NCAA Basketball has a tremendous impact on my schedule starting now.  I’m looking at the schedule, kind of planning my time backward.  According to the NCAA Basketball site, final selection is on March 14, Opening Round Game is March 16, Fourth Round Completes on March 28 and the final four on April 3rd and 5th.

I’m getting my schedule ready in anticipation.  I think of the teams–all aiming to be part of March Madness.  Actually, they started months ago in their training.  Their seasons are just starting, each building a record of wins–hoping to develop a track record that enables them to qualify and compete in March Madness, each hoping to be in the final four.  Each team has to focus both on today–practicing, competing, and winning.  Each team has their eye on March, they know what they do today lays the groundwork for March. They are looking at their January and February schedules, preparing and strategizing for the teams they will compete against, knowing those performances impact that great event in March!

Oh wait—this is supposed to be an article about sales, sorry I got diverted.  Let me get back on target and talk about sales.  But isn’t what the NCAA basketball teams are going through similar to what we as sales people are going through?  Don’t we have to balance both our short term goals—winning every deal that we are competing for today, but laying the ground work for the deals we know we need to win in January, February, March, ……

Our success today impacts our ability to be successful in the coming months.  We need to focus on closing business today, our companies need it, our managers are looking for a great year end.  However, we need to keep an eye on the future.  Are we doing the right things today that enable us to compete and win in March?  For us in sales, this means looking at our prospecting, account development, territory development, and qualifying.  Are we identifying the opportunities today that enable us to be in the game in  March? 

Teams that do great in December, but fall apart later in the season don’t get to the final four.  Like those teams, doing great this month, having a strong end to the calendar year, doesn’t mean we will continue to do well.  If we aren’t identifying and developing the opportunities that will close in January, February, and March, we won’t be in the game.

The only difference between sales and NCAA Basketball, is that for us, after March Madness, comes April Angst, May Mayhem, June Jamming…..  While closing deals today, we have to lay the groundwork for the future.  Do you have a strategy that will get you to “March Madness?”  Make sure you don’t have just a great December and fall apart for the rest of the season.

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While they may not always admit it, sales people are really gatherers and hoarders at heart, that is why there is premium paid for real hunters.  When you ask most sales people what they need to do better they say “I need more accounts”,” I need more territory”, as though more stuff equals more results and output.  Completely ignoring the fact that having “more” means having to deal with manage and deal with more accounts and people.

Hunting on the other hand takes focus, concentration and elimination of unnecessary distractions.  Think cheetah; pick his prey and goes after it with determined precision.

So while people will tell you they are hunters, closers, deal makers, what have you, they really are not.  You know what gives them away, their pipeline, full of crap, noise and distractions.  They gather, hoard and hang on to everything because one day it may close, and eight-track will make a comeback along with Jethro Tull.

Let’s look at your pipeline in a couple of different ways.  As one great sales person, Mark Pfeifer, once said, pipelines are like a vast lawn in a garden.  When you are sitting on the patio of your 30th floor penthouse, it looks shiny and green, a thing of beauty to enjoy.  Then you go down and realize that half the lawn is weeds, man what do you do now?  If you pull the weeds, and you go back up to your patio, the view is not that nice, patches of brown remind of the poor state of your garden, and you realize that now you are going to have to work to make it all nice, green and pretty again.  As if, most sale people let the weed grow back and go back to pretending they have a full pipeline, which they do, but full of what?

Another way to look at it is to acknowledge that your pipeline is much like an artery carrying the precious lifeblood of sales success.  Yet most reps just allow the plaque and crap to build up, causing clots and reduced flow of deals, activities and things that need to pass unencumbered to create deals and success.

Reps need to have enough confidence in their ability to qualify, or more accurately disqualify those things that are not going to happen.  If it you have had some success selling, just look at the attributes of those successes, and any thing that does not look like it, get it out of your pipeline.  Yes, everyone is allowed a long shot or two, but not a bag full of date cheese clinging to the artery, waiting for a sales stroke and financial heart attack.

So, What’s in Your Pipeline?

