Pipeline management in CRM is the core to accelerating sales, forecasting and managing product demand. I recently wrote about the basics of pipeline management. To provide context for where marketing stops and where sales begins. Here I’ll focus on what I call the Seven Rules of Pipeline Management.
Become maniacal about your sales process
Most sales processes have become informal, and sales leaders rely on the rainmakers to haul in business when it’s needed. But the sales process is the absolute key to understanding what is at the top of the funnel and what will be closing soon. Each step in your sales process should have clearly defined metrics or objectives that must be achieved. For instance, if your sales rep doesn’t understand the customer problem they are looking to solve, they shouldn’t be advancing to “Proposal” stages. Nailing the process and the requirements of each phase will clean up your pipeline data and help your sales team deliver to their quotas and your forecast.
Question Closing Dates
There is nothing worse than seeing an opportunity continually move the closing date out another month. Looking at the history of pipeline closing date changes helps to understand how bad your opportunity really is. Unrealistic closing dates impact your forecast and business plans. A good sales manager will question the closing dates and if whether the rep has the ability to execute the steps and obtain the commitments needed to close the deal in the time frames indicated.
Separate Pipeline Review from Forecast Commitment
All too often sales leaders mix the conversation about the pipeline with the reality of which sales WILL BE CLOSED. The pipeline conversation should focus on what’s in each stage, the plans to get more leads, advance prospects more quickly and what should drop out as dead. The forecast (aka commitment to close) is the more serious discussion where your sales reps put their “chips on the table” and forces decisions where people can get hurt. Here the sales leader needs to focus on specific closing with the sales rep that leads to company forecasting sales, growth, production and purchases.
Inspect the Four Essential Pipeline Metrics
When it comes to keeping your sales team efficient and measuring the success of you pipeline, there are four essential metrics. Opportunity Dollar Size vs. Average Won Deal Size; Opportunity Age vs. Typical Win Cycle; Pipeline Volume, and; Win Rate. Most pipelines get messy if these factors aren’t considered. Deals much larger than the average deal won should be assessed as to the feasibility of a customer willing buying this large volume – pipe dreams waste everybody’s time. The older the age an opportunity is in the pipeline, the more time your rep has and will spend trying to move the deal along. A high volume of leads or prospects may look good for a rep, but can they devote the time needed to advance and close a large volume? Contrary, a small pipeline means your team isn’t spending the time needed in networking or lead generation. Finally always know your Win Rate, this will determine how many opportunities it takes to generate a deal, thus informing you how likely it is to convert any given opportunity.
Understand Historical Pipeline Trends
Historical Trends are one of the best ways to determine how well your pipeline is performing. It creates context to compare your current pipeline to past sales results. It helps you to understand the probabilities of delivering the forecast to your current pipeline, and identify where your team is challenged moving deals forward.
Assess Opportunity Probability
In order to have a successful pipeline, you will need to assess each opportunity and the probabilities for closing. Reviewing the probabilities for closing provide rich coaching opportunities for managers to help less experienced reps. For instance, high closing probabilities early in the sales cycle might mean doesn’t grasp the client’s buying and approval cycle, or the rep will miss key buying signs or steps in the process. Some general rules about the probability to close tied to the sales stage, number of buying approvers and size of the deal will help keep your probabilities in check.
Regularly Purge Your Pipeline
Many times old leads and prospects clutter the pipeline. And like storing old items in your basement, it becomes a pain to make the decision and take the action to clean things up. You should regularly purge (meaning closed/lost) the stale leads and prospects in your pipeline at least every six months. This will help improve the accuracy of the win/loss analysis and forecasting abilities.
These are seven of the best practices for pipeline management. Adding these ideas to your current sales plan and teaming it up with Microsoft Dynamics CRM will cause your sales team can go from good to great in a matter of months.