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My pipeline is bigger than yours! Who cares?

Sales leaders tend to put too much focus on the size of their sales pipeline, which drives wrong behaviour and leads to a false sense of ‘being on track’. There is a better way!

 

What’s a pipeline?

In sales we use the term sales pipeline for the overview of a sales person’s identified opportunities (potential contracts/deals) and at what stage of the sales process they are. Typically, opportunities are monitored from prospect stage all the way to the final stages of negotiation. The sales pipeline is also referred to as a sales funnel or book of business.

 

The bigger the better?

The larger the pipeline, the more opportunities a sales person is working on, the higher the likelihood of winning new business. A small pipeline indicates that trouble is on the horizon. That is why sales leaders are often obsessed with pipeline size. Makes perfect sense … or does it?

 

Let’s use an exaggerated example to demonstrate that it doesn’t. Imagine the best sales person in the world Mrs. Magic. What would Mrs. Magic achieve when visiting a potential customer? Indeed, Mrs. Magic would walk out with a signed contract! And that every time she meets a new prospect customer! What would be the size of her pipeline? Bingo, it would be absolutely zero. There would not be a pipeline!

Compare her to the following imaginary sales person, Mr. Noclose. He visits as many customers as Mrs. Magic and manages to keep them engaged for many months, but somehow, he never closes a deal. His pipeline? Bursting at the seams. He would top any pipeline report in the company.

 

And here is my point. The easiest way to grow a pipeline is to increase your throughput time, i.e. the time you keep your cases alive in the sales system. This is much easier than identifying realistic potential business. Just don’t close opportunities, leave them in the reporting system (even if you know you won’t win them). Most sales people know this or learn quickly after being challenged for their pipeline size. Moreover, entering opportunities as soon as you can and closing them (especially losses) as late as possible is often not challenged and thus an ‘allowed’ way to maintain a large pipeline. This creates a false sense of ‘being on track’ for sales management.

 

 

It’s not about size, it’s about dynamics!

 

The remedy? Forget size and focus on pipeline dynamics. Measure and reward how much is added each month and how much is closed. In a good month a sales person identifies new opportunities to drive future growth and closes/wins opportunities to contribute to the top and bottom line. This methodology also provides an early warning system. A decline in opportunities added each month signals trouble on the horizon much earlier than the size of the pipeline will do. Going forward Mrs. Magic will win all the sales awards and Mr. Noclose is up for a tough appraisal.

 

 

At Business Acceleration we help companies by increasing the effectiveness of their marketing and sales efforts. Value proposition selling is the key ingredient, but it needs to be backed up by solid processes and meaningful management (reporting). Please contact us if you want to find out how we can accelerate your sales results.