A sales pipeline is a tool that tracks prospects as they progress through the stages of your sales process. It should contain information such as:
- Company name
- Sales owner
- Expected sales volume
- Approximate closing date
- Win probability
- Reason(s) for losses
A believable sales pipeline is critical for the success of any company relying on a sales team to drive revenue growth. Having accurate information in one place will give your organization a clear picture of potential deals, timeline and likelihood, and enable better business planning as well as gain the confidence of management. However, a useful pipeline will not work without the support and buy-in from the entire sales team.
What steps should you take as a small-business owner to create a reliable sales pipeline that will improve your organization and drive growth?
1. Know Where to Start
Before you establish an accurate and predictive sales pipeline, you first need a well-defined sales process. A good sales process is the key to managing your sales team and building your pipeline. Evaluate the stages of your sales process to ensure that it runs smoothly.
If you are unsure if you need to alter your existing process, use your pipeline to learn more about the number and size of deals being tracked for a given period. One approach you can use is to multiply the value of each deal by percentage chance that it will close for a weighted value. Next, add the weighted values together to see if you are close to reaching your revenue goal for a given period.
If your deals are not adding up to your forecasted revenue, this may be a red flag that your sales process needs improvement or that you need more deals in the pipeline. Look at the metrics to determine where there may be weaknesses.
2. Include the Right People
It is important to have the appropriate people involved when establishing your sales pipeline. Those directly responsible for new business, upsells, renewals and their managers should be included. It’s also good to have customer facing people, such as inside sales and service individuals that are outside of the sales team. They may have relationships with customers that offer a different perspective on how to build a pipeline and close deals.
You’ll also want someone detail-oriented – such as an accountant or analyst – to keep track of all the data within the pipeline. Make sure to designate a person to own the data and watch out for duplicate prospects or errors.
Involving the right people, both inside and outside of your sales organization, creates a more supportive sales culture and helps unify your workforce towards a common goal.
3. Create a Supportive Culture
Aggressive goals paired with fair expectations should go hand-in-hand with your sales pipeline. With realistic goals, your sales team will want to participate in the pipeline process and won’t shy away because they feel picked apart or scrutinized. Try to position the process in a way that people feel empowered by putting information into the pipeline.
The supportive culture behind the pipeline should also encourage your sales team to celebrate the victories and keep the larger team informed of deals won. Sometimes sales teams get so wrapped up in the associated work that they forget to communicate the deals they’ve closed. I knew a local ad agency exec that hung a big bell in the main area of their office and every time they sold new business, the responsible sales team member would ring the bell, alerting the whole team of their win.
Recognizing your sales team and everyone involved in closing the deal is a big step towards a supportive culture.
4. Organize and Measure
The pipeline is meant to be a tool used to gather information and provide insight on how to move prospects through the sales journey. Engaged and quality team members will only record real deals in the pipeline. Make sure entering and tracking data in the pipeline is simple and manageable.
Watch out for errors that may influence your projected outcome, like duplicate entries. Each separate revenue opportunity with a unique decision-making process should occupy a separate entry. Look to make sure the same deal isn’t listed with two different names, through two separate channels, or counted multiple times. For example, if you are talking to five different people at Walmart, two about one deal and three about another, you should have two opportunities in the pipeline.
Also look out for too many close dates at the end of a given financial period. Sometimes salespeople will input the last day of a quarter, for example, without thinking that a more accurate l close date is important. It is unrealistic for your organization to be able to support the closing of all of these deals on the same day. By having your sales team enter more thoughtful close dates, it helps you set realistic projections and goals. Encourage your sales team not to fudge information and to take the time to accurately set a predicted close date.
Track and measure metrics consistently and establish measurements for wins vs. losses. This will help determine your expected sales and the benchmarks set moving forward. Also look at how long deals remain in the pipeline and how long deals spend at each sales stage. If deals are getting caught in certain stages, there may be a problem with that part of the process that will need to be addressed.
It is also important to look for trends among your sales team. You should be able to tell If someone is struggling at a specific stage or with a certain type of deal and provide them with the guidance to improve.
Monitoring the pipeline metrics and trends will show you where your process is both strong and weak. It will help you determine where your team excels and where they may need improvement. Note that it may take a few iterations to get the “right” process documented, but have patience and persistence, as the result will be a great communication enabling tool for the sales team to display their efforts.
5. Take Advantage of the Losses
When you lose a deal, make sure you track the reason for the loss and any other important information. This will help your team learn from mistakes, so you can better improve your process. Some questions to keep in mind when reviewing that data include:
- Are all the deals you’ve lost big or small?
- Have the deals all been owned by one internal team member?
- Have you lost all your deals to one competitor?
- Are you losing all deals in one vertical?
Losing a deal is never a good feeling, but don’t write it off too soon. Keep all your lost deals together, creating a pool of information for a potential opportunity in the future. Most people don’t realize it, but all of that time invested in learning about a particular company could pay off in the long run. During that time in the sales process you may have developed a stronger relationship with the company compared to your competitors, that’s an asset you can capitalize on if their situation changes and they are a prospect again.
Looking for additional resource to help grow your business?
Check out our resource section and blog, or contact Evolution Capital Partners at (216) 593-0402