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Knowing that some of my fellow bloggers specialise in the area of pipeline management, I’m going to focus this post quite tightly on 3 simple guidelines for sole practitioners and small businesses.

Many organisations still rely heavily on instinct, guesswork and “seat-of-the-pants” management to control their sales pipelines. As a result, they get trapped in a vicious circle where they over-focus on highly visible areas such as closing late-stage deals, and under-invest in key areas such as early-stage lead generation.

This leads to a further drying up of quality opportunities, a panic-driven focus on closing the few remaining opportunities in the pipeline at all costs, and more neglect of the critical front-end.

For small businesses – and particularly for owner-managed companies and sole practitioners – this can be even more crippling, as the key business-winners are often also heavily involved in the execution of sold work – and are easily dragged away from working on filling up the earlier stages of the pipeline.

The first, and most important pipeline guidance for small businesses is to actually look at it. Now this may seem blindingly obvious to those of you in larger companies – but the majority of small businesses I meet either don’t actively manage their pipelines – or in some cases don’t even know what pipeline management is. They carry round their pipeline in their heads – and as a result have a weak understanding of what the shape of their future sales actually looks like and what they should be doing to increase their chances of winning those sales.

So the first step for businesses in this position is to get hold of a simple pipeline management methodology and use it. And you could do a lot worse than moseying on over to fellow Sales Blogger Colin Wilson’s site at First Border and looking over the approaches recommended there.

The next piece of guidance is to model your pipeline on your customer’s buying process. Of course, that’s more complex than it sounds: different customers buy in different ways and even the same customer can buy differently depending on the the size and nature of the product. But it should be possible to develop a rough model of how they usually buy – the stages they go through. When buying consulting, clients most often meet with a small number of prospective suppliers first to discuss the key issues they face. If that goes well, they may have a series of follow up meetings with some of the consulting firm’s expert staff to delve into highlighted areas more deeply. Then they may ask for a more formal proposal or go out to tender for a larger piece of work – etc. etc.

Building a model of how your customers buy can be tremendously helpful in it’s own right in giving you insights into what they will be looking for from you at each stage before they allow you to progress to the next. And if you find you don’t know how they decide at each stage – ask – you need to know to sell effectively.

Mirror this model in your pipeline – don’t just accept the standard model that came with your CRM software – make it truly reflect how your customers buy.

This will give you insights to allow you to accurately assess where an opportunity is in the buying process from the customer’s perspective (and that’s the only one that counts) and therefore the steps you need to take to progress it to the next stage.

The next and probably most important guidance is to use your pipeline to manage not just to measure.

Far too often I see small businesses who adopt pipeline management get obsessed by the process and the numbers and the need for absolute accuracy. They spend more time trying to get an accurate forecast than they do trying to figure out how to increase their chances of securing a sale. Good pipeline management – whether being done by an individual salesperson, or by a team with their manager – is primarily about improvement. At the end of a pipeline review you don’t just want to have a more accurate forecast – you want to have actually increased your chances of selling the deals in the pipeline becasue you’ve used the process to help the reps understand better what they need to do to win (or in some cases, got them more focused and motivated to do it).

Now I’m not saying forecasting is unimportant. I particularly want to use the forecasts to highlight weak spots in my pipeline that I can do something about. For example, my pipeline may show that I have a solid late stage pipeline of deals I’m working on, and a lot of stuff in the funnel at the early stages about to drop into the pipeline – but a dearth of opportunities being progressed whcih are likely to come to fruition in the 2-3 month out timeframe. That’s a signal that I need to put my focus on the opportunities in earlier stages and pull them through to fill that gap. For a capacity constrained business, the pipeline may also highlight time periods where I run the risk of being oversold and unable to meet customer demand: maybe I need to slow down some of those opportunities.

The point is that I’m using my forecast in a managerial sense to highlight weaknesses and areas I need to focus on – I don’t really need to be super accurate – just accurate enough to tell me my weak spots.

Once I know those weak spots I can do something about them. The pipeline model can help again here as it will give me clues as to what the customer is looking for before moving on the the next phase in their buying process.

