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The End of Feast or Famine: Managing the Funnel and Pipeline for Consistent Performance

BillWallaceToday's post is by Bill Wallace, vice president of Revenue Storm, a global sales consulting and revenue acceleration firm.

 

 

I’ve been a sales executive or consultant for a long time, and I’ve heard every excuse in the book about why forecasts are inconsistent, opportunities slip into the next period, win rates are unacceptably low, and a high percentage of salespeople fail to meet quota. The main reason why these failures occur is that most sales leaders don’t have a solid process of funnel and pipeline management and aren’t capable of holding the necessary coaching discussions with the team.

There are two distinct components at play here: one is the funnel, where we CREATE new opportunities, and the second is the pipeline, where we CAPTURE qualified opportunities. Think of it as “today and tomorrow.” Opportunities you’re going to close this sales period, or today, are the pipeline. Opportunities you are working to close tomorrow are the funnel.

Good sales leaders manage both aspects. Not managing both typically results in having either great potential business but nothing for now or having terrific business now with nothing for the future. It becomes a cycle of feast or famine, but the intent is to create smooth, consistent results without peaks and valleys.

To minimize this feast-or-famine cycle, it is imperative that sales leaders ask themselves three questions:

  1. Are we going after the RIGHT business? Chasing unqualified business wastes time, creates false expectations, and lowers the win rate. All too often, we chase requests for proposals (RFPs) or join a competitive battle, only to find that we were never really being seriously considered in the first place. If you haven’t influenced the RFP or helped to write portions of it, one of your competitors more than likely has, and you are already too late.

  2. Is the funnel RICH enough? Do you have enough in the funnel to consistently achieve quota? Many sales leaders use a quick measurement of 3 or 4 x quota to ensure that there is enough new business opportunity to achieve consistency. If there isn’t, your coaching must be on demand creation. Coaching discussions should focus on how team members are going to create new opportunities to fill the gap – where they are going to find the opportunities, with whom they are going to connect, and what messages they are going to discuss.

  3. Are the opportunities in the pipeline REAL? This is where heartache, drama, and quite a bit of antacid come into play for sales leaders. Have you ever had a “sure-win” deal vaporize after one of your salespeople insisted it was going to close? Do you automatically apply a discount factor to your team’s forecast, or find yourself recalculating the forecast and accounting for margins of error? An opportunity should NOT be included in the forecast unless it has an 80 percent probability of closing. What are the very clear means of testing needed to determine if the opportunity is going to close? Create a standard and stick with it. No exceptions.

The next step is to establish metrics that are measured at least once a month. What is your expectation for the number and amount of new opportunities to be created and entered into the funnel? What key questions are you going to ask to evaluate an opportunity and ensure that your salespeople are as conservative as you are? What standards are you going to use to validate that an opportunity should be forecasted? Create the discipline, and watch how the results manifest themselves in a positive way.

Spend the first part of your coaching discussions on the opportunities that are forecasted, and come to an agreement about which are real and which are suspect. Move suspect opportunities out or back into the funnel.

Next, evaluate the quality of the opportunities within the funnel. Remember, when in doubt, throw them out.

The last portion of the conversation should focus on the amount of new opportunities that are being created and added to the funnel. This is usually a weakness for salespeople and should always be part of your conversation. Ask your salespeople to note action items for improving the funnel and pipeline, and always end the discussion on an encouraging note.

Lastly, you have to create a culture of honesty. Never chastise or condemn a person for showing you the reality in his or her funnel or pipeline. It is what it is. Now that you understand where the challenges are, you can work with the salesperson to improve it.

If you invest the time to ask the critical questions, inspect the math, and conduct coaching around RIGHT, RICH, and REAL, you will see drastic improvement in your forecast accuracy and win rates and a greater number of salespeople achieving plan.

Hear more about Sales & Marketing Convergence from Bill and Revenue Storm at the Sales 2.0 Conference in Las Vegas on September 18, 2014. 

Comments

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SandraCrowe9

I agree with your points of view Bill, your post will help business people on how they are doing in their business and also if they are good at it your post is a great guide towards success

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