5 Reasons Why Leaders Focus on Pipeline Management

A new division head told me a story the other day that the company leaders had been focusing on the immediate promise of closed business (forecast) for that month's expected wins.  When discussing future months, the leadership team based their idea of the market and future sales potential by enabling the sales team to discuss individual sales ‘stories’ from the front line sales managers – i.e., this person bought their products for “xyz” reason, so others are sure to follow – and accepted this analysis as a basis for estimating future growth.

Since leaderships' focus was the short-term sales wins, it was sketchy at best knowing exactly what the sales process entailed, what the metrics were to succeed, how accurate was the forecast, and what the next ½ year would bring (much less the following year) beyond trusting the individual sales stories.  As the market required the industry to change from a transaction-based sales approach to a solution sales approach, the length of the sales cycle grew, as well, forcing a good portion of ‘find now, close now’ deals to be ‘start now, close next ½ year’ deals.  Unfortunately, there were not trusted metrics or an emphasis on accurate pipeline reporting available to accurately forecast this transition.

I brought this discussion to Jim Olson, long-time sales and sales operations leader in the telecommunications, technology and software industries, and we spent the morning discussing his experiences on the five reasons why organizations should focus on the pipeline, not the forecast, as their first order of business.

1.      Forecasting is a result of Pipeline Management, not the other way around.  Accurate Pipeline management can help drive both short term and long term forecasting while developing an understanding of the length of the sales cycle. Driving forecasting – the promise in dollars and deals of what will be closed within this quarter (or other company-defined ‘short’ time-period) –eliminates sales representatives from focusing on or sometimes even revealing their opportunity pipeline (i.e., a sales rep knows they won’t get questioned on items the manager can’t see or doesn’t know about and chooses to just show what they are almost certain will close as a win in the short term).  Forecasting with an established sales process has been provide to produce predictable results long-term and helps leaders understand the business.  If an organization is only focusing on the commitment to close quarterly pipeline, it encourages the sales reps to not report the future potential closes.

2.      Pipeline Tracking encourages open communication between Sales Rep and Sales Manager. By going through the pipeline and what opportunities are in what stages, what came in new, and what left the opportunity process, a manager will have a much better idea on the activities of the sales rep, provide guidance on territory management, ensure the right activities are being done for both closing deals this quarter and ensuring future quarter deals are being worked, and report his metrics back to senior management with much more confidence and accuracy. In other words, proper Pipeline Management allows you to know your true Opportunity base.

3.      Analytics are available to understand if you know your opportunity base.  If you are tracking your entire pipeline, with a defined and commonly used definition of the steps in the sale (i.e., sales stage process), you can easily calculate metrics like sales cycle length, close ratio, etc.  From this information, you can not only understand what will be closing this quarter, but see what has potential for closing in future quarters. From there, you can then make business decisions on what is needed for the business (is the funnel big enough to support future expected growth?, are we driving enough leads today for future sales?, etc.).

4.      You can build a more accurate Forecast. Knowing the pipeline and applying the historical metrics in #3, you can easily calculate the forecast through data, comparing that with the ‘commitments’ or ‘promised business’ that the sales reps are providing.  Once you establish accuracy in your forecasts, you can then provide a framework to senior leadership on future quarter potential, including being more accurate in future quarter forecasts (i.e., create a data calculation to look at current funnel and apply the metrics – the ‘weighted’ or ‘factored’ calculation being an example of companies across industries with b2b multi-month sales processes).   With the same defined sales stage and opportunity reporting base, your short-term Forecast becomes your upside and/or committed opportunity.

5.      Increase Customer Benefit by prioritizing activities by forecast and sales stage. With an accurate pipeline, sales reps can understand where potential customers are in the sales cycle, timing discussions around discovery, customer requirements, benefits to the customer of a potential solution, etc., based on customer buying signals and where they are in the process. For example, a customer needs the software company that understands what you do and how you do it – and the sales rep knows at what point in the pipeline process to gather this information.

