Sales Pipeline - Fact Or Fiction

As salespeople know, the pipeline is a vital part of the sales process. But what is the usual definition of a sales pipeline? It may be a list of prospects at various points in the sales cycle, from leads to those ready to close. At times, a sales pipeline could be a set of leads and nothing more. In order to maximize the sales process, the sales pipeline must be a well-planned management cycle with specific components. In this view, today's sales pipelines are not quite fact, but not quite fiction, either. Let's find out how to upgrade that sales pipeline into a true sales cycle management system.

The first component of sales cycle management is opportunity management. In short terms, opportunity management is the act of focusing on the most promising sales possibilities. When you manage opportunity, you are expending energy and time on probable sales instead of the "maybe's". But how do you go about managing opportunities? First, you must identify them. Which possible sales are moving forward? Which ones, based on forecasting, will be more likely to close? Next, prioritize the list based on expected income generation, time to close, and expense. Finally, allocate resources to those opportunities. Sales people can also maintain their list in "top ten" or "top five" format, that is, focus on the top opportunities and update them constantly as the sale moves forward.

Next, sales forecasting is an important component of your cycle. Forecasting is simply the prediction of sales based on past numbers - along with analysis of existing conditions. When you forecast, you're creating an objective view of the future and rooting your sales pipeline in reality as opposed to "fiction". Forecasting also gives a good view of the price of products as well as the cost of closing sales. But to be completely rooted in reality, your forecast must take into account the factors acting upon sales, including seasonal need, general economic conditions, competitors, and consumer conditions. There are various formulas for sales forecasting based on qualitative and quantitative measurements, but you have to determine which one is right for your organization, products, and sales measurements.

The third component of the sales cycle is account planning, or building a realistic sales plan. From your opportunity management and sales forecasts, you can establish sales goals, strategies, and tactics. As part of account planning, you should take these goals, strategies, and tactics all the way down to the individual customer level. By doing this, you'll be able to develop sales plans for the best opportunities - and break goals down into time periods. The combination of plans for opportunity and time-based goals will create a strong account plan.

The final piece of sales cycle management is performance analysis, which essentially closes the gap on your sales cycle. Sales performance analysis is sometimes brushed aside in favor of "keeping the cycle moving", but you should spend a considerable amount of time and energy here in order to adjust your entire process. In order to analyze performance, you first need to know your close rate. From knowing this bit of information, you can improve your definition of a qualified lead in opportunity management - if close rates are low, your opportunity management process is out of line. Through your analysis, though, you'll be able to shorten your entire cycle by spending targeted, quality time on the most probable sales. You also need to review sales goals consistently, by time period. Are sales falling far short of the goal or in constant excess? What you find out may again point to flaws in the other components of your process. Another point in performance analysis is to audit each sale and determine how much was spent to generate the income from the sale - everyone involved in the sale should understand the profit margin. As you consistently analyze sales performance, you'll be able to make adjustments at all phases of your sales cycle.

So a traditional "sales pipeline" is not necessarily "fiction", but it must be modernized to include the four components of sales cycle management. In our next series, we'll look at each individual sales cycle component in more detail so that you can move your pipeline into firm reality.

Copyright 2008 Bryant Nielson. All Rights Reserved.

Bryant Nielson - Managing Director and National Sales Trainer - assists executives, business owners, and top performing sales executives in taking the leap from the ordinary to extraordinary. Bryant is a trainer, business & leadership coach, and strategic planner for sales organizations. Bryant's 27 year business career has been based on his results-oriented style of empowering.

