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The Definitive Guide to Sales Pipeline Management

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Pipeline management is the key to sales success. Your sales pipeline allows you to evaluate, manage and improve your sales process over time. This detailed guide will help you better understand and manage your sales pipeline and - ultimately - close more deals.

Published in: Sales
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The Definitive Guide to Sales Pipeline Management

  1. 1. The Definitive Guide to Sales Pipeline Management
  2. 2. 1 Table of Contents 10 Best Practices for Pipeline Integrity 8 Keys to a Healthy Sales Pipeline2
  3. 3. Why should you care about your sales pipeline? Pipeline management is a primary factor in sales success. Your sales pipeline is the key to evaluating, managing, and ultimately improving your sales process – so you can close more deals. Follow the steps in this detailed guide to better understand and manage your sales pipeline.
  4. 4. 10 Best Practices For Pipeline Integrity1
  5. 5. 1. Separate Pipeline Meetings from Forecast Meetings
  6. 6. The sales pipeline is all about the top of the funnel opportunities, not the opportunities that are about to close this month. Because of this, you should separate your pipeline meetings from your forecast meetings. You should use pipeline meetings to talk about the overall health of your pipeline – is it growing? Do you have enough leads for the next month?
  7. 7. 2. Formalize Your Sales Process
  8. 8. For your pipeline to function correctly, you must have clearly defined opportunity stages mapped from the customer’s point of view. Instead of defining your sales pipeline by your selling process, you should align it with the buying process. This means instead of “Qualification” and “Present Solution” your pipeline should use terms like “Acknowledge Pain” and “Decision.”
  9. 9. 3. Inspect the 3 Essential Pipeline Metrics
  10. 10. 1.  Opportunity Dollar Size vs. Average Won Deal Size How big is a specific opportunity? Is it significantly larger than the average deal your company wins? If a deal is much larger than you’ve historically closed, it has a much lower likelihood of closing.
  11. 11. 2. Opportunity Age vs. Win Cycle Much like opportunity size, an opportunity’s age tells you a lot about how likely you are to convert it into a deal. Opportunities that linger in your pipeline are less likely to convert, while newer opportunities are more likely to become deals.
  12. 12. 3. Win Rate (Probability of Winning Your Opportunity) How many opportunities does it take you to generate a deal? The inverse of this ratio (Opps : Deals) is your Win Rate, and tells you exactly how likely you are to convert any given opportunity.
  13. 13. 4. Beware the 5 Pipeline Killers
  14. 14. 1.  Age in Stage Stalled deals convert at much lower rates than quickly progressing ones. Look for opportunities in your pipeline that have stayed in the same stage for as long as your average lost deal, and flag them as at-risk.
  15. 15. 2. Non-Linear Stage Leaps The beauty of the sales pipeline is that it matches the buyer’s journey. Therefore, if an opportunity goes through the Pipeline haphazardly - without a linear progression - that opportunity is less likely to convert.
  16. 16. 3. Opportunity Size An opportunity’s size dictates a lot about how it will act and how likely your reps are to convert it. Inspect the pipeline and flag any opportunities that are more than 3x your average deal size.
  17. 17. 4. Deal Size Changes If an opportunity’s expected value changes 3 times or more, it is less likely to convert and should be flagged.
  18. 18. 5. Time Slippage Does one of your opportunities keep having its close date pushed back? If so, it is probably unlikely to close at all. Flag it now.
  19. 19. 5. Understand Historical Pipeline Trends
  20. 20. You must understand your pipeline history in order to put your current pipeline in context. Look at how your pipeline has changed over time: •  Has it grown since last quarter or last year? •  Is it growing along with your growth goals?
  21. 21. 6. Assess Your Opportunities to Achieve a Narrow Sales Funnel
  22. 22. A bigger pipeline is NOT necessarily a better pipeline. You want your pipeline to be filled with high- quality opportunities. You can create a narrow sales pipeline by more stringently qualifying opportunities at the top of your sales funnel. Don’t allow weak opportunities to waste your reps’ time.
  23. 23. 7. Regularly Purge Your Pipeline
  24. 24. Unless you prune your pipeline, it will become bogged down with unlikely-to- convert opportunities. A smaller pipeline filled with high-quality opportunities is better than one with low- probability ones. If you fail to purge your pipeline, it will skew your won/lost analysis and impair your forecasting abilities.
