Sales leaders often require their sales force to fill their pipeline with several multiples of their quota. Ensuring you achieve your sales goal is a necessary goal, but this approach is a sign that the sales team isn’t working effectively. When a sales leader asks their team to create an outrageous overage of opportunities, there are big problems in the sales organization.
There are five common problems that sales pipelines reveal. Without addressing these problems, sales organizations will struggle to hit their sales targets.
The Problem of Non-opportunities
Some sales managers require their sales force to log every new opportunity in the CRM immediately after a first meeting. In most cases, the team complies with this edict, typing in the company’s name and a fictitious revenue number. Both the manager and the salesperson are happy to have created each new opportunity. Updating the CRM in this way feels promising, so why does the salesperson miss their quota, despite having a full sales pipeline?
A first meeting might create a new opportunity, but most of the time, it takes more time to determine if a prospective client belongs in your pipeline. In order to determine how many real opportunities you have, first tally up everything in your pipeline. Then, remove anything that has not had a second meeting within two weeks of the first. That is how you discover your actual coverage.
If the client disengaged after the first sales meeting, they don’t count as an opportunity. What some managers perceive as a pipeline problem is actually a problem with sales effectiveness.
I once watched a group of sales leaders report their pipelines to their senior leader. This team was reporting many deals that were more than twice the average sales cycle. I laughed out loud when one sales leader had a deal that was almost five years old, when an average sales cycle was 90 days.
An opportunity isn’t like a fine bottle of Barolo that improves over time. It’s more like the wine that comes in a cardboard box and degrades rather quickly.
Recently, one sales leader said that he had to keep the aged-out opportunities in his pipeline because the executive leaders wanted to have a better story to tell their investors. Eventually, the investors would discover the truth. My guess was that they were one quarter away from getting some bad news.
Salespeople who lack sales effectiveness are desperate to create new opportunities. With no regard for how awful or delusional a prospect is, the salesperson pursues the opportunity as if they were a desirable potential client. There are several reasons you should remove these types of opportunities from your pipeline, starting with the fact that your operations teams will not be able to help them. You and your clients can succeed only when your company is allowed to execute what is necessary. Difficult clients do not allow this.
When a client is unwilling to change the things that prevent them from benefiting from your team’s help, you will never book the revenue you need. Instead of racking up easy wins, you want hard-to-win clients that will lead to easy-to-achieve solutions. That is how to grow revenue.
Unaddressed Conversion Problems
If you look at an individual sales rep’s pipeline over time, you may discover a point in the opportunity stage of the sales conversation when they fail to convert to book a second meeting. If you pay attention to your pipeline, you can learn how and why salespeople lose deals they might have won, if they changed their approach.
Most of the time today, the salesperson has trouble getting a second meeting, often because the salesperson is using a legacy approach to sales. Because our current environment is one of accelerating, constant disruptive change (the ACDC environment), businesses and sales forces need to deal with what is an exponential rate of change, especially with technologies.
By looking for the stage where the salesperson is challenged to convert to the next conversation, you can help them break through by giving them sales training and coaching them for their meetings by preparing them to move the deals forward.
Poor Forecasts and Unweighted Pipelines
Salesforce does not intend for you to use their default percentages in your CRM. When sales leaders map their opportunity stages to their actual sales performance, you get a little closer to the truth. The better way to use the pipeline to ensure forecast accuracy is to create a weighted forecast.
When you average the wins you expect in the quarter by averaging the entire sales force’s deals, you are overestimating or underestimating your results. Your best salespeople have large deals with high average win rates. Those who do not fit this description, are not so fortunate.
A salesperson with low sales effectiveness and a large opportunity in the pipeline has a lower chance of winning that deal. By building a weighted pipeline, you forecast everyone’s deals based on their individual performance. This is a more accurate way of counting outliers, like a giant deal being handled by a salesperson who will be challenged to win it.
The Five Problems in Your Pipeline
These are five problems you can find in most sales pipelines. Those sales leaders who allow their pipeline to lack integrity often find themselves in trouble later. Pretending you have more than enough coverage to meet your sales goals and sales objectives won’t improve your results.
In all things and always, any pipeline problem will lead directly to a sales effectiveness problem. Even though it is easier to ask for more opportunities than it is to build a high-performing sales force, the time and investment you make in sales effectiveness is a better long-term approach to sales success.
- Evaluate your CRM process: Ensure that your sales force is not logging fictitious revenue numbers and that every new opportunity is genuine. Train your team to differentiate between a potential client and an actual opportunity.
- Eliminate aged-out opportunities: These deals are unlikely to close and can give a false impression of pipeline coverage.
- Remove undesirable opportunities: Remove undesirable opportunities that can lead to operational challenges and result in a lack of revenue. Seek hard-to-win clients with easy-to-execute solutions to grow your revenue.
- Address conversion problems: Analyze your pipeline to identify the stage where your sales team struggles to convert to the next meeting. Provide sales training and coaching to help them break through the challenges.
- Build a weighted pipeline: Avoid using the average sales win rate to forecast revenue. Instead, build a weighted pipeline that considers individual sales reps’ deals and their effectiveness in closing those deals.
- Focus on sales effectiveness: In all things, focus on sales effectiveness. Invest time and resources in building a high-performing sales force that can close deals effectively. Remember that any problem in your pipeline is a sales effectiveness problem and addressing it will lead to long-term sales success.