Subscribe to his blog - and learn the legendary secrets of top business training programs at: http://www.BryantNielson.com

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5 Steps to a Robust Sales Pipeline

Whether or not the sales team follows the rules of the sales process, every company has a sales process in place as this is a prerequisite for a sales department. Even when you're not sticking to the company's sales process, sales executives follow some of sales process. In every sales process there are a few well coordinated steps:

1. Generating leads

2. Qualifying prospects

3. Sales presentations

4. Handling objections

5. Closing deals

6. Referral sales

There are potential/confirmed customers at various levels of the sales process. Usually their number tapers off from lead generation to the final step of referral sales. If a hundred leads are generated it may lead to 20 qualified prospects and three or four deals. If the sales person is talented enough or lucky, the number of qualified prospects and ultimately the deals may increase. Though there is no fixed method to predict the number of deals, this is a rough measure of leads to deals predictions. The Pareto principle of 80:20 works well here. Eighty percent of the leads qualify as prospects and eighty percent of the sales deals are generated by twenty percent of the qualified prospects. There may be a small percentage of difference here and there, but generally this is the rule.

The generation of leads, qualified prospects, deals, and referral sales is known as the sales pipeline. It is in the best interest of a sales person to have a robust sales funnel at every stage of the sales pipeline. This is the best way to maximize sales. The healthier the sales pipeline, the better the chance of achieving sales. It is the responsibility of the sales executive to maintain a robust sales pipeline. Here are the five steps how it can be done.

A strong Foundation through Good Lead Generation and Qualification

Explore all the expected sources for leads. Your company definitely creates leads by way of advertisements and publicity. Check if the lead data bank your office uses is up-to-date. You should have your own methods of lead generation too. Fresh leads can be obtained from the latest yellow pages, the Internet, networking, and referrals. There are some services like postmaster.com that have interested people signed up to receive newsletters and emails from sellers. You can probe for sales by sending newsletters (without spamming) to the listed people with postmaster.com.

Apart from the expected sources, leads appear from unexpected quarters if a sales person keeps his eyes and ears open. If you are on your way out of the customer's office after having concluded a deal there is no harm in stopping by and having a small talk with any of the office staff. Thank people from the organization that have helped you in reaching the right person and making a sale. Some of their friends or spouses may be running businesses and may have a requirement of your products. Usually as a sales person you will be in your element after making a sale. This is the best time to explore more possibilities. If not immediately, the office staff may get interested in your product later after they see how it works in their office. They wouldn't require any further proof of quality.

When it comes to qualifying prospects for your product or service be sure to ask open-ended questions - who, what when, where & why to determine that they are prospects and not suspects. Wisdom lies in grading qualified prospects and allotting time according to their importance. High caliber sales professionals spend more quality time with top prospects.

Be Creative in Contacting

Senior executives that have the power to make buying decisions do have hobbies and are often found in gyms, tennis clubs, resorts, and golf courses. They would be pleasantly surprised and appreciate it when you try to meet them there. Keep the meeting as brief as possible and only as a primer to a real official meeting. This is the time when they are in a relaxed mood and would give you a chance for a meeting or a demonstration. Also ascertain as to what time the senior executive in a relaxed mood while in the office. That's the best time to schedule a meeting.

Probe and Talk about the Customer's Need

When you have an audience with the potential customer, don't bore him with the prattle about your product. Even if it's the best product in the whole world it means little to him. You have to first explore the needs of the organization, understand the needs, and confirm the needs. Then you will have the attention of the customer when you describe how your product can cater to their requirements and all the positive points about your product will suddenly become matters of interest to him. Let the customer do the talking about his needs first.

Solid Presentation, Pleasant Objection Handling, and Swift Closing

Now this is your chance. You have come this far. Make the most of it by giving a solid presentation. The best way to do that is to pepper your presentation with humor. Be confident and assertive. Come prepared to handle objections and remove objections pleasantly. Most importantly know when to close the deal. Close the deal swiftly with correct timing.

Closing a Deal is Just the Beginning

Closing the deal is just the beginning of more sales from the customer (repeat orders) and referrals earned through them. Yes, referrals have to be earned. When you treat your customers well with the right service they may refer others voluntarily. They may come forward to refer others when you ask them. Many sales people overlook the opportunity for repeat or referral sales just by not asking.

Sales people can have a large number of leads, prospects, and customers if they follow the above five steps. The flow of leads and customers would be steady and the sales pipeline will be robust as well as fully functional.

