Why You Should Create A Sales Pipeline Management Process

Sales Pipeline Management Process

In simple terms a sales pipeline starts with your first interaction with a company and doesn’t end until they become a customer.  From the starting point to the ending point is where you need to create the sales pipeline management process.  So let’s start at the beginning.

Like I said before, time is money so managing your time with each step of the client in the sales pipeline is the most crucial aspect of the pipeline.   Too many times sales people waste their time in the wrong areas.  When first prospecting a client you must know who the decision maker is.  This is the first mistake many people make in the pipeline.  You must always ask yourself “who is the decision maker” and am I talking to them?  If not, how do I reach them?  In every business there is usually a gatekeeper, getting past this gatekeeper in the shortest amount of time is vital.  If you spend most of your time working on the gatekeeper and then lose the sale when you finally reach the decision maker, then you just spent most of your time getting to the right person instead of working with the right person.  All this time lost could have been spent on a more qualified prospect.  Sometimes you just have to cut your losses if you are not reaching the decision maker.  Don’t get me wrong, constant contact with the gatekeeper can get you to the top dog, but that doesn’t mean you will make a sale.

The next way to manage your time is by identifying an accounts total budget compared to their length of sales cycle.  Let’s look at it this way.  Say you have two different prospects.  Prospect number 1 has a total budget of $100.  Prospect number 2 has a budget of $50.  After speaking with both prospects you have a good feeling of their length of sales cycle.  Let’s say prospect number one will take 3 hours to close while prospect 2 will take 2 hours.  You also assume prospect number 1 has a 70% chance of closing while prospect number 2 has a 90% chance of closing.  Who is the more valuable client?  Prospect 1 would be because it has a higher value for your time.  $23.33 an hour compared to$22.5.  But in real life it will never be cut and dry like this situation.  This is where you need to decide in your conversations with these prospects what you think their likelihood of closing and estimated time to close would be.  It is all about probability.  Yes, this is one of the most difficult things to assume but you must think it out in order to manage your time.   These assumptions can also be created from past sales.

So now let’s take a look at the historical data.  As the saying goes, history repeats itself and this can be true in certain sales situation.  Of course every industry is different so you will need to make your own analytical assumptions to improve your sales cycle but let’s take a look at what another company realized which improved their sales greatly.

This particular company focused on sales number as the sole metric, but as they dug deeper, they realized that the largest driver of lead-to-sale conversion was the response time.  They discovered for their company that if they called their leads back within 2 minutes of receiving it, they were 4 times more likely to close that sale.  Then when they looked at their average response time it was over a day and a half.  The problem that their sales team had was prioritizing their follow-up leads over hot leads.  They were following up with people that had already said no when there were prospects ready to say yes.  In my past job as an account manager at a local television station, I learned this the hard way.  Old leads are not better than new hot leads.  I spent hours following up with old leads thinking they were close to closing when the new lead was already practically sold and I let it slip through my grasps.  Now this is not always true for every industry but can be.               

Analysis

After you start realizing these different metrics you can truly start to analyze your sales pipeline management.  The goal of a pipeline is to estimate your potential sales in order to reach your desired goals.  So once you have your funnel moving you will have a good assumption of how many of those prospects will close and how many more prospects you need to start putting into the funnel.  The analytics that you need to focus on will be the average number of deals in a certain stage, the average percent of converting to the next stage, the average deal size and the average time in each stage.  By creating these numbers you will have an estimate of where you will be in in the coming months.  It will also give you an idea of how many people you need to keep prospecting in order to stay on track with your goals.  The analysis part of your sale pipeline is the most important section as it gives you the benchmarks you need to reach in order to reach your goals.