- 12 Oct
We’re all familiar with overly optimistic sales reps who are certain all their deals will close. Thank goodness they maintain such a positive outlook! On the other hand, it can blind them to the realities of the situation at hand. It’s similar to seeing the doctor for a checkup and telling her you feel fine. Then she conducts the exam and discovers a few issues that need addressing.
Your job as a sales manager is similar –looking beyond what your sales team is telling you to assess the true health of the sales pipeline. Here are four ways to make your diagnosis.
1. Narrow Your Focus
While general practitioners know a bit about the whole body, specialists are the ones we visit when we want to get to the bottom of a specific issue. Think of yourself as a specialist when diagnosing your sales team’s pipeline health. As a specialist, you are narrowly focused on the middle and late stages of the funnel. After all, leads in the early pipeline stages have too many unknowns to count as potential revenue yet.
2. Get a Clearer Picture
Work through all the factors and variables that prevent opportunities from closing to arrive at an accurate diagnosis. Specifically, assess factors in terms of those mid- and late-stage opportunities. Looking at probabilities, deal sizes, and expected close dates is how you forecast. But to understand pipeline health, it’s important to reconcile each deal with the historical close rate and sales velocity of the rep working the deal.
Only with clear guidance can your reps take better care of their pipeline health. Explain to your reps your expectations – how you are viewing the sales funnel and process, and what should be happening at each stage. Be sure to clarify criteria for expected quality, speed, and volume of opportunities. Also account for purging quiet leads from the official pipeline after a set time.
3. Pinpoint and Minimize the Risks
Even experienced and specialists can get thrown off track by paying too much attention to symptoms instead of trying to identify the root cause. In the case of pipeline health, you don’t want to get sidetracked by focusing solely on revenue numbers. What’s behind those numbers is what matters.
Say a rep is slated to drive $2,000,000 in revenues for the month, and is only working two deals. Obviously he is banking on both opportunities closing, but is putting himself at great risk by working only two opportunities. What happens if one of those deals falls through and the other one stalls?
This is risky behavior which can jeopardize long-term pipeline health. The temptation is to focus all the energy into a high-revenue deal in the mid-to-late stages, and you do want to give these deals more attention to a certain extent. But it’s also important not to put all your eggs in one basket, so-to-speak. There are too many uncontrollable variables, and if those one or two huge deals continue to push out month after month, or falls out of the pipeline entirely, now your rep is trying to refill their pipeline from scratch.
Educate your reps on how to put themselves in the best position to succeed. Show them what a healthy pipeline looks like. Show them what an at-risk pipeline looks like. Teach them how to become self-sufficient at prioritizing and managing risk.
4. For Better Health, Plan
Physicians work with their patients to come up with the best plan of action. Let’s face it – each of us needs to be participants in making sure we are as healthy as possible. To that end, you need to understand how each sales rep plans to satisfy their quota. It’s one thing for reps to say they expect to bring in a certain amount in revenues. It’s another to show how they will reach that goal. Your job is to determine the viability of each strategy.
Research has found that companies spending at least three hours per month managing each rep’s sales pipeline drive 11% higher revenues than companies that spend fewer hours on pipeline management. By spending time to help your reps develop healthy pipelines and solid strategies for closing their deals, you can help them earn more revenue for themselves and your company.
Originally published at LinkedIn Sales Solutions, reposted here with permission from our 2017 Gold sponsor, LinkedIn.
Alex Hisaka. (2017). 4 Ways Sales Managers Can Diagnose and Improve Pipeline Health. Available: https://business.linkedin.com/sales-solutions/blog/sales-leaders/2017/05/4-ways-sales-managers-can-diagnose-and-improve-pipeline-health. Last accessed 12/10/2017.