Doug Dvorak is the CEO of DMG Inc., a worldwide organization that assists clients with productivity training, corporate humor and workshops, as well as other aspects of sales and marketing management. Mr. Dvorak's clients are characterized as Fortune 1000 companies, small to medium businesses, civic organizations and service businesses. Mr. Dvorak has earned an international reputation for his powerful educational methods and motivational techniques, as well as his experience in all levels of business, corporate education and success training. http://www.dougdvorak.com

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Why Build a Qualified Sales Pipeline

If your management asks you to check your sales pipeline that means you need to pay attention to the leads you are generating and how qualified they are. Your sales numbers will dip if the sales pipe line is not steady and strong enough to help you reach your sales targets. If you are not generating enough qualified leads and qualifying prospects how can you have sales? You will be advised to build a qualified sales pipe line to be effective in selling.

Each sale starts with a lead: a name, a phone number, an email address, a referral, or the person that just walks in to your office or store. The next step is qualifying the leads. To determine whether the customer has the need and capacity to buy your product or service. For instance, a growing small business owner may have the need of a few personal computers in the office to augment increasing business activity. But does your brand of computers meet his business needs? If yes, how many can they afford to buy at this stage and how many more in the near future?

The next steps are setting appointments with the prospects and giving a demonstration of your product or service. This could lead to a sale and taken all together this is known as the sales process. The first two activities: generating leads and prospecting are known as creating a sales pipe line.

Archery and Sales

The analogy of a sprinkler system best applies to a sales pipe line. When a garden needs to be watered with a sprinkler system there is an elaborate plan. The pipes carrying water are arranged in such a manner that the water flow is steady to all the sprinklers. The game of archery is the perfect analogy for sales. An archer is given many arrows to hit the target. With the given number of arrows they have to maximize their score. The closer their arrows hit the bull's eye, the more points they receive. Similarly, a sales person creates leads, qualifies them as prospects, and tries selling to them. Just as an archer may not hit the bull's eye every time they take aim, sales person may not be successful in selling with each call or each prospect. As an archer tries with more than one arrow to hit the target, the sales person also tries to make a sale with more than one prospect. In fact the game of archery requires the archer to carry all the arrows with them. Sales people keep trying with many prospects. And prospects come from leads.

Ten or more leads may provide the sales person with one good prospect. And one in ten such prospects may actually buy. This is the basic premise of a sales pipe line.

Steady Sales Pipe Line

Though the archer gets many arrows to use, still they are fixed in number. They have to utilize their skills in notching up the best score by hitting the bull's eye repeatedly at a given point in time. Likewise, a sales person generates a fixed number of leads during a sales day. For example, a computer sales person targeting a high rise building in Manhattan housing 50 offices can have 50-100 leads at the maximum (assuming that in some offices they may get the chance to sell to individual employees in addition to catering to the official requirements of the firms) from that building. Their sales would depend on how they manage the 50-100 leads.

There are no infinite number of leads and prospects. Every market segmented on the basis of location, income, and preferences of the consumers are limited in size. Wisdom lies in utilizing the leads and prospects properly and converting them in to sales. Careless exhaustion of the list of leads will only result in spoiling the chances of selling. Each lead has to be dealt with carefully. Each prospect has to be worked on attentively.

While taking each lead and prospect with due attention and sincerity a good performer in sales builds a steady pipe line of leads and prospects. Once a list of leads is exhausted fresh leads will be needed. High performers in sales always have a steady sales pipe line by renewing it with newer leads and prospects. They also include past and current customers in this sales pipe line. Fresh requirements from existing customers are no less important to sales than a new hot prospect.

With the possibility of rejections the only way a sales person can achieve their sales quota is to generate the maximum number of leads and qualify the maximum number of prospects out of them and thereby increase the chances of selling. The generation of qualified leads and prospects should be steady and voluminous. And each lead and prospect should be worked on diligently so that not a single one is wasted. This is the essence of a qualified sales pipe line which holds the key to maximizing sales.

