General Sales
How Winners Manage Their Pipelines
By Dave Stein
Jun 20, 2005, 12:28

Too many salespeople
think that pipeline management is a bureaucratic burden placed upon
them just to keep their bosses happy. So they update their pipelines
3 minutes before it is due or they don't do it at all.

Let me put it
to you this way:  if the winners I've coached weren't told
to spend time and effort managing their pipelines, they would do
it anyway, because they know that's the secret to maintaining a
steady flow of business.

Taking control
of your pipeline will enable you to smooth out the monthly or quarterly
peaks and valleys leading to much more consistent and predictable
revenue production. (c)2005 -- Dave Stein

Get a solid
understanding of how your customers evaluate and procure products
and services.

Whether you
are selling commercial real estate, enterprise software, industrial
equipment, legal, financial, professional, or outsourced services,
or just about anything else that requires your offering to be evaluated
by a business buyer, you need to understand how your buyer buys. 

Start by listing
the key milestones from their perspective combined with what you
know you have to do to secure the business.  For example, companies
looking for enterprise software may first uncover a need, then define
requirements, create an RFP (request for proposal), send it to a
long list of vendors, cull the list, require presentations, a demonstration,
pilot or proof of concept, a proposal, a final meeting, negotiate,
and then go forward with the selected vendor.

You'll need
to timeline those milestones into groups based upon the experience
you (or others in your company) have had selling your offerings
into that market.  That will provide you with the stages you
will manage.  Creating a model like the one below will provide
you with a new level of visibility into where you stand on each
opportunity, what is left to be done, and whether the opportunity
is moving along at the expected pace.

>From the
model below you'll see an example of how the milestones and qualification
criteria slot into stages.  I've only listed some of the milestones
and criteria, and be aware, please, that this model will likely
not apply to your situation.  It is intended to be generic
and the attrition percentages (see below) and months until close
are for example only.  Also, I've used stage descriptions from
your ( the vendor's) perspective.  You might want to use the
customer's stage descriptions, once you really understand how they
buy.

You'll notice
the attrition percentage between each stage.  That's where
the term "sales funnel" originates. The attrition is based on history
(for you and your company).  It represents what percentage
of opportunities from the previous stage will historically not make
it to the next stage.  If you track this, you'll get more and
more data as the quarters go on and your calibration will become
increasingly accurate.

You'll want
to adapt this model to your selling situation. If at all possible,
you'll want customize your SFA or CRM tool with these stages and
milestones. Then each and every sales opportunity in your pipeline
with be categorized by stage.  Again, you'll know what stage
it belongs in by what milestones have been completed and what qualification
criteria are being met.  Your sales plan for each opportunity
will contain specifics on how you will advance the deal to the next
stage.

It should be
apparent that you will need to have  appropriate levels of
opportunities in each stage of the cycle, front-loaded in the earlier
stages to accommodate that attrition. I look for not only the number
of opportunities, but the rolled up potential revenue associated
with each stage as well.  For example, if your average deal
size is $50k, one sole, $500k deal in the engagement stage is a
risk--a big one.

Using a model
like this will make you money. 

Your sales process
will be aligned with the pipeline model (which is driven from customer
buying cycles combined with your selling cycle).  You'll know
every tactic required to advance each opportunity and you'll be
able to determine with a reasonable degree of certainty what business
you will be closing and when.

There are a
number of additional points to be made in reference to the model
above:

• This model
  should be continually revised, as you learn more and more about
  what must be accomplished during each stage.  You'll be modifying
  the months until close, attrition, and milestones as you progress
  forward.


• You will
  be able to figure out which deals are lagging and which are moving
  along with momentum appropriate to the urgency on the part of
  the real buyer.  Deals that are lagging will be not only
  be visible, but you'll know where you are stuck, so you can ask
  questions and find out why.


• You'll want
  to create a checklist (as I recommend in How Winners Sell) by
  stages which includes each milestone.  If you don't complete
  a required item, you can't go on to the next stage.  That's
  good news, since you can't win the deal without it.  This
  eliminates subjectivity from the pipeline and gives you a detailed
  tactical plan to execute.

In the model
below, you can see that the aggregate value of a rep's pipeline
in stages D and C have decreased by $100k and $200k respectively. 
This could be caused by a recalibration of the process--getting
closer to "the truth."  Or it could be the result of a competitor
who is gaining ground.  In any case, you can see that this
is a powerful diagnostic tool.  If the rep is calibrating accurately,
they have made good progress in adding potential opportunities to
the earlier stages of their pipeline.

Calibration

Many sales executives
and VPs of marketing I know keep track of the contents of all stages
of their aggregate pipeline so they have visibility into where it
may be anemic, warning them of a potential dip in sales at some
point in the future.  They take action accordingly. For example,
a savvy, proactive VP of sales will redirect resources to qualified
deals in that anemic stage to assure that the quarter in which those
deals are expected to close isn't a bust.

You can see
that in order for this to work, the pipeline must be calibrated
twice.  First, the individual sales rep must calibrate where
each opportunity is, based upon what has been completed and what
remains, as well as through his or her ongoing qualification process. 
In this way, the veracity of each deal can  be assessed relative
to the others as well as in absolute terms.

Second, all
reps must be able to calibrate their deals relative to each other.
That way, the value of the entire team's pipeline as well as the
forecast are built upon objective criteria and the completion of
critical milestones, not the more typical subjective guesses of
a bunch of reps which are further factored by their manager.

The Forecast

When you manage
your pipeline this way, you can see that accurate forecasting is
a natural extension of the process.  The forecast stages of
your pipeline (the final one, two, or perhaps three stages, i. e.
closing, proposal, and engagement in my example) are fact and activity-based,
not based on guesswork.  Qualification criteria used in advanced
stages of opportunities are employed to gauge likelihood of close.

Sharing Detail

Many VPs of
sales keep the pipeline to themselves, only sharing the aggregate
value of each stage.  They don't want the CEO chasing down
reps asking about their pet deal.  And it follows that reps
like to keep the details of their individual deals to themselves
for the same reason.  My experience is that this need abates
when the reps are able to better manage their pipeline.  In
fact, they tend to share details about nascent opportunities because
they are seeking the truth and leverage their corporate capital
to do so.

The Bottom
Line

Improved pipeline
management is a huge opportunity for many salespeople and their
managers.  It provides a number of benefits:

• More accurate
  visibility into future revenue potential, not just this quarter
  


• The ability
  to better understand customer buying processes, providing a platform
  for more effective selling


• An overall
  view into your entire portfolio of opportunities,  providing
  you with a clear understanding of where to focus your time and
  resources and what you have to do to win.

About
The Author:

Dave Stein is known as the expert in competitive selling strategies
and tactics. He is president of The Stein Advantage, Inc.; his sales
consultancy outside of New York City. His 20042 bestseller, How
Winners Sell as well as his monthly articles and resources are available
at www.HowWinnersSell.com.
He'll teach you how to compete in today's hyper competitive marketplace.

Contact
Information:

The Stein Advantage, Inc.

69 Woodland Road

Mahopac, NY 10541

(845) 621-4100

info@HowWinnersSell.com


www.HowWinnersSell.com

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