The term pipeline management is commonly cited by sales leaders as an area of concern. However, like “trusted advisor” – another frequently used term – pipeline management doesn’t seem to have a common definition. Sales leaders often say: “We need our people to focus on pipeline management” with little detail about what that really means. So, let’s give it some structure.
First, pipeline management is not something a salesperson does on command. Similar to health, a person trying to become healthier wouldn’t say: “Monday’s are my healthy day,” as this would not yield long-term lifestyle results. Pipeline management is the same. Sales leaders should never have to ask their salespeople to focus on it because it should be part of their everyday routine to be successful.
Pipeline management is a continuous process of decisions that influences how a salesperson works and sells each day. There are three components to successfully and effectively managing a pipeline: Evaluating, working, and filling.
Evaluating a pipeline is the foundational action for effectively managing it. The evaluation has historically been boiled down to a salesperson adding up the total pipeline value to see if they had 2.5X or 3X their total annual goal in the funnel. While common, this approach lacks the detail required to truly make good decisions. It suggests that if a seller shoves enough opportunities in one end of the funnel, there should be enough coming out the other end to achieve their goal. This is a pure quantity play, which is only one element of a comprehensive pipeline evaluation.
Factors such as deal quality and velocity are critical in today’s market, but other key evaluative factors – such as deal size and product/service mix – should also inform a salesperson about their pipeline health. However, the evaluation is not about the pipeline itself. It’s about the decisions a salesperson is making each day which are driving pipeline health. Either way, they provide the insight a salesperson needs to make adjustments to how they think, work, and sell.
It’s not enough to simply evaluate the pipeline; a salesperson needs to be able to act on the insights—or work the pipeline. This has a couple dimensions to it. The first is related to how a seller makes decisions about which existing opportunities to focus on. Some critical decision points include:
- Which opportunity has the greatest potential for a “Return on Time”?
- How does the seller leverage resources (technology and people) to advance the opportunity?
- What percentage of time should a seller direct toward customer interaction versus strategic thinking on key opportunities?
The second dimension of working a pipeline is continuously creating and updating a pipeline plan. This plan is then adjusted based upon results from the seller’s evaluation of their pipeline. Salespeople get used to receiving their goals from leadership and jumping right into working their opportunities. This is a huge miss. Those annual goals need to be more than just financial measures. They also need to translate into quarterly objectives which should become part of an ongoing decision-making process. This is how a salesperson ensures they are working on their business and not just in their business.
When a salesperson has a plan and is effectively working on their business, it directs them to the third action: Filling the pipeline. This comes down to defining how much prospecting and business development is needed to achieve the goals. The answer is based on the goals, the plan, and the evaluation of the pipeline.
While filling a pipeline is a continuous process, it’s important to figure out how much time to dedicate to it through clear planning. For example, salespeople need to be clear on where to find new opportunities. They may ask themselves: “Should I search for a new opportunity in an existing account or seek out a new logo?” The answer depends on the plan and the priority order of their accounts. In my experience, salespeople who play fantasy football spend more time ranking their players for a draft than they do ranking their accounts for business potential.
Finally, filling the pipeline is about ratios: the ratio between the number of contacts needed to achieve a meeting and the ratio from first meeting to an actual sale. These ratios should inform how much the pipeline needs to be filled to achieve the overall goals. By the way, remember deal size and velocity from the evaluating action? Those play a role in the amount of filling required. So this entire process is integrated and comes full circle.
Pipeline management is important for sales success today. It’s a cornerstone of the job and should be an everyday occurrence. It doesn’t have to be a challenge, just focus on a few key actions.