Doug Dvorak is the CEO of DMG Inc., a worldwide organization that assists clients with productivity training, corporate humor and workshops, as well as other aspects of sales and marketing management. Mr. Dvorak's clients are characterized as Fortune 1000 companies, small to medium businesses, civic organizations and service businesses. Mr. Dvorak has earned an international reputation for his powerful educational methods and motivational techniques, as well as his experience in all levels of business, corporate education and success training. http://www.dougdvorak.com

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What Is A Sales Pipeline And Why Is It Important?

A Sales Pipeline is a useful concept used by Sales Managers, individual sales staff and the owners of small businesses to quantify the demand for their products and services. Regardless of what you're selling, by effectively managing your sales pipeline, you can smooth out customer demand and create a more stable sales cycle with more reliable results.

A sales pipeline works by placing cohorts of leads or prospects at the different stages of the sales process/sales cycle, and then measuring their progress through the pipeline, from unqualified lead to satisfied repeat customer.

Unfortunately for you and me, the pipeline has a tendency to leak. Leads and prospects fall out of the pipeline on the way, failing to become the happy customers we know they could be.

At a gross level, sales pipeline management is nothing more than estimating incoming cash flow. We look at our leads and prospects, make some estimates of the likelihood that they'll eventually buy our products and services, and feed that information along with their expected spend into our projections to find out how much revenue we're expecting to make.

But the real power of sales pipeline management becomes clear when we establish proper metrics and put processes in place to respond to changes in those metrics. To illustrate, consider the following story.

A retail sales client of ours once called us to ask if we could help him improve his company's sales. He explained that sales revenue was not high enough, and that his staff needed training in closing sales, so that they could close more sales and therefore improve sales revenue.

When we spent some time with his staff, it became clear that there was nothing wrong with their ability to close sales. Instead, we found that staff were finding it difficult to start or carry on a conversation with a customer. Most potential customers were walking into the stores, then walking out again without really having an opportunity to talk about the products they wanted to buy.

By analysing the sales pipeline and the particular points within the sales process where more customers were "leaking" from the pipeline, we were able to determine that the biggest problem staff had was not in closing sales, but in opening a dialogue with customers.

Once we established that, we ran some training courses and created training aids designed to assist staff in opening a sale and keeping a conversation going.

Year on year sales at each store increased by up to 20%.

There are several benefits to managing your sales pipeline effectively:

By focusing on the entire pipeline instead of taking a short-term focus on closing sales, or getting a single high-value contract over the line, demand for your services will be smoother and your cash flow more reliable.

Making incremental improvements of as little as 1-2% in your conversion rates can increase your sales by much more.

An in-depth analysis of when and why your leads and prospects leak from the pipeline will pinpoint specific areas for improvement and help you get far more value for your training dollar.

If you keep track of which prospects leak from your sales pipeline and which prospects don't, you can construct a profile of prospects who are more likely to buy and prospects who are less likely to buy. This knowledge will help you to focus your marketing material and allow you to more accurately qualify your leads, leading to a more streamlined, more efficient and less costly sales process.

Once you have established an accurate sales pipeline, you can use it to plan for new product launches. If you were to plug all the information about your new product into an existing sales pipeline, you would quickly get a pretty good idea of how many leads you're going to have to generate to reach your new product's sales target. This will in turn assist you in deciding how to launch the product, and give you an idea of how much it's going to cost. If you're going to need 500,000 leads to reach your sales target, you're probably going to have to look at a mass market advertising campaign.

In the information age, it always pays to be informed.

© Change Factory 2008.

Mike travelled extensively during his youth, moving interstate and overseas several times before he finished school. This upbringing has given him a unique perspective on change, and a healthy disrespect for the value of maintaining the status quo.

Since 2004 he has worked with Change Factory as a change management and behavioural expert, using his background in psychology and marketing. At work, he is most passionate about giving people the tools to enact change and giving them a goal towards which they can all aspire. Outside of work, you'll probably find him at the nearest nursery buying yet more plants for his garden.

Change Factory is a change management company specialising in improving business outcomes through changing behaviour, Visit our website to learn more, or visit our new Sales website to learn about our vision for Sales.

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