In addition to the above reasons, here are two more items to consider from a Chief Customer Officer view:

6.      Lead Generation and Funnel Development requirements are defined. Building leads from either the marketing or sales perspective (research shows that the most efficient b2b businesses obtain 30% of leads from marketing campaigns and initiatives) are clearly understood if you can calculate both ways – from lead to close and from expected sales back to leads. Tracking the quantity and quality of leads is imperative to understand how many leads are needed to drive the Funnel increase that is needed to get the Opportunity base you need to deliver the sales results expected.

7.      Provides direction for Marketing and Relationship Management Automation.  To help the sales people keep ‘selling’ – i.e., actively work the pipeline deals and prospect – automation processes and systems are being implemented to assist with ‘keeping the contact warm’ until they become an active lead or ‘keeping in touch’ with the existing customers to help with Customer Success and upsell opportunities.  Having a clear sales process with a well-defined Pipeline Management process ultimately helps the corporation trace back and define the requirements for marketing and relationship management automation.

Ultimately, senior executives want to know that sales is providing accurate current and future information surrounding sales and expected revenue.  By starting with the Pipeline that is reported from a defined sales stage process, the sales leader can confidently provide executive management what they need to know on a consistent basis and ultimately develop a trusted reputation that helps when corporate initiatives to help sales are requested.

Sales Leaders’ 4-pronged approach to building a sales team

I was presenting this information to middle school aged children during a Future Business Leaders event. During the dramatic pause I built in after the statement “Step one, hire good people” a wonderful young man named Travis looked me in the eye and astutely said…..”No, Duh!”  Well, Travis, sometimes you still need to state the obvious.

1. Hire and mentor good people. People can succeed in sales in a variety of ways with a variety of talents.  Each sales leader for a b2b organization needs to define what they need – and not in terms of product experience, but rather the ‘type’ of person that can succeed with the organization’s sales needs.  For most of my career, I’ve found that b2b sales reps who are most successful have the following attributes: a) They like people. b) They have an internal drive to push forward (NOTE: I used to say they must love the kill – in other words, they enjoy immensely winning the deal – however, I have known sales reps who have an internal drive to push forward for the sake of activity and work – not necessarily from the high from the contract signing itself – who still exceed 100% every year because they’ve learned how and when to close throughout the whole process.) c) They understand that having a way to keep track of “stuff” is critically important to their job, and d) They understand how to think in terms of the person they are talking with – not necessarily ‘empathy’ or ‘emotional intelligence’ (although these help), but simply having a knack for knowing what the person is thinking or is about to say before they say it – i.e., like in an argument when you can expertly argue both sides.
2. Foster customer first culture with outside in thinking. Consultative selling, solution selling, outside in thinking, talking about the benefits – these ideas start with the basis that the sales person first has to understand the potential customer’s environment, then find the issues they are trying to solve – both for the organization and the individual person’s ‘wins’. Part of the sales leader’s job is to ensure that each conversation they have with a sales rep ensures that the rep is thinking about ‘them’ and not ‘us’ or ‘we’ – this concept is the key to the strategy needed to win the deal.  A good way to understand if the sales rep is there is to ask “Can the sales rep have a conversation with themselves – speaking both for them and the prospect?”
3. Establish expectations of how to work. The distinctive sales leader expects two fundamental elements from the sales reps – 1. Sales, 2. Reporting of future sales.   In order to obtain that, the best leaders ensure the organization has expectations on how to work (and hopefully advocates for the infrastructure to make that work as efficient as possible – see next bullet).  Some common questions to ask each sales rep - who do you need to talk to, how are you finding opportunities to work, how are you building and managing the funnel, what are your strategies for closing each deal, how are you closing something with every contact, where are you against this year’s goal, what does your future year funnel look like.  Take time to write down how you are going to help the sales rep answer each of those questions – and deliver to the team the expectations to have these questions answered at any time. The steps along the path to the final sale is how to build the pipeline and ultimately be successful.
4. Implement operations that are effective.  I’ve seen the most successful sales leader take personal responsibility to have Corporate see sales as a positive extension of the business, not just closing deals, but ensuring a positive environment for all the other departments to do their job (customer support, development, installations, etc.).  Working together with corporate to ensure sales operations are implemented in such a way to a) maximize the sales reps time and b) provide corporate with field sales status is critical to the success of the sales team. Read this article for the four ideas that sales leaders follow when focusing on sales operations.

