“Our pipeline is not where it needs to be”, the SVP of Sales said to me, “We need 30% more than what we have now”. “Our immediate focus is on growing the pipeline … How do we do that?”
I hear this type of refrain a lot in my work. It’s also an area that many CEOs are asked about on conference calls – how their sales pipeline is looking, which can be used to predict future revenue performance. The sales pipeline gets a lot of attention from C-suite executives to sales management to sellers. I wrote about pipeline dynamics last year and ‘Pipelies’ before that. Net net, the sales pipeline is the barometer of the ‘future’ for a lot of companies and its current market valuation is derived from future expectations.
In the most prosaic way possible, the pipeline is basically a pipe with lines – the pipe is the sales process and lines are stages. The sales pipeline represents opportunities that are arranged along each of the sales stages or steps that comprise the sales process. The de facto standard today is that your sales process should align to your customer’s buying process, assuming they have some sort of process, which is likely to depend on what they are purchasing.
So if we get back to the question in the title of this post, there is a bit of work to really understand what’s going on with a sales pipeline. First off, are you even assessing the complete picture?
I’ve had numerous clients tell me that their pipeline is missing 20 to 30% of their opportunities given the poor adoption of their CRM and/or because of a culture that frustrates sellers when they put deals into the pipeline early in a sales cycle – early stage deals become the “Hail Mary’s”1 of the quarter (“Can you pull it in?” or “When it’s going to close?”) and, for the sales professional, they are now on the ‘high board’ to potentially close the deal (e.g., visibility = risk).
Diagnosing Your Pipeline
If we assume that you are viewing a complete picture of the pipeline (or close enough), how do you know where to focus your efforts. Some areas I’ve reviewed in the past include:
- Pipeline Value
- The pipeline is just not large enough – look at both number of opportunities and average deal size – what are the trends?
- Sales Cycle Velocity
- Where type of deals are getting stuck? What stage?
- How does velocity differ by solution, channel, team and deal size?
- Victory / Wins
- What is your win ratio and how is it trending? How does it differ across the relevant dimensions of the business?
- I would note that you can draw an inference around quality of the pipe from both the win ratio and velocity (e.g., low win ratios and poor velocity often = wrong targets / prospects).
- Pipeline Balance
- What is the shape of the pipeline? Where are the peaks and troughs - early, middle or late in the pipe?
- Pipeline Dynamics or Flow
- What type of opportunities are getting pushed or getting ‘pulled-in’ to the quarter?
- What opportunities are getting written-up or down (i.e., increase/decrease in value)?
Per the questions and areas above, with some analysis of the pipeline you can begin to crystallize the diagnosis and prescription(s).
Not Enough in the Pipe
For many sales leaders, including the one in the first paragraph, the issue is usually one of overall pipeline size. On a pure numbers basis, there are just not enough opportunities in the pipeline given average win ratios2. In this case, there are usually two main avenues to investigate.
- Existing Accounts
- What is the whitespace opportunity available in your current customers based on your addressable spend?
- How can you ensure the relationship is healthy and then attack the whitespace and uncover more opportunities?
- Net New Accounts / Logos
- What is your ideal customer profile and how should you effectively ‘cover’ your highest potential markets/targets/prospects? Per our Guide to Sales Resource Optimization, you can’t afford to make the wrong ‘bets’ with your selling resources if you want to have the best chance at meeting your revenue goals.
For the two areas above, both territory and account planning are essential in outlining your whitespace and in optimally covering your best prospects/targets.
Lastly, an integrated marketing approach is another tool in the arsenal to help drive pipeline and new conversations. The vehicles might include business or sales development reps (more outbound), content marketing assets (drive more inbound) and social or search marketing.
Ultimately, based on your ideal customer profile and your prospect/customer base, you want to determine what your prospects/customers do along their buyer’s journey – what do they read, who do they talk to, how do they make decisions?
Also, as part of joint planning with your current customers – assuming you are doing that as part of your account planning efforts – you can help to generate net new opportunities by providing relevant and compelling insights and helping your customers to discover new needs or opportunities.
In closing, growing and converting your sales pipeline is one of the most important activities of the sales organization and it’s well worth the time spent to diagnose the issues and define targeted actions.
As Sherlock Holmes said: “There is nothing more deceptive than an obvious fact.” Don’t assume you know what is really driving your pipeline issue. Explore and analyze it.
1 In American Football, a Hail Mary is typically a very long, often unsuccessful pass made in a desperate attempt to score late in the game.
2 Sales leaders often want a certain pipeline ‘multiple’ of their quota or goal – for example, 3 or 4x quota assuming a 33% or 25% win ratio. It also depends on sales cycle velocity as an average deal that takes 90 days to close is not going to close in the last month of the quarter if it’s in the early stages.