Unfortunately, so many businesses just don’t know where the weak spots in their pipeline are and so are hugely surprised when the weak spots turn into horrible leaks.

Ian

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The purpose of business is to find weakness, highlight strengths and improve. So why are we not fully helping those who want to achieve, do so?

If there is anything to be learnt from the ongoing fiasco of the banking industry it surely must be that with targets and pressure to achieve comes the temptation to mask information when it appears that those targets are not going to be met. The creativity that some can go to in order to appear in a better light is actually quite ingenious only mirrored by the lack of understanding or education in bank managers digesting the amount of data and the methods of information input employed by those in their ward.

In sales, the pipeline is the measure of performance and can be used to indicate the strength of individual and company forecasts for revenue, future growth, potential business, conversion rates, lead sourcing etc. As such the sales pipeline is one of the most important pieces of information that a sales manager, CEO, Financial Director or Marketing Director could want. Unfortunately, one of the most prolific reasons why sales pipelines are so ill used or inneffective is the accuracy of the information inputted into the pipeline.

If the sales pipeline is used as a measurement of performance then it is understandable that sales people will knowingly or unconsciously affect the pipeline to make their figures appear more favourable. That has to be one of the side effects to pressurisation of the workforce, especially if the targets that they are set are unrealistic or unachievable. In such a case, the sales person will be tempted to input leads into the pipeline that aren’t in fact leads, will forecast orders that will inevitably slip to the next quarter and over emphasise the probabilities of the opportunities of opportunities down the line. The sad fact is that if the individual sales pipelines are innaccurate this affects the entire company pipeline.

Now take into consideration the time that sales managers have to actually interrogate, search out and verify all the data, how much is taken to determine the accuracy of every individual forecast? What if, and I know this requires a fundemental change in attitude, but what if a company used the sales pipeline as a sales tool for improvement rather than measurement? Would the sales person be more or less afraid to input realistic data? Wouldn’t they want to improve their own performance and learn from their own real information? What if the pressure wasn’t there? What then?

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I was asked to write a post on pipeline management and I seemed to have written the best part of a book! So those with a low threshold for reading long posts be warned… but as I was bemoaning to Nesh earlier today he sympathised with me by saying… “if you are asked to write on a subject that you are passionate about then it is sometimes difficult to write a little”… and so to steal a phrase that has been attributable to various famous people over the years… “I wanted to write a short post, but I did not have the time”… so here it is in all its glory…

Pipeline Management… there we go… it’s the title of the post and I’ve started with the same words… must be important then… pipeline management… well yes it is… it’s the fundamental skill, process and methodology that all field based sales reps operating in the complex sales environment need to know, understand, master and conquer… but how many can say they achieve this?… actually not many… in fact pipeline management is often treated very much as an anathema!

So why is pipeline management so often greatly disliked, detested and shunned?… good question I hear you say… and would you believe there are several reasons. However, before I delve into the dastardly reason for shunning such a noble skill I will first put into perspective the importance of pipeline management. I should point out that unlike ‘safe bank’… ‘pipeline management’ is not or more importantly – should not – be thought of as an oxymoron. The operative word of our 2 word, 18 letter, 5 syllable phrase is management and to underlie its importance… it accounts for 3 of the 5 syllables and 10 of the 18 letters. It will also give you 15 points on a scrabble board as opposed to 12 for the mere pipeline.

There are only three main sales strategies that all sales people, no matter what they sell, have to do. They need to find some customers, they need to manage those customers and then they need to close some business. For our intrepid field sales guys working in fields of complex sales that means… filling the pipeline, managing the pipeline and closing the pipeline.

Why Is The Pipeline So Important?
It’s because we have targets to meet… and there has never been a better time to meet your target… and it’s no longer just about earning money… it’s no also about keeping your job… who do you think the company will let go first… those that hit their number or those that don’t?

