5 Step Detox Plan for your Sales Pipeline
It’s the beginning of a New Year and everywhere you look there are signs for cleanses, detoxes and fasts to jump-start 2015. Starting with a clean slate doesn’t just apply to personal health and is often overlooked in sales organizations.
Unfortunately, many pipeline reports are a little unhealthy right now, as deals that didn’t close last month ended up being pushed into the new quarter. Now you’re struggling to tell the difference between the opportunities that have a realistic chance of success and the ones that are well past their sell-by date.
How do sales managers know how much quality pipeline they really have?
Knowing how much quality pipeline you’re carrying into a quarter provides immediate focus. If you are short on what you need, you’ll have to take action immediately to realize any benefit in Q1. If your sales cycle is any longer than 30 days, you’ll soon risk creating a problem in Q2. Half your year’s quota could be dependent on the actions you take in the next few weeks.
Step 1 – Know How Much Pipeline You Actually Need
The first thing you need to know is the amount of pipeline you actually need this year. This is easy to figure out, but you will need to agree clear revenue goals with your VP or CEO. You can then calculate how much pipeline you need now, and how much you need to build throughout the year.
Here’s an example of how we work it out. You need to know your sales cycle (the average time it takes to close a deal) and your win rate (the percentage of deals you win).
Assuming you have a win rate of 25% and a sales cycle of 60 days, you will end up with something like the projection above. The New Pipeline to Generate is calculated from the Revenue Projection (two months ahead). The Start of Month Pipeline Required is then calculated as the sum of pipeline created in the previous two months.
Now you know how much quality pipeline you need. The next two steps explain how to figure out how much you really have.
Step 2 – Clean Out The Dead Deals
Quality pipeline is made up of well qualified opportunities that are recorded at the correct stage in your CRM. You can quickly identify the deals that are truly dead by finding the ones that have had no recent activity or engagement with the decision maker.
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Often you will find them with large dollar amounts and a note to follow back up in the next few months. These need to be taken out immediately. Your nurture strategy can range from Marketing nurture, to Sales Development nurture to Sales Rep nurture.
The most important thing is that these deals are not tracked as opportunities or included in your pipeline calculation.
Step 3 – Re-qualify Deals That Slipped
Even when a prospect is well qualified, external factors can influence the buyer no matter what “end-of-quarter” deals you had to offer. Oftentimes internal politics, budgeting cycles and the timing of compelling events primarily determine when a deal closes.
It is important not to drop the ball with these deals in the New Year. Have your reps reach out as early as possible. Look for an update on each slipped deal, with a careful assessment of where each one is in the buying cycle. The only way to establish this is to have a conversation with the prospect.
Remember, slipped deals are your best bet at gaining momentum in January, so handle them with care. Once your team has had a chance to re-evaluate where you stand with each of these opportunities, your pipeline will start to feel a lot healthier.
Step 4 – Stock Up On Fresh Leads
By now, you should have a good understanding of the gap between the quality pipeline you have and the quality pipeline you need. This enables you to have a conversation with your Sales Development and Marketing teams to make them aware of what you need and when you need it.
Significant pipeline deficits in the current quarter can only be balanced with extraordinary action. Your Sales Development and Marketing teams may have additional resources to allocate, but oftentimes it will come down to you to snatch victory from the jaws of defeat.
Assigning strategic accounts to each of your sales reps can bolster the activities of your Sales Development team. Account Planning to maximize revenue from existing customers is another example of how top performing sales VPs close the gap. We’ll cover both of these in future blog posts.
Step 5 – Keep Up The Good Work
Following these steps will get you off to a great start. Making a habit out of scrubbing your pipeline throughout the year will allow you to know where you stand at the start of each month or quarter and be more confident about the number you call towards the end of the year. It is now accepted that accurate forecasts correlate with higher win rates and broader quota attainment.
Next Post: Empowering your sales reps to regularly check their own coverage will lighten your load and enable them to take proactive action, rather than wait for the next pipeline review. Next week, we’ll look at a number of ways you can use objective data to them take control of their own destiny and ensure you all meet your goals in 2015.