  25. 25. 8. Find Your Strike Zone
  26. 26. As you start purging your pipeline, how do you know which opportunities to eliminate? Look closely at your Strike Zone. Every company should know the types of opportunities most likely to convert into customers. Opportunities that are significantly older or larger than the deals you typically win are outside the Strike Zone.
  27. 27. 9. Understand Your Pipeline Flow
  28. 28. It’s not enough to just add new opportunities to your pipeline. You must add enough to replace the opportunities that have flowed out as Won and Lost deals. This is your pipeline flow. To prevent your pipeline from shrinking, you need to create more opportunities than you lost – carefully tracking your pipeline flow over time.
  29. 29. 10. Forecast by Pipeline Stages
  30. 30. If you want to use your pipeline to make accurate bookings forecasts, you need to correctly define your pipeline stages and use them to predict the likelihood of a deal closing. If an opportunity makes it to a certain stage, you know the probability that it will ultimately convert into a deal.
  31. 31. 8 Keys to a Healthy Sales Pipeline2
  32. 32. 1. Design Your Sales Process for Effective Pipeline Management
  33. 33. Your sales process should be mapped to the steps your buyers take to buy from you. According to CSO Insights, a formalized sales process leads to: •  53% increase in forecasted deals won •  63% increase in reps making quotas •  88% increase in companies hitting bookings targets
  34. 34. 2. Know Your Conversion Rates by Stage
  35. 35. Pipeline management is about tracking open opportunities as they move through your sales process. If opportunities are stalling in particular stages, you must look into the problem and address it. The only way to do this is to analyze your sales funnel by stage. Are you losing a large share of deals in the same stage?
  36. 36. 3. Measure Pipeline by Both Count and Value
  37. 37. When measuring your pipeline, you have to know not just the number of total opportunities in it, but also the value of all the opportunities. If you have $5 million in your pipeline today and a 31% overall win rate, you can feel comfortable with hitting your $1 million sales goal.
  38. 38. 4. Measure Pipeline by Individual Rep
  39. 39. Sometimes you need a more detailed understanding of your pipeline in order to manage it effectively. Don’t just look at your overall pipeline, but drill down to view it at the rep level. Does on rep have many opportunities in early stages? Is that rep on target to hit their goals? The pipeline analysis by rep can tell you.
  40. 40. 5. Compare Won and Lost Opportunities
  41. 41. Time kills all deals. Knowing this, you should regularly check open opportunities that are falling outside your normal range for won deals. Compare your won deals to your lost deals by sales cycle. Tracking age in stage for won and lost opportunities is a great way to evaluate the open opportunities in your pipeline and their likelihood of converting into deals.
  42. 42. 6. Study Your Average Sales Cycle
  43. 43. A lengthy or increasing sales cycle is often the byproduct of an unhealthy sales process. Regularly measure your sales cycle to ensure you’re closing opportunities quickly, and no single stage is holding up deals. Identify problematic stages and coach your reps to improve their skills and move opportunities through that specific stage.
  44. 44. 6. Look at Average Sales Cycle by Rep
  45. 45. You shouldn’t only look at your average sales cycle in aggregate – you should also analyze it by employee. This gives you a much more detailed view into why your sales cycle is changing and what you can do to correct the problem. Is one rep closing deals faster than others? Learn what this rep is doing and use that information to coach the rest of your team.
  46. 46. 7. Monitor Opportunity Changes
  47. 47. Maintaining a healthy pipeline means having an accurate and up-to-the-minute picture. To achieve this, you must closely monitor changes to open opportunities, especially for deals past Stage 2. If an opportunity has changed its expected value or close date multiple times, it may be less likely to convert. Check in with reps regularly to see how opportunities are changing.
  48. 48. 8. Make Your Bookings Forecast Metrics-Driven
  49. 49. You can’t base your forecast on guesses about when opportunities will close. Instead, multiply the value of opportunities in each stage by the historical conversion rate from that stage to Closed-Won. No forecasting model is perfect, but we found this provides a reliable figure and a simple way to understand your sales process.
  50. 50. Want more sales pipeline guidance? This SlideShare only scratched the surface. Check out the full guide here.

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