Pipeline management is about managing your portfolio of opportunities to meet your target. As a sales rep this is your primary focus… to meet target. Meeting target means you get paid… but to keep your job you also need to take religion out of selling… this is the bit where your sales manager puts his hands together and prays you will be making your number! In this economic climate religion can play no part of selling… you need to be predictable… you need to be able to forecast and mastering pipeline management will help you achieve this.

The diagram below shows the pipeline management process following the buying phases and the different relationships that are in play depending where an opportunity enters the pipeline and then the competitive advantage at entry point. The pipeline needs to be time bound and therefore there ineeds to be a different set of phases for each sales period.

If you are running a quarterly pipeline – and if you are not, then you should – you need to fix your forecast by the end of week 5… and by the close of quarter after 13 weeks you need to be greater than 95% accurate… and yes it is achievable and yes we do have many customers achieving this level of accuracy. The sales pipeline is your planning tool to… Show How You Are Going To Make Your Number. Showing how you are going to make your number means naming the deals that will be closing… yes binary forecasting. There are only two outcomes in selling… you win the deal or you don’t win… there is no other outcome. ‘Gone away’ is not an outcome. Anyone who puts the reason for not winning the deal because it has ‘gone way’ is doing so to make themselves feel better… “It’s not my fault… the customer no longer wants to do it… it’s gone away”. Sorry to disappoint… it’s not gone away, you lost it… it probably was never there in the first place… your qualification is suspect… and yes it is your fault.

Is Qualification Important?
Yes, qualification is an important part of pipeline management. It is there to be used as a tool to help, but the tool must not use you. There are far too many systems around that try and automate the qualification process… answer the qualification questions and our tool will tell you where that deal is in the your process and provide you with a probability of winning. If you are happy to put your car on cruse control and take your hands of the wheel and then hope you will get to your destination safely… then these systems will be right up your street… unlike your car which will be right up someone else’s backside and suddenly you are in a car crash. Qualification is not there to make you feel good… quite the opposite it’s there to make you feel uneasy… uneasy enough to put a plan together to win the deal. Although this post is not on qualification… I will share with you the most important qualification question I always ask any sales rep when I am doing a deal review with them… any idea what that is?… well the answer is at the end of this post… along with the second most important qualification question.

Top 5 Tips For Pipeline Management.
It’s not an exhaustive list, but I just wanted to provide an insight to avoid Einstein’s definition of madness… well this definition has been attributed to him… and others… “You can’t keep doing the same input expecting a different output.” If you haven’t achieved 95% forecast accuracy already, then no point continuing doing the same thing expecting it to improve… you need to do something different.

So, my top five tips for doing something different…

1. Sales pipelines are in the very first place personal tools… not corporate. All those running a corporate pipeline and just a corporate pipeline are unlikely to achieve the forecast accuracy required for these challenging times… make it personal before corporate.

2. Follow the buying process, not the sales process. Most corporate pipelines have the sales activities (not even process) as the pipeline stages. This is the equivalent of ‘fools gold’. Understand where the customer is in the buying process and measure your pipeline against these stages. If you need some insight into what I mean then go to http://www.firstborder.com/sales-ebooks/buying-process.php#download to download a free ebook.

3. Put the responsibility of forecasting squarely on the shoulders of each and every sales rep. get them to show how they are going to make their number. Fix the forecast at the end of week 5 of the quarter and measure their forecast accuracy at the end of week 13. Publish the results.

4. Use the grown up forecasting technique – binary forecasting. You are either going to win or not. Only those scared and out of control use factored forecasts. Factored forecasting is for wimps who don’t want responsibility. If the sales rep names the deals that they say they are going to close, then guess where they put their focus. This one action alone improves the chances of winning those deals… because the deals get the attention.

5. Sales managers need to add value to the team, not by helping them on specific deals, but helping them make their number. Manage the team by looking at how each sales rep is going to make their number. Don’t get seduced by the ‘dark side’ – focusing on the big deals – focus on how each person is going to make their number using binary forecasting.

6. And because I can’t count here is number 6. Make sure each and every sales rep has a full funnel. The sales funnel feeds the pipeline. With personal pipeline management you will be amazed at how full the funnel can become. With just a corporate view… your funnel, if indeed you use one, will invariably be underground… and underground is out of sight and out of mind.

