Pipeline Management - Your Path To Achieving The Sales Edge!
Those sales teams who achieve the sales edge, do so with a clear understanding of their pipeline's health. Pipeline management allows a sales person and/or management to more accurately forecast their sales, better manage their time, and ultimately close more sales. We all want it...the full pipeline that is-a sales funnel with more opportunities at the top, converting to qualified leads, and feeding the closed sales at the bottom. With it we are sales stars.
And without it we are constantly riding the amusement park favorite-the ROLLERCOASTER. While the rollercoaster can be thrilling it can also be exhausting and is definitely ineffective as a long-term sales management strategy. We can only ride that rollercoaster so long before the "thrill" wears off. And, that's where pipeline MANAGEMENT fits in.
But, what is Pipeline Management really?
Pipeline Management is a process by which you continually evaluate your active opportunities (from prospects to booked customer) for their balance of QUANTITY and QUALITY.
QUANTITY: We're used to looking at our pipeline for quantity since this is usually where our sales forecasts come from. Unfortunately, we often do not look at the right things when evaluating quantity. We either value the quantity at face value (where all opportunities are valued at their full estimate regardless of where they are in the sales process and what our history is for closing deals we come across) or they are valued and factored against a "gut instinct" of probability (I'm 95% sure this will close). The problem with this method, however, is that some sales people are overly optimistic (mostly just wanting to BELIEVE they are in better shape than they really are) or are incorrectly tagging where the opportunity really is in the sales process. The first steps to accurately managing the quantity of your pipeline are 1) define your sales process contact types and milestones, 2) determine your conversion ratios for Prospect to Customer; Lead to Customer; and Proposal to Customer. These percentages will become the Pipeline Weighting factors by which you calculate your pipeline's WEIGHTED FORECAST. If you don't know your ratios, start with your close ratio. How many of the proposals/bids you provided last quarter booked as orders? Then work back from there. A starting place would be to go with a weighting ratio of 10% at PROSPECT stage; 30% at LEAD stage; and 50% at PROPOSE stage. Then, monitor your actual conversion ratios each month and tweak them as necessary.
QUALITY: Having the right volume in your pipeline is a key factor to success and understanding where you are weak, and will help you determine where exactly to spend your time. Measuring quality, though, is equally important. Too often when I help companies with pipeline management practices I find that the biggest problem in sales forecasting and time management is that the pipeline is cluttered with junk and sales people are wasting time with "follow-up" on prospects that are not playing ball. So, to ensure your pipeline is meeting your quality needs, evaluate every opportunity weekly against the criteria you set for each step in the sales process. If you find a contact is not moving to the next step in the process as it should, then trace back and reassess that you haven't missed something (contact not actually decision maker, other decision making criteria you were unaware of, etc.)
Sales people generally hate reporting. It's a waste of time in their mind and they'd rather be doing what they do best-selling. And, truly they aren't crazy about the accountability and visibility pipeline management reporting can give their management. So while pipeline reporting and review is ESSENTIAL, it is equally important to help sales teams understand how valuable this tool can be for forecasting their own income (assuming they make a commission) and saving their sanity by creating a tool to better focus where they spend their time.
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Source: http://ezinearticles.com/
Added: May 28, 2008
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