When I am asked to assess a client’s sales capabilities, I am often stunned by the poor quality of their sales pipeline (assuming they have one)! I can generally count on finding one or more of the following signs of an unhealthy sales pipeline:
Stale opportunities that have been in the pipeline way too long, depending on your sales cycle.
Sometimes this is due to neglect or sloppiness, but more frequently comes from salespeople holding on to a deal for dear life and clinging to hope when the opportunity has been on life support for months and should be retired from the pipeline. Salespeople are notorious for “stuffing the ballot box” with opportunities so that it appears they are quite busy and engaged, when only a few of their opportunities have real activity or any real chance of closing.
Deals that have been in the same stage of the sales cycle for way too long.
Sometimes deals get “stuck” in a certain stage of the sales process and need to be either moved along within a given timeframe or removed from the pipeline. This can happen even with legitimate opportunities, as sometimes the timing just isn’t right and the deal should be brought back into the pipeline at a later date.
Deals that don’t fit your strategy, marketing direction or client profile.
This is more common than you think, again frequently because salespeople figure that something in the pipeline is better than nothing. Let’s say your company sells software into the logistics, distribution and retail markets, with a minimum deal size of $500,000 to meet your annual sales targets. So why are there printing companies, plastics manufacturers and $75,000 opportunities in your pipeline?
Deals that don’t enhance your brand or are a poor cultural fit, or deals that have a poor chance for long-term success.
Sometimes salespeople like to “think out of the box” when it comes to finding new prospects, and generally that’s a good thing – but it can get out of hand at times. If you are a high-end media firm with a stellar reputation, maybe selling to casinos and on-line gambling sites is not for you. Similarly, after some time working with a prospect during the sales cycle, it may become apparent that there is just not a cultural fit and the companies may not be successful working together going forward. In addition to cultural issues, sometimes the financial or legal terms and conditions handicap an opportunity to the point where neither party will be satisfied with the relationship. And, if a prospect gets into financial or legal trouble or becomes at risk of not being able to pay you, it is better to part ways sooner than later before significant investments are made and contracts are signed.
Do any of these conditions sound familiar? Here are five things you can do to fix the problems.
- Hold your salespeople accountable. If an opportunity has been around for a while, ask tough questions to find out the true nature of the activity level and the client relationship. If you are not convinced the opportunity is real and can close in a reasonable time period, out it goes.
- Have a sales process and enforce it. Having a sales process with defined stages and steps is a must. Then track how long each opportunity has been in a particular stage and make sure your salesperson understands the steps required to get it to the next stage. If those steps can’t be met in a reasonable time period, it’s time to move on (we call this the “up or out” philosophy).
- Have discipline early in the qualification process. If a potential prospect doesn’t fit your client profile or strategic direction, you probably know that from the outset. Salespeople, and even sales leaders and senior executives, frequently fall into the trap of saying, “Well, we don’t have much going on right now, let’s take a flyer on this opportunity to help fill our pipeline.” The time and money you invest in chasing a one-off opportunity is better spent researching, marketing and networking to find bona fide prospects that will be good customers long term.
- Have solid sales operations and reporting tools in place and demand they be used and kept current. Although companies may slip up on this from time to time, investments and discipline in this area return a huge ROI. Find a CRM that works for your business and make sure everyone uses it. Prospects and opportunities not in the tool don’t exist. Tie sales commissions and compensation to proper use of the tool to enforce good habits – accurate data entry and keeping data current are paramount.
- Recognize and reward good habits. This is key across the board with sales, sales leadership and senior management. Salespeople want to spend their time working on real opportunities with a real chance of closing, so the sooner they learn the disciplines of time management, deal qualification and accurate reporting the better they will perform. Likewise, it’s up to management to lead by example, and to recognize and reward good pipeline management habits for a healthier sales pipeline.
Need help evaluating your sales pipeline? Or did any of the above observations strike a chord with your organization? I am happy to help. Reach out to me at [email protected] or give me a call at 214.507.1447, and let’s talk.