7. If I’ve done 6, I may as well add another… and so here’s number 7 of my top 5! Commission. Sales reps are motivated to sell more and earn more commission… in theory anyway. However, very few companies use the commission plan to motivate. Sure they will tell you how much you will be paid, but not how much you could be paid if certain deals close… it’s called commission forecasting. Not many sales reps need to be told that deals need to be closed to make target, but if they could forecast how they could earn by closing certain deals then this motivates them. So, top tip number 7, forecast commission.

Why Is Pipeline Management So Often An Anathema?
The answer to this question lies somewhat with the top 5 tips listed above, but looking at the 3 main aspects I shall start with the biggest problem… Management… it is the all important word in our dualistic phrase – pipeline management, however, in this context I’m referring to sales management… those responsible for “the organising and controlling of the affairs of business”.

Management needs to add value and sales managers are no different… but how do they do that you may ask… well… ask questions about your big deals… ask lots of questions about your big deals… the big deals are important… right? Maybe they are maybe they are not. If they form part of your plan to make your number then they are important… and if they are not part of that plan and you have identified other deals that will make your number than they are not that important.

Sales management often become misguided by focusing in on nig deals. They get seduced by the dark side… focusing all their effort on the big deals that don’t have a hope of closing while smaller deals are passing you by and being snapped up by the competition. A clutch of small deals will make your number just as well as a large deal and are often easier to close.

However, if the sales manager is looking just at deals and not how each member of the team is going to make their number then they get disorientated. Think about it… if you have 20 opportunities in your pipeline and your manager has 5 people, then he has to look at 100 opportunities. If the Sales Director has 5 sales managers then she needs to look at 1,000 opportunities. So, how do they select which ones to look at?… it’s often the big ones.

So, they ask questions and sales people don’t like answering them as we get distracted and most questions in our opinion are unwarranted and so to keep them off our back we are reluctant to put too many, or any, big opportunities in the pipeline as it just gets management too excited.

Meanwhile due to the lack of big opportunities, management find other ways to get excited… they have an inside belief that there needs to be 3x the value of the target in the pipeline and so messages go out saying fill the pipeline… so the pipeline gets filled… filled with anything… to get management off our backs.

The other problem with putting large opportunities in the pipeline, particularly when they are likely to cut across target setting session… is that we don’t want to get lumped with a big target based on what we have in the pipeline… so bets avoid the temptation and not put them in.

The other thing management get excited about is the lack of activity… and so we need stuff in the pipeline to show that we are doing something… even if the stuff is dead… it gives us breathing space to recover.

Corporate pipeline management is a game based on wits and cunning where sales management are trying to catch you out and find the truth… and therefore you can’t be trusted to forecast because if you are wrong the manager takes the hit… therefore when it comes to putting the forecast together you will be consulted and then the manager weaves their magic on the numbers and adjusts them to get to the right number. Some deals you call are not included and some deals you have not called are included… it all becomes a sticky mess outside your control… and it’s no wonder you keep your own private pipeline to monitor what is really going on… and if only management could get their hands on it!

Customer Relationship Management systems are sheep in wolfs clothing. For field based sales teams they generally add little value, yet they demand so much data and give little in return. The clue is in the name Customer Relationship Management… the name is not Sales Management. CRM systems are content free databases that do nothing more than aggregate data. In fact they do worse than that… they claim they add value by doing nothing more than aggregating data. If you think I’m being unreasonably hard on CRM then they should not be making these fanciful claims that CRM adds value to field sales people.

The problems start with Pipeline Management… yep they have a pipeline, but it can’t be used to manage anything… it just provides a list of deals by sales stage… yes, sales stage, not buying phase. Managing the pipeline by sales stage is akin to getting an alcoholic to manage a pub… not a good idea. However, there is also aiding and abetting going on with the way the forecast is cobbled together using factoring techniques. Each sales stage has a corresponding percentage chance of winning and this percentage is multiplied to the value of the opportunity and hey presto you have a value for your forecast… add all the different opportunities together and you can see where you will finish the quarter… your pub manager with the personal problem is now drinking your profits… and the factored pipeline is as much use as the bar manager after a day of profit sharing!

