I facilitated a Sales Swap Meet™ this week with a collection of business owners.* If you aren’t familiar with a Sales Swap Meet, it is where business owners and CEOs bring their questions, concerns, and problems regarding their sales organization and swap them for ideas, suggestions and answers.
The topic we spent the most time on was what to measure and how to measure it. I thought I would recap for you what we discussed since it is of high importance for any business. What I heard was that the majority of the folks keep track of a pipeline and some grade the pipeline (calculating how much business will actually spit out the back end based on the probabilities associated with the deals in the pipeline) and make some projections based off of those. Nobody indicated their projections were accurate, unfortunately. So let’s start there.
A pipeline frequently is just a list of deals that salespeople are working on. The less disciplined you are about what goes into the pipeline and how opportunities are rated, the bigger, fatter and more unrealistic the pipeline becomes. If you place too much emphasis on the pipeline, it will continue to grow until it is a total waste of time.
Here Are Two Tips to Tame Your Sales Pipeline
Tip #1: Don’t focus solely on the raw number of deals in the pipeline.
Focus on the actual things that have to happen to move a deal along in the pipeline, from a 30% chance of closing to a 75% likelihood for instance. What are those factors that indicate a higher likelihood of closing? Always ask your salespeople, “What is the next AGREED UPON step to move this deal along?” It is important to focus on the pipeline, but best to focus on it in terms of how many deals are necessary at each stage of the pipeline to accurately predict that enough business will close to meet goals. So start with the end in mind. What is the sales goal for the team?
Then break it down into goals by individual. Then the sales manager should be working with each salesperson individually to calculate their closing ratios based on different pipeline stages. An easy way to do it is to start by creating the Math of Success™ with each salesperson.* You can calculate by pipeline stage or bucket, but that might be overwhelming if the data isn’t readily available. Instead, keep it simple and calculate how many deals are needed to enter the pipeline to make the goal, because one certainly doesn’t close 100% of the deals that enter the pipeline.
Tip #2: Don’t focus just on the number of calls or appointments. Focus specifically on the number of FIRST APPOINTMENTS with prospects.
Help the salesperson calculate how many first appointments are necessary to feed enough new deals into the pipeline. As you probably know, there is likely not a single buying process for your various customers so it might take one meeting to close business with some clients and it might take 10 to close with others. Therefore, the number of first appointments where the salesperson is uncovering whether there is truly a need or not are far more important than the total number of appointments.
Once the salesperson has a grip on how many deals have to get into the pipeline, be sure to ask them to create their own activity plan. What are the two or three most important things they can do every single week or every single day to obtain enough first appointments to produce enough new deals get into the pipeline?
Then, all you and your management team need to pay attention to are:
1. Did the salesperson do what they said they were going to do this week to produce enough first appointments? If not, why not and what are they going to do differently next week? Obviously, this requires specifics with regard to the number of activities or time spent doing activities – something measurable.
2. If they are doing their agreed-on activities, and they have enough first appointments, are there enough deals in the pipeline to predict enough closed business? If not, does the salesperson need to increase their activity (maybe the math was wrong?) or is it time for some coaching intervention?
The more energy you spend measuring the right activities, the more you’ll be able to identify genuine opportunities and close business. Or, if the business isn’t happening, you can at least identify that it might be the individual that needs more coaching or training, rather than feeling lost about what the causes are. The sales will take care of themselves if you focus on the right behaviors and activities, but it all starts with the Math of Success.
What is the state of your sales pipeline? Try these tools and let us know how they work for you.
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