prospective accounts remain in your pipeline before you close a deal. In other words, it refers to the speed at which prospects go through the pipeline.
The formula is rather simple: You get the numeric value of your pipeline velocity when you multiply the number of prospective accounts in your pipeline by the conversion rate percentage and average deal value and divide the product by the length of the sales cycle in days.
Let’s say you have 160 prospective accounts in your pipeline, with an average conversion rate of 30%, an average deal size of $5,000, and a sales cycle length of 80 days.
In that case, your pipeline velocity is 160 x 0.3 x $5,000 / 80 = $3,000.
Pipeline velocity is expressed in money, meaning that in this example, $3,000 moves through the sales pipeline every day.
Monitoring this metric is essential because it provides you with insight into your pipeline health and can help you find out the main reason for attrition between stages.
Lead response time refers to the average time it takes for a sales representative to follow-up with a qualified lead.
To get the lead response time, you simply have to find the time difference between the first time a lead was contacted and when the seller followed up.
However, sales teams usually take an average of 42 hours to respond to B2B leads—a staggeringly long time. Lead quality tends to degrade over time, so strike while the iron is hot. The faster your sales team responds to a lead, the higher your chances of conversion.
The sales cycle refers to the length of time it takes to move a prospect through the entire process of creating and closing a deal.
Different organizations have different sales cycle lengths, as the number of steps vary depending on industry benchmarks and individual business strategies. Some organizations begin a sales cycle during prospecting, while others start when a potential lead has been engaged. Almost all sales cycles end when the deal has been closed.
The size of a B2B sales cycle usually depends on the value of the deal. The sales cycle for smaller deals typically last for only a few weeks, while high-value sales can take the better part of a year to close. The number of decision-makers involved is also a factor: The larger the buying committee, the higher the chances of having a longer sales cycle.
It’s important for organizations to know how their current sales cycle stacks up to current industry benchmarks. Most companies aim for a comparatively shorter sales cycle, as it indicates an effective sales process. If your sales cycle is longer, it might be a sign that your sales process is inefficient.
The average win rate is calculated by dividing the number of won opportunities in a given period by the total won and lost opportunities during the same timeframe.
The average win rate is solely based on opportunities that have already reached the proposal stage. It doesn’t take into account the opportunities in the prospecting stage, nor should it count late-stage deals—these will make your numbers inaccurate.
When calculating the win rate, it’s important to know the main reasons why a prospect would purchase or decline your product. Here are some of the most common reasons:
By analyzing your win rate according to the reasons above, you can prime your sellers on how to handle possible objections to your product.
Your B2B sales pipeline could have several implications for your sales and marketing strategies. As Matt Heinz, the founder of Heinz Marketing, writes in the Full Funnel Marketing ebook:
“Today’s ‘full-funnel’ marketers are actively working side-by-side with the sales team throughout every stage of the buying journey and sales process, embracing revenue responsibility and measuring their impact based on not just sales pipeline contribution but marketing influence on closed business and direct revenue growth.”
Your sales pipeline and your marketing and sales departments’ efforts will always be intertwined, and issues in your pipeline have the power to affect your sales and marketing strategy. Here are some common problems you might encounter while building your sales pipeline:
This refers to a situation wherein you end up with prospects in your pipeline that don’t have the power to make the purchasing decision. If you don’t address this problem, it will reflect poorly on sales strategy. Your sales efforts will bear no results, and your marketing strategy will continue to generate no gatekeeper leads.
It’s important that your sellers identify all the decision-makers in the account and make them see why your product or service is worth considering. By using objective, data-based Signals, they can identify and find ways to approach the decision-makers within their target accounts.
Your sales strategy should be tailored to pitch products and services to “good” leads, and it will fail to deliver results when your pipeline is filled with predominantly bad leads. This could be a sign that your ideal customer profiles need to be reevaluated.
If this happens, you will have to realign with the marketing team as soon as possible. Otherwise, they will continue generating bad and poor leads.
Each aspect of your sales strategy is time-sensitive. After all, every opportunity has to spend some time in your pipeline, and your goal is to boost pipeline velocity. You won’t be able to meet your sales strategy goals if the sales reps keep wasting their time.
Keep track of the time your sales reps spend on administrative tasks and ensure they focus on activities that can generate income.
“A lot of times, pipeline gets stale because you haven’t done a proper job at the very earliest stage of qualification,” says Lipp. “Qualification is needed to really understand the business need and the business problem, and how your solution or product helps to drive value and solve it. If that’s not really taken deeply and thoroughly, that will lead to problems against the rest of the funnel or the rest of the pipeline.”
Aside from troubleshooting your lead generation efforts, you should also implement a more strategic process for following up cold leads. Periodically reconfirm the circumstances that fostered the customer’s interest.
While a strong sales pipeline can do wonders for your organization’s annual revenue, it goes without saying that a poorly performing one will have a negative effect on your sales. It’s an issue that a lot of organizations struggle with.
“There are structural issues that every company has with their sales pipeline management, there’s no question. But you can’t have sales pipeline management issues without having a sales pipeline,” says Sheth.
“There’s so much effort and time that’s invested in the tweaking of sales pipeline management, but there’s not enough attention given to the main problem, which is how can we create sales pipeline in the first place. How can we create it in a way that is standardized, prescriptive, and therefore, predictable?”
Below are some of the most common repercussions of a weak sales pipeline:
Closing a deal in the B2B landscape can take up to several months. With so many decision-makers and touchpoints, it is logical to expect slow development. However, this only calls for more lead generation efforts. Working with too few opportunities in a pipeline will definitely have negative effects on an organization’s annual revenue.
