This post is an adaptation from Leading Growth: The Proven Formula for Consistently Increasing Revenue. You can preorder Leading Growth now.
As a sales leader or sales manager, you recognize the importance of pipeline management best practices. Without a set of practices, you may fail to reach your goals by not having enough opportunities, by not winning enough opportunities, or some combination of both. Let's start with the most important best practice when it comes to sales pipeline management.
Creating Enough Opportunities
One leader told his team they needed to create 800 percent of their target. A quick, back-of-the-napkin calculation suggested he expected his team to win 12.5 percent of their opportunities. It was not a coincidence that is roughly what you net out if you only reply to RFPs (requests for proposal). We can categorize this as a sales pipeline management worst practice. While it is important to hedge by acquiring more opportunities than you need, there is no reason to fill a pipeline with anything that isn’t a real opportunity.
The best way to ensure you have enough of the right opportunities is to separate your pipeline meeting from your opportunity reviews. Focus your pipeline meeting on the creation of new opportunities and which deals have moved forward. This prevents salespeople from talking about the opportunities they have already created, unless there is progress. As a result, your team becomes accountable for creating new opportunities each week. If your team needs to do more prospecting, knowing you will ask every week for an accounting of their new opportunities holds them accountable.
Sales Pipeline Management Best Practices
The following best practices will help you manage your sales pipeline.
Address Too Few Deals
It is not uncommon to see a pipeline with too few deals, even though the potential revenue is more than enough for the salesperson to reach their goal. When losing one of those deals would all but ensure they miss their goal, you can be certain their pipeline is fragile. By the time the main contact calls the rep to say, “We decided to go another direction,” it’s often too late to recover a deal they were counting on winning.
It's not only important to have enough opportunities in total. You also have to ensure each person on your team has enough opportunities to reach their individual goals. The salesperson who is relying on one big deal needs to protect themselves and your pipeline by creating new opportunities. You solve this with more prospecting.
Replace Deals That Are Too Small
Even after you coach your team on their territory and account plans, you may discover that a salesperson has a large number of unreasonably small deals. There are a number of potential causes here, including poor targeting, a willingness to treat every deal as a good deal, or a lack of confidence. Your role in this case is to discern why the pipeline has so many small deals and what you need to do about it.
Most of the time, having too many small deals stems from a lack of effectiveness. To improve the salesperson’s ability to create opportunities, they may need a development plan that results in greater confidence. The problem of having too many small deals may also result from poor targeting. As Neil Rackham suggests, this can happen when salespeople only call on receptive contacts and avoid unreceptive contacts. While this may seem sensible, receptive contacts who are not motivated to change have little value to the pipeline. Good targeting requires salespeople to identify contacts who are ready to make the changes they need to improve their results.
Remove the Wrong Deals
Here is where I embody the autocratic leader. There is no reason to allow a salesperson to spend time and energy on deals that you don't want. In one of my businesses, there is a minimum price a client must pay or we will refuse to work with them. Revenue without profit is like empty calories. It offers no nutritional value for the sales organization. You want to remove non-deals from the pipeline as soon as you discover them, ensuring the salesperson knows what you don't want. Not all deals are created equal, and it's best to pursue the ones that support your business and the client’s equally.
Because salespeople are, well, salespeople, they have little trouble trying to sell on you why this one opportunity needs to be treated differently. But no matter what case they make, if the client won't invest in the results or is a poor fit, the deals need to be removed. The salesperson may persist in asking (as is the nature of a good salesperson). The way to deal with this challenge is to exercise your managerial will.
Assess Deals All Bunched Up
Even though we acknowledge that the sales conversation and the buyer's conversation are both nonlinear, when you see deals all bunched up in one stage of your process, you have reason to be concerned about your pipeline. You can know for certain you have an effectiveness problem when you see this pattern. An opportunity review should reveal areas where the salesperson needs help. You want a conveyor belt for a pipeline, with everything consistently moving forward.
When sales are clustered in the same stage, it might also suggest your sales approach has reached its expiration date. The logjam is an indication that you have a real effectiveness problem, whether it stems from the salesperson or an approach that no longer works.
Reanimate Zombie Deals
There is an old saying that time kills deals. That isn't exactly correct. Time with no forward movement kills deals. As long as deals are progressing, all is well. A deal is a zombie if the salesperson has had to renew their driver’s license since it last moved. It looks like a deal, but it's likely already dead.
You don't have to stop the salesperson from pursuing that client, but you do have to move the deal back to target and have the salesperson start over. While you are pushing deals back to target, the best practice in sales pipeline management is not to move on to the next task. Instead, you have to discover why these deals stalled and teach your team how to keep them moving forward.