Mohan G Joshi, International Business Coach and Former President, SCHOTT Glass India outlines the importance of measuring the effectiveness of your pipeline to help understand sales graph, assess the gaps, fill them up and move ahead to a sterling performance
A pipeline is undoubtedly a revealing tool in the sales process. What construes your pipeline, how you read it and how you make the most of it, speaks volumes about your sales effectiveness. Pipeline as a term is core to sales; however, it has been used quite randomly without much thought. It pays for every sales person to invest time in understanding how you can build a pipeline in the new age and how you can make it work for you.
What is a pipeline and what it is not?
A pipeline is a specific set of actions in a sequence taken by the seller to move the prospect to the next stage – from the entry to conversion. It has specifics about every prospect, shows the value of every deal at every stage. Sales pipelines help sales persons understand how their sales are looking, whether they have enough leads and deals, how these are distributed across each stage and whether this will help them achieve their sales targets for that period.
A sales pipeline and a sales funnel are often considered as synonyms; but one would be wrong in doing so. A sales funnel gives a quick conversion report; it deals with an overview of figures and shows the conversions at every stage. A sales funnel looks like a funnel, broad at the top and narrow at the bottom, showing the dropouts at every stage. A sales pipeline is more detailed and helps in a qualitative analysis of your prospect movement across the buying journey. Together, a sales funnel and a sales pipeline can help in predictive analysis and can help formulate a sales strategy that results in successful selling.
The classic pipeline and its stages
A pipeline has typically four to five stages, through which your prospect will move.
However, a little flexibility in setting the stages as per industry buying patterns is a good practice. There are buying patterns specific to every industry. For example, the cement industry buyer displays a certain buying pattern in his/her buying journey. The pharma industry may have different stages; and the food industry may have its own stages. Then again, there is a lateral influence to be considered while stage setting, considering the influencers in the industry (the pharma industry has doctors as major influencers in the buying pattern) It is best to consider the gatekeepers, the influencers, the decision makers and the buyers as key parts of the ‘buying process’, while setting the stages in your sales pipeline.
How do you come up with these buying stages for your industry?
The key here is to study your buyers’ buying journey. You need to simulate patterns from earlier buyers to arrive at your stages. While defining the stages, you need to have clear entry and exit point for every stage. Remember that the idea is to deliver value to your prospect at every stage. Example, if downloading a certain brochure from your website is earmarked as one stage in your buyer’s journey, you need to assess if that plays an important part in the buying process. You also need to check if there is value for your buyer from the ‘brochure download’ to take him further to the next stage. The purpose of a sales pipeline is to keep your sales organised and delivering value to you at every juncture. It may be best to keep your stages at an optimal number all the time.
Does your pipeline measure up?
Having a pipeline is not enough. It needs to measure up to certain benchmarks if you wish it to be effective. Measuring the effectiveness of your pipeline helps you understand your sales graph, assess the gaps, fill them up and move ahead to a sterling performance.
How do you measure your pipeline performance?
a) Deal size: Find out your average deal size. Is it a high value or high volume one? With high value, you can achieve your sales targets with lesser numbers. The question to ask yourself is – ‘How do I convert my deals into high value ones?’
b) Pipeline coverage stats: Look at your pipeline (a CRM can be a handy tool if used effectively). See if you have enough leads at the entry point; monitor your growth rate. If you have a growing number of leads entering, you stand a good chance to achieve your targeted sales quota.
c) Pipeline length performance: This is the average time that a lead takes to move from the entry to the final stage of the pipeline. Monitor the transition rate to the next stage. If you spot bottlenecks, understand what the reasons could be. Solve that problem and ensure smoother flows to the conversion stage.
d) Conversion rate: It all boils down to results and conversion. Sales, at the end of the day is the closures achieved, contracts won and deals cracked. Keeping a close watch on your conversion rates (leads to conversions ratio) becomes key to your sales process.
Turning the pipeline into gold
Making the most out of your pipeline is the task on hand. Here’s how you can focus on getting gold out of the pipeline. Automating without losing out on personalising: There are some buying patterns that can be capitalised on by automating, yet maintaining a personalised feel to it. There are a lot of tech tools to do this and save your valuable time.
Maintaining uniformity of stage definitions across your sales team: Define each stage in detail and communicate. This way, there is no room for confusion and chaos.
Profiling the prospect in greater detail: This will help in optimising the available prospect data and turning it into an opportunity for conversion at every stage. This way, you can tailor your pitch to align with prospect expectations. Using a CRM: This may help in monitoring how far your lead has travelled along the pipeline.
Stepping back: Assessing and analysing the process regularly – to ensure the conversion rate is improving. Your sales pipeline shows the vital stats of your business at a glance. Check regularly if you are ‘pipelining’ the right way.