“That’s the number one issue in sales pipeline,” says Sheth. “You can’t manage people if you don’t have people to manage.”
Fluctuations in pipeline velocity are quite normal, but if the values hit the lowest quarterly sum, you will definitely need to reevaluate action triggers and prospects’ behavior models.
This will result in fewer sales, thus taking a big chunk of the annual revenue of an organization. Lipp suggests reviewing your ICP to ensure that you’re targeting the right customers.
“What are your ideal customer profile criteria?” asks Lipp. “How well have you defined and understood them, and are marketing and sales crystal clear on what that looks like?”
This can decimate annual revenue and can dry even the biggest of budgets.
For instance, if you expect high conversion rates without planning for an exit strategy, leads can suddenly go cold, thus leaving you with significantly less profit.
The low conversion rate translates into low ROI given all the money you have spent by this point on marketing, lead generation, and work hours of sales reps.
“You could be meeting with someone in mid-level management, and they could be telling you all the right stuff,” says Lipp. “But if you don’t have a proper qualification process where you’re guiding them and helping them understand what needs to happen to buy—if they don’t know how to enable meetings with the more senior players or the classic decision-maker—you’re going to stall, and you’ll be building an inflated pipeline that doesn’t really have any credible quality of closing. You’re just kind of wasting time.”
It’s essential to work out who the decision-makers are for every prospective account in the pipeline.
Wasting time and resources on opportunities that can’t convert because you are negotiating with a person that can’t make a decision is a formula for negative ROI.
Approaching leads based on Signals is the most effective way to ensure that you’ll have an asymmetric competitive advantage over your competitors.
“What we suggest is that you apply Signals against your accounts,” says Shanks. “Signals provide objectivity and clarity as to which accounts will result in opportunities, and which ones could prove to be a risk.”
There could be many reasons why a pipeline can be faulty, but they will all affect the annual revenue in the same way.
If you’re encountering these issues, reevaluate your monitoring and pipeline management strategies to ensure your pipeline generates a stable revenue stream.
A pipeline report enables the whole organization to get instant, updated insights into your pipeline’s health, identify pain points, and set pipeline review priorities. With an in-depth pipeline report, you’ll be able to accurately forecast revenue.
Doing a pipeline review should be imperative whether your prospective accounts are moving through stages as intended or not, as this activity will help your sales and marketing departments work better as one team. In fact, the purpose of pipeline reviewing and reporting is to find and troubleshoot any issues in your sales pipeline that prevent leads from transitioning from stage to stage as fast as possible.
“B2B organizations have to be prepared to review their sales pipelines, especially after a decline in a pipeline,” says Craig Rosenberg, the co-founder of research firm Topo and now the distinguished VP of Gartner. “All sales and marketing tactics must be reviewed—many changed or even eliminated—in order to effectively reach and engage buyers today. Many of the optimized processes that have been refined over time such as milestone definitions will have to be re-examined.”
As such, it’s often done on a weekly, monthly, or quarterly basis. The frequency of reviews depends on the length of your sales process, the size of your team, and how fast you generate leads. Consider all those factors to decide the best course of action for your team.
When reporting your sales pipeline, make sure to include the following:
Before the review, you should take a look at each prospective account and the sales rep assigned to it to assess the seller’s performance. As a sales leader, it’s your duty to provide your reps with the feedback and support they need in order to move their leads from stage to stage. You should also try to develop an action plan for any problems they have, so they can unstick non-moving opportunities and move them to the next stage.
During the meeting, a sales manager will have to ask every sales rep for feedback. Here are some questions to help sales managers structure the feedback process for every sales rep.
Your sales pipeline provides the framework for your B2B lead generation efforts and B2B sales strategy.
There are several factors to consider when building a strong sales pipeline, including the specifics of your B2B sales process, the individual needs of your prospective customers’ businesses, and the unique features of your products or services. However, the real challenge lies in creating and maintaining pipeline.
“Pipeline creation really is the single biggest problem in sales, because the endowment effect—sellers sticking to stalled or slow-moving opportunities because they don’t have enough strong leads in their pipeline—is very real,” says Sheth. “Sales managers or revenue managers are basically taking these leads, and they’re having pipelines that are not strong. They’re not having pipelines that are accurate.”
Building your sales pipeline is only the beginning of the entire process. It should be followed by efficient engagement strategies for pipeline creation, coupled with regular monitoring of metrics, reviewing, and reporting.
Above all, your pipeline should be built and maintained according to how a customer will actually invest in your product.
“It’s always about them, not you,” says Lipp. “Way too many sales organizations have a self-serving agenda. They haven’t actually structured a pipeline management process that is mapped against the stages of what the customers go through to first determine their need.”
Creating and maintaining your sales pipeline isn’t an overnight affair. You have to take good care properly plotting your pipeline in a customer-centric manner, and this is a process that could require a lot of trial and error. But the result will always be worth it.
“The role of prospecting never ends. It’s part of business,” says Lipp. “A lot of people only prospect for new business and then they kind of stop. And in my opinion that’s not a very good strategy. You have to continue to always have that mindset, but then be respectful of where you are in the customer lifecycle, and how you and your prospect could lean into net new business, prevent revenue churn, and drive customer lifetime value ultimately.”
“Building pipeline for the sake of building pipeline is meaningless unless you understand what you need to achieve by what date using these as milestones to get you to your goal,” continues Shanks. “Being pointed about the actions and activities—the only things that you control are necessary to achieve that goal.”
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