How well is your company managing its sales pipeline, and does it really matter? According to new research from Vantage Point Performance and the Sales Management Association, 44 percent of executives surveyed reported that their organizations were ineffective at managing their companies’ sales pipeline. (The execs were from 62 business-to-business (B-to-B) companies, 39 percent with revenue greater than $1 billion and 37 percent with revenue greater than $250 million.)
This gap in effectiveness may matter more than you think because the research also found that companies reporting effective pipeline management saw revenue grow 15 percent faster than their ineffective peers. What’s even more interesting is that companies that mastered three specific pipeline management practices experienced 28 percent higher revenue growth.
Below we’ve outlined what our research pinpointed as those three pipeline management best practices for all-star performers:
1. Clearly define the sales process.
At its most basic level, the sales pipeline represents your company’s sales process and how your company tracks progress through each stage of the process.
Pipeline management includes everything from the way the sales pipeline is designed to how it is measured and how it is used to drive sales-rep performance. Without a clearly defined sales process, the pipeline has no foundation. We found that sales forces were most effective at managing their pipelines if they invested time in defining a credible, formalized sales process. In fact, there was an 18 percent difference in revenue growth between companies that defined a formal sales process and those that didn’t.
This begs the question – what specifically does a “formal sales process” mean? For starters, it means having clearly defined stages and milestones universally understood by your salespeople. If your sales team has to guess where a particular deal belongs or how to manage deals in each stage, you likely don’t have a formal sales process. In addition, your sales process should align with how your customers move through their buying process. Don’t fall into the trap of using generic sales processes that may not reflect your customers’ actual buying process. Instead, invest time in developing a unique process that reflects the reality of your sellers, and make sure your sales force understands how to use it.
2. Spend three hours a month on pipeline management.
In addition to a solid sales process, our research revealed that companies must also allocate enough time and resources to make pipeline management effective. Companies that spent at least three hours per month managing each rep’s sales pipeline realized 11 percent greater revenue growth than those spending less than three hours per month. However, success doesn’t depend on just the amount of time spent on pipeline management – but on how the time is spent.
While many sales forces believe they spend a lot of time managing their pipelines, they often, in reality, spend their time creating forecasts, not managing the pipeline. If your pipeline discussions revolve around close dates, probabilities and deal sizes, then you are just forecasting. Period. However, if you spend your time discussing the overall health of your sellers’ pipelines, as well as helping them shepherd more deals to a successful close, you are managing your pipeline productively. The primary focus of a pipeline meeting should be to help reps develop a game plan to move deals forward, not just scrub customer-relationship management (CRM) data and forecasting revenue.
3. Provide pipeline management training.
Our research revealed that 61 percent of executives surveyed admitted their sales managers had not been adequately trained in pipeline-management strategies and techniques. This begged the question – how can we expect our sales managers to do something well when we haven’t prepared them to do it? The payoff for training on pipeline management is tangible. Companies that adequately trained their sales managers saw their revenue grow 9 percent faster than those that didn’t. But not just any training will do. Targeted training to address specific pipeline management challenges, not just generic training on leadership or coaching, is key.
Most pipeline-management training revolves around technical training on using a CRM system, but what managers really need is training on making better pipeline management decisions – for instance how to determine the ideal pipeline size for each rep. Managers need to know at what point in the sales process their actions have the biggest impact. They also need to know how to structure pipeline meetings so they enable coaching rather than inspection. These few skills alone can have a significant impact on sales force performance.
The good news: There are no hidden secrets to effective pipeline management. It all comes down to defining your sales process, allocating the time and resources to pipeline management and then instituting pipeline-management training. Integrate these three best practices in your sales force, and the revenue will follow.
Robert Kelly, who founded the Sales Management Association in 2008, contributed to this article. Kelly was previously vice president of sales operations and strategy at Genuine Parts Company, where he provided leadership to sales management and developed sales effectiveness programs at GPC’s S.P.
Related: 10 Ways to Better Manage Sales Leads