Today we feature a post from a guest blogger, David Nicholson of Nicholson Consulting in the UK. David is an accomplished sales director who delivers strategies for sales and sales leadership.
What is effective pipeline management?
We all know what a sales pipeline is and how to interrogate the data, but how many of us actively manage the sales pipeline to extract meaningful and insightful data from which to understand and influence business performance?
Effective pipeline management is essential to achieving outstanding sales performance
Business applications such as CRM help capture, structure and align your pipeline with your sales process and enable content push to assist your sales teams in the field – BUT a CRM tool will not govern the quality and integrity of the pipeline data input – this demands a behavioural shift within your sales and marketing organisation which, like all change initiatives relies upon effective coaching and reinforcement
The illustration below shows the relationship between sales pipeline Inputs and Outputs – the critical element to effective output management is the pipeline Insights, how they reflect leading performance indicators and the action taken to influence performance output.
Lets first consider the outputs and what they mean to your business.
Performance & Predictability – you should be able to predict your sales performance with reasonable accuracy from your pipeline, both short and medium term – enabling you to proactively influence the projected output.
Resource & Workflow – accurately predicting which orders will convert is paramount to sizing your business appropriately to successfully fulfil and satisfy customer demand while managing cost and precious resources.
Coaching – an essential ingredient of outstanding sales performance is the effective and consistent coaching of your sales teams. The leading performance indicators accessible from your pipeline enable continual performance development of individual and team.
Trending – mapping your sales pipeline over time to your strategy and segmentation will unearth invaluable insight supporting future execution – product, market and regional adoption and performance, commercial and life-cycle values influence your competitive strategies.
Performance impacting outputs can only be mined from accurate and meaningful pipeline Input – the integrity of the pipeline data is vital to the analysis and credibility of your data insights.
Pipeline input sources vary greatly from sales to customer enquiry to marketing generated lead with each presenting many permutations – not least the individual responsible for gathering, understanding and content recording.
Data integrity – to generate credible pipeline insights you must ensure the integrity of the input is appropriate to the output demand. For reasons outlined above, it is not practical to simply rely upon data entry without process and reinforcement – the content will be incomplete and inaccurate and not therefore credible.
Alignment – your pipeline must be aligned with your sales process and CRM tool to reflect the status and maturity of each individual recorded opportunity – from suspect to qualification to understanding, monetising and validation through to negotiation and close.
Reinforcement – as mentioned at the beginning of this post, change is a behavioural shift requiring consistent positive reinforcement to encourage adoption. Your sales managers should be coaching performance improvement ~70% of their time including the importance and use of CRM/pipeline to accurately record and share content. Sales enablement should embed and push relevant content through CRM to reflect and assist each opportunity relevant to its pipeline stage and progression through the sales process encouraging reciprocal quality content population. Regular pipeline reviews should be conducted to validate and develop prospects through the sales process aligned funnel.
Control – plan your content appetite carefully as often less is more and demanding too much content from field based sales teams will impact sales performance and data integrity – control the information needed and content input with verifiable outcomes for each stage of your pipeline/sales process, removing subjectivity and reinforcing sales methodology adoption.
When your pipeline content is accurate, consistent and mapped to a sales process you can extract credible insightful data from which to analyse and make decisions.
Volume/Value – retrospectively calculate the ‘pipeline conversion to win’ ratio per individual/team to understand the theoretical pipeline value needed to convert a required value (accuracy is increased by (a) data integrity) and (b) time measured). Look for volume exceptions adversely challenging conversion ratios ie) single large or high volume of low-value opportunities attracting risk or resourcing demands respectively.
Additions – visualise your sales pipeline as a funnel – whilst converting opportunities to real won business is ultimately the sales objective, you must ensure closure focus does not result in a lack of new opportunities being added into the top of the funnel. The impact of pipeline deficiency can be devastating to your business in many ways.
Maturity – understanding the relative maturity of your pipeline through sales process alignment offers pipeline health insight but also greater performance predictability, lead generation demand and sales funnel trending.
Distribution – track the distribution of your pipeline content across the funnel stages to better manage precious resources involved in the sales process.
Velocity – often overlooked, but is an essential metric to track pipeline performance – benchmark your pipeline velocity with best practice to expose exceptions and development areas.
Conversion – this essential leading performance indicator predicts the theoretical pipeline value needed to meet the sales targets. It also exposes sales efficiency and effectiveness metrics uncovering individual development and training needs.
There are many more pipeline insight metrics including product mix, activity and engagement levels which should be tailored to your business and sales strategy.