It should be no surprise to learn that nearly every company in the world maintains a sales pipeline. However, you might be surprised to learn that very few companies think they’re any good at managing it.
In research we conducted with the Sales Management Association, 63% of executives said that their organizations were ineffective at managing their sales pipelines. Which is another way of saying that their companies waste a lot of time staring at pipeline reports, but their effort does not yield any increase in sales performance.
So how can you improve the effectiveness of your sales force’s pipeline management effort. Fortunately, our research revealed also some insights that provide a clear roadmap for that.
We discovered the sales forces that were the most effective at managing their sales pipelines had invested the time to define credible standardized sales processes. More specifically, they had sales processes with clearly defined stages that were universally understood by their salespeople. There was no guesswork as to which stage a particular deal belonged, and everyone believed and trusted the data in the CRM tool. In short, there was a strong backbone for effective pipeline management – a solid sales process with cleanly defined stages.
With a solid sales process in place, our research revealed that the next requisite to effective sales pipeline management was to focus the front-line sales managers’ on doing enough of it. In fact, companies in our survey that spent at least four hours per month managing each rep’s sales pipeline realized 14% greater revenue growth than those that spent less than one hour per month. And who couldn’t use that?
Unfortunately, many sales forces believe they spend a lot of time managing their sales pipelines, when in reality they are spending a lot of time creating forecasts. To help distinguish the two activities, if you are spending your time discussing close dates, probabilities, and deal sizes, then you are forecasting. Period. However, if you are spending your time discussing the overall health of your sellers’ pipelines and how they can shepherd more deals to successful closure, then you are managing your pipeline in a productive way, and you’ll likely see improved sales performance.
Our research also revealed that 61% of executives admit their sales managers have not been adequately trained to manage their sales pipelines. Furthermore, sales forces who claim to have adequately trained their sales managers in pipeline management strategies and techniques reported 23% greater revenue growth than those who had not. How can we expect our sales managers to do something well when we haven’t trained them how to do it?
So the lessons from our research are very clear. Most sales forces are not good at managing their sales pipelines. However, the handful that are do some very fundamental things that lead to better managed pipelines and superior revenue growth. They define solid sales processes that are clean and credible. They set aside time to actively manage their sales pipelines (not just forecast revenue). Plus, they train their sales managers how to manage their sales pipelines. So looking at this formula for successful pipeline management, how does your sales force stack up?
Jason Jordan is author of the Amazon.com best-seller Cracking the Sales Management Code and a partner at Vantage Point Performance, the leading sales management training company in the world. He helps sales leadership teams improve sales performance by implementing management best practices revealed in his groundbreaking research. Follow Jason on Twitter at @JasonRJordan.
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