Businesses with strong consistent sales, typically are the same ones who have a deep prospect pipeline. Regardless of the type of business or product, those who have the depth of opportunity in their sales pipeline, are also the ones who have less stress and typically better margins.
When you only have one or two prospects in your sales pipeline, there is the pressure to progress those opportunities quickly – perhaps with even a level of desperation. Whether these opportunities are ready or worthy – they are still progressed.
I have often used the analogy and comparison of a sales pipeline to that of a horse trainer. For those trainers during the Spring Carnival with only one or two horses in training, they will take those horses to the races – regardless of whether they are truly ready for the opportunity or not. By comparison, the trainers who have a dozen horses in the stable – will only take their top two or three to the track. They will only select the horses which are really worthy of the race.
This comparison reflects the benefit of having breadth of choice and multiple options to select from. Just like the trainer with the dozen horses, those sales agents with multiple prospects in their pipeline can be selective as to; which ones they progress, how they progress them, and the speed at which they progress them. They do not feel the stress of having to push a bad opportunity quickly simply because it’s the only one they have.
The more considered progression of a sales opportunity means that aspects such as pricing can be more appropriately pitched for optimum return. Businesses with a low level of prospects in their pipeline will often develop them with a level of desperation or haste. This may be reflected in either reduced pricing, substandard terms, increased risk or without full consideration of cross and up selling opportunities.
So with these points in mind, there is naturally a clear benefit to having strong volumes in your sales pipeline. The simplest, clearest and most effective way of doing this continues to be good volumes of SMART activity. Whether this is simply a strong level of contact based activity, or the ongoing and regular advertising of your service, or perhaps even a low volume but highly targeted activity – all can be effective. Simply hoping however that your sales pipeline will increase – seldom delivers.
So as a simple action plan to improve the effective value of your sales pipeline, I suggest the following;
- Cleanse your current sales pipeline for cold prospects – being those that are not real and really should not be there. They merely muddy the data and mask your true position.
- Order your sales pipeline into logical categories, so that it is easy to see where your prospect volumes sit. The actual categories will vary for each business, however as a guide I would typically use the following; target, prospect, proposal, acceptance, close. These are very generic categories, but you can see the gradual progression through to the completion of the sale.
- Work backwards based on your closure rate, to calculate the volume required at each level of your sales pipeline to give you the desired level of sales. Once again this is going to be very different for each business, and you will also see that the dropout rate for each category is also very different.
- With this level of information, together with an understanding of the sales life-cycle of your product or service – you get a picture of how many opportunities you need to have in your pipeline. This can then be translated roughly back into the required level of activity to get there. As an example, to get 1 closed sale you may need to get 2 acceptances, which then translates that you need to have 4 proposals on issue, which means you need perhaps 10 prospects, which in turn has been driven by maybe 50 targets. This shows that from top to bottom, for every average sale you need 50 cold prospects to start with – or at a category level, you close 1 in every 4 proposals.
It is this last point which I find many sales teams do not focus enough on. Sure, I strongly promote quality activity…..but even quality activity must be coupled with sufficient quantity of activity to get an acceptable outcome. Too many preach high-quality but then simply do not undertake sufficient quantity.
By understanding the timing and dynamics of your pipeline, you then have the opportunity to better manage and improve the close rate at each stage. This can provide immense benefit.
Adopting this simple action plan – appropriately aligned to your product or service and coupled with SMART activities, you have the ability to increase the number of ‘horses in the stable’ so that you can choose which prospect and when, to progress through to a sale.
To gain a deeper understanding of how to improve your sales pipeline, contact us today to arrange for a fuller diagnostic review of your business.
(SMART – Specific, Measurable, Achievable, Relevant & Time bound)