Of course, there are many other areas to consider, as both this Forbes article and Dave Kerpen's "10 mistakes" article points out, including aligning compensation with business targets, positive motivation, building a winning sales culture, etc.

Although there is no one right way to build a winning sales organization, working through these four areas to make each successful will significantly improve sales communications and focus, increasing the chances of sales success.

Sales Leaders: Who's taking the responsibility to implement sales operations for your team?

The best sales leaders combine personal responsibility with organizational infrastructure to advocate for their team.  Part of this advocacy ensures that the Corporation supports the team with tools and infrastructure to make the sales reps job as efficient as possible.  The responsibility of the sales leader also includes leading the implementation of the operational processes with the sales team to take advantage of the organizational infrastructure.  The best sales leaders take this need as their personal responsibility, and ensure the following operational items are working at peak capacity by either collaborating with the sales support organizations or leading the charge themselves.

• Territory management – how does a sales rep manage their territory?  Are the tools being used implemented in such a way to make it easy for the sales rep to do both: 1. manage their territory at the task level on a daily basis, and 2. view the territory overall to ensure the week to week and month to month strategies are still the best way to move forward?   Build a territory management culture that benefits both the sales rep and management – working together to find and win business.  Surrounding the tools, what are the expectations of territory management? Process?  For example, is there a regular planning call (more than a status review – ensuring the territory plan is enabling the sales rep to maximize their time and ability to find and close deals)? Ensure the process is in place and working.
• Escalation procedures – a sales rep needs help. How do they get it? It’s a simple question and surprising how many organizations don’t have these answers written down. As a sales leader, take an hour and write down the following: 1. What would a sales rep need help with? (there could be dozens of questions here – come up with at least 6 to get started) and 2. What is the first step in getting that help? (including the particulars of what the sales rep does/says to get the help).   Here’s a thought regarding this topic: when should a sales rep proactively call their manager?  When should they talk to ABC corporate department (sales ops, training, tech support, marketing, etc.)?  Establishing clear escalation procedures will save everyone time – and ultimately give the rep a greater chance to succeed.
• Funnel tracking & follow-up automation – although all of the areas in this article go hand in hand with establishing expectations on how to work, this area of tracking the funnel, establishing priorities, ensuring timely follow-up, etc., has the most direct connection to how corporate can help implement an infrastructure of sales support.   Does your company have a CRM (Customer Relationship Management) system and a Marketing Automation tool?  These products are specifically designed (or should be) to help the sales rep keep track of and in touch with as many prospects and customers as possible.  The sales leader needs to advocate on behalf of the sales organization to ensure this is true, and request fixes when it is not.  No automated tools? Create something – anything – to ensure tracking and follow-up are being handled.
• Metrics and reporting – Even in the best organizations that fully support their sales teams, the bottom line is that executive management need to know what’s going on. The average b2b sales organization has some type of reporting to management – the sales leader needs to take the "typical" to the next level – what specific metrics can be tracked and integrated into the sales culture – to ensure the most successful ‘deals closing’ outcomes?  (after all, are successful metrics that don’t contribute to sales closes really worth a sales team's time to track?) Establish those metrics and report back out to the sales teams, management, and key departmental managers (marketing, sales enablement, product owners).  Then take that data, combine it with the opportunity funnel and win/loss data, and ensure an executive level dashboard is used on a regular basis (monthly seems to be the common time period).  Again, report it not just to executive management, but to the sales team itself and key corporate partners.

Great sales leaders have many attributes and key reasons for their success (see the Harvard Business Review article here as an example of a good list).  Ensuring that the teams have what they need to do their job is a detailed operational need that sometimes gets overlooked.