Not atypically, if you take a look at a seller’s – and consequently an organization’s – revenue over the course of a year you will see peaks at the end of each quarter with a substantial peak at the end of the 4th quarter. This is commonly referred to as a roller coaster ride – which is very much in line with stress levels in the sales operation.
This is, of course, due to the fact that sellers are trying to do everything they can to achieve quarterly and annual quota objectives, including unnatural acts to close business prematurely.
And, unfortunately, at the start of each new quarter, and especially the new year, pipelines are barren and people are therefore doomed to repeat this pattern.
Sales pipeline management will resolve these and other related issues. The purpose of this post is to define what we mean by Sales Pipeline Management, provide the framework for an effective sales pipeline and illustrate its setup, and demonstrate pipeline management by using a Pipeline Balance Algorithm.
Lets Sync Up on a Few Important Definitions
The forecast, as opposed to the Sales Pipeline, focuses on near to mid term revenue projections. It includes opportunities that have anticipated close dates that will occur in the near term (next 90 days) to mid and potentially long term (beyond three months).
The Sales Pipeline summarizes by stage all qualified opportunities that are actively being pursued. It is usually depicted as a funnel. Qualified opportunities include those from the earliest stage of qualification (“Candidates”, where a seller has conducted a partial sales call and where the buyer has, at minimum, admitted a Critical Business Issue, with a 10% probability of closure) to opportunities that are imminent (“Near Wins with a 90% probability of closure) and recent “Wins”.
As opposed to the forecast, it looks at the broader opportunity set and includes opportunities that are nascent and too early to forecast. It is normally independent of opportunity close dates and instead focuses on opportunities by stage. As such, for individual sales people, their managers, and executives it gives a picture of anticipated overall future business. And, when matched against sales pipeline goals:
- Provides an important view of both the health of the pipeline and the health of the business,
- Identifies where gaps exist, and gives management the ability to take corrective actions early.
Sales Pipeline Management
Sales Pipeline Management is the process of:
- Establishing pipeline balance expectations/requirements,
- Monitoring and assessing pipelines against those expectations for both quantity and quality,
- Identifying gaps, and
- Putting in place highly specific plans to rapidly achieve balance where gaps exist.
In Part 2 of Sales Pipeline Management we will provide the framework for an effective sales pipeline and demonstrate sales pipeline management through use of a Pipeline Balance Algorithm. Stay tuned!