This blog post originally appeared on AG Salesworks blog at http://www.agsalesworks.com/Blog-Sales-Prospecting-Perspectives/bid/97058/Should-Your-Company-Invest-More-in-Building-its-Sales-Pipeline#.UWVvFJN19NQ.
Over the first quarter of the year, and in particular the last month, we have heard this question a lot.
For many the question stems from doubt about the ability of Sales to produce replicable results, and for others it stems from a desire not leave anything on the table. In both instances the answer is the same:
Yes, you should always invest more in building your company’s pipeline!
Why? Because the pipeline is the soul of a business’s potential to grow and prosper. Without a strong pipeline, your company’s ability to succeed and meet customer and stakeholder expectations is greatly diminished. Today’s turbulent economic environment requires persistent and frequently incremental investment in one’s pipeline. To maximize your return you must invest in both pipeline quality and quantity.
Investing in Pipeline Quality
Investing in pipeline quality (ideally) comes first. This may seem counter intuitive if your confidence in sales’ ability to deliver is low and you need numbers, but it’s counterproductive to pump a higher volume of opportunities into the pipeline without addressing flaws in sales and pipeline management processes. You might survive another quarter if you crank up pipeline volume, but ultimately the pipeline will slow to a crawl without addressing quality. So, tackle quality first, or at least simultaneously with quantity. Improving pipeline quality requires investment in three areas:
- Aligning the pipeline’s stages and gates with the sales process. The first step in improving the quality of the pipeline is ensuring that its stages align with the sales process; this symmetry ensures that there is “one set of books” for revenue and eliminates misunderstandings between Sales and senior management, particularly Finance. The addition of gating factors for each stage increases managers’ and reps’ ability to pinpoint exactly where opportunities are in each stage and determine what actions must be taken to make progress, increasing their credibility both internally and externally as they manage the sales cycle.
- Calculating sales cycle times and conversion rates by gating factor and stage. Investing in measurement of sales cycle time, intra and inter-stage, enables managers and reps to spot and remediate trouble spots quickly. Measuring cycle time also increases reps’ sensitivity to, and understanding of how they are able to move different kinds of opportunities, building their agility and perceptiveness, and ultimately increasing their pipeline velocity and close rates, and forecast accuracy.
- Implementing a sales management review process focused on results, not activities or volume. Quality is maximized when the above investments are combined with a sales management review process. The best review processes, while led by managers, are two-way problem-solving conversations with sales reps. The focus of these conversations is not on activity or volume, but on the following questions: How fast is each opportunity progressing?, What gating factors have been accomplished and which need to be accomplished? How each gating factor can best be accomplished?, and If stuck, what actions are appropriate, and why, in the context of the account, to regain momentum?
Investing in Pipeline Quantity
Once pipeline quality has been improved, you are ready to invest in quantity. Driving an increase in the quantity of opportunities in the pipeline requires investments in:
- Identifying your target customer(s) and their specific needs, criteria, and behaviors. This may seem trivial, particularly if your company or territories are well established, but it’s not. The goal is to develop veins of prospects with homogenous characteristics that will reference each other, creating greater pipeline volume. To do this, review the accounts that you have won in the last year. Identify commonalities in their: needs/problems, buying criteria, demographic profile, and buying behavior. To develop even deeper insights, segment accounts before beginning this exercise into their groups, accounts that are brand new wins, accounts you are simply retaining, and accounts you are penetrating . Conducting this exercise twice a year will help Sales identify growth themes that enable reps to build their pipeline volume, and enable Marketing to sharpen its messages to clusters of prospects.
- Developing a tightly scripted automated marketing process and tele-prospecting process that scores prospects based on their behavior and characteristics. One of the most underleveraged tools to drive pipeline quantity is an automated marketing and tele-prospecting process. Most Sales organizations lack activity above the funnel, and therefore an adequate flow of quality opportunities. If you have not invested in an automated marketing and tele-prospecting process, it’s time to take the plunge. Fixing this problem has never been easier and more cost effective; an automated marketing and tele-prospecting process is the cheapest insurance you can buy against poor quota attainment and inadequate testing of your relevance in different markets.
- Segmenting your sales force to create Opportunity Development Specialists and Sales/Account Reps. You have heard a lot about how buying has changed; customers complete over 50% of the sales process before meeting your sales rep, customers expect your reps to provide more and deeper insights into your business, and more stakeholders than ever before are involved in the buying process, lengthening the sales cycle and increasing its complexity. Unfortunately, all of the above apply for most of Sales forces, yet many still lurch along expecting their Sales/Account Reps to prospect and cold call consistently and aggressively. It’s time to stop asking your company’s highest priced resource to do low-value, high volume work that is decidedly different than managing the later stages of a sales process. In most cases (except for selling in extremely mature markets, or in processes where the buyer expects a single point of contact) it’s far more efficient and effective to segment the Sales force into Opportunity Development Specialists and Sales/Account Rep roles and narrow Sales/Account Rep prospecting to a narrow set of highly qualified leads (e.g. a short list of 10-15) that have a tight fit with their current account base.
If you have not invested persistently in your pipeline, now is the time to catch up. With three quarters left in the year, there is plenty of time to make incremental investments that will help you exceed plan.
Remember, two investments are required. To achieve Sales efficiency and effectiveness you must invest in both quality and quantity on a regular basis.
Defining the key decisions and information requirements at all customer touch points is a critical prerequisite to investing in BI capability.
I recently co-hosted a webinar with Chris Winter, head of Enterprise Solutions at DOMO. Our discussion focused on Optimizing the Selling Machine. We talked about business intelligence, data, and decision making.
Since that webinar, I have had a number of conversations with Sales and Senior Leaders about business intelligence as it pertains to sales and marketing. And, there’s one theme that has been resonating louder than the rest.
Here is how the theme has emerged in conversation:
- With our marketing lead generation, social media, CRM our ordering, customer service, and fulfillment systems, we have really great data.
- Our data completely cover our customer relationships end-to-end.
- We now know more about our customers and our interactions with them than ever before, it’s amazing!
- All this data has not lead to fundamental changes or improvements in how we sell or manage our sales efforts.
It turns out, that in all of these situations there were two fundamental gaps that had yet to be closed.
The first was the tools that enabled these managers to move from snap shots of data to trends and patterns of performance, and beyond to comparative analyses of multiple factors. We call this Business Intelligence. The second, and most important gap was a set of fundamental links between business intelligence and Sales and Management actions. In other words, the map tying information to actions and decisions across all of those customer touch points, action which in the end would lead to fundamental change.
Before you beef up your BI with a system from companies such as DOMO or Microstrategy, or deploy the next layer of Salesforce.com, take a step back and define the key decisions your reps, agents, account managers, and managers need to make across all customer touch points and nail down what intelligence would enable their ability to act faster or differently with greater effectiveness. And. remember there are a critical few measures that matter at every step. Failing to do so risks disabling decision making and impairing growth.
This makes the 10th and final Growth Driver, links to the previous nine are listed below:
- Growth Driver #1 – Confirm Your Revenue Model
- Growth Driver #2 – Increase Your Value
- Growth Driver #3 – Sell the Way Customers Buy
- Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains
- Growth Driver #5 – Identify Growth Themes
- Growth Driver #6 – Create a Road Map to Success
- Growth Driver #7 – Tighten Your Focus on Sales Management
- Growth Driver #8 – Assess Your Turnover Risk
- Growth Driver #9 – Focus on Opportunity Creation