All sales reps know that factoring is not a good idea and yet CRM in the whole forces them into it. However, they now have a system that provides a list of opportunities to the manager and an even greater list to the sales director. Where do they focus their time?… on the big ones… but know they want you to update all the actions, meeting notes and strategy and… it goes on. Don’t get me wrong, I’m all in favour of sales guys planning to win deals… but filling in CRM data has nothing to do with winning deals… it’s about feeding data to a beast for no return and so sales reps don’t like doing it.

Now look at my top 5… which seems to have morphed into 7 and ask if CRM does any of them and you will be hard pushed to find a system employing the outlined principles. So change the management view and focus on the magic 5 and then change the system to allow personal pipeline. The personal pipeline will allow the sales rep put all their leads and opportunities in one place. They will have full view of their whole sales effort. This one view will follow the same methodology and therefore will allow everything to be in sight and in mind. Allow the corporate system to be fed by the personal systems and as long as each rep is showing how they are making their number and showing a healthy funnel then let them hide what they want… it means they are in control… but following the magic 5 also means they can’t hide… and point 3 means they will look pretty slipshod if they sandbag.

The diagram below provides an overview of what should be in a sales system. Note the different phases are based on the pipeline as outlined in the previous diagram. You follow the buying process and different tools come into play. There are a set of tools that are used to involve the customer and a set of tools that are used to manage the opportunities that you need to close to meet your number. You will see qualification as one of the tools used to manage if you remember… and it’s many words ago… I promised to share my first qualification question.

The initial qualification question I would ask when starting a deal review with a sales rep is… “when is the deal going to close?” Pipelines need to be time bound and the close date is the most important piece of information that you need for accurate forecasting… therefore that leads me on to the second most important question… “does the customer agree with the close date?” This question is so important as it is the first indication that the customer is prepared to commit. If they don’t agree then there is no commitment and if there is no commitment then something is wrong… they may not like you… they may not have authority and therefore you are speaking to the wrong person… they may not want you to win and therefore will not commit to you… there may not be a deal… whatever it is there is something wrong and you need to find out. However, if they do commit then you have a date to work towards and the customer will know this, but they have made a commitment and as you know, selling is all about getting commitment from the customer and therefore sales qualification is testing this commitment at various points along the customer’s buying phase. If you don’t get commitment it doesn’t mean that you are not going to win, it just means you are not in control… and if you are not in control… how can you forecast?

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Sometimes people start talking to me about different visual concepts for the sales pipeline. Obviously the recurring theme is the funnel. A wide mouth with lead after lead at the top, slowly sloping inward through prospects to opportunities and finally to the small trickles of sales. On the newer, more Landslidian (man I love making up words) side of the pipeline planet, we are taught to look at the pipeline as a straight pipe. While the workstyle management company is on to something, the Sales Evangelist cannot afford this form of niavete.

The Sales Evangelist pipeline is like a tight waterfall from a high peak. While the pool of leads may be massive, once you have taken someone into the current, you do not have much time to decide if they deserve to make it into your waterfall. See once someone becomes a prospect in the Sales Evangelist world there must be somewhere in the range of 80-90% certainty they will become a customer.

The pipeline of the new is an exclusive club. It is not from egotism that we must be cautious in our indoctrination, but from a necessity to spend our time with only those who are going to buy. What this requires is three important pieces to the process.

1. A powerful lead cultivation system that weeds out far more leads than it allows to become prospects.

2. A clear understanding of the buying process and who is going to engage.

3. Defined roles for all parties involved in the offering; the buyer, the seller, and the decision makers.

When you look at the a pipeline process with this imagery and rule set it becomes clear where you must be most cautious. It is in the transfer of a leda to a prospect. Only people that can almost more from lead to opportunity should be taken into discovery. Everything should be clear, their need, the ability for the buyer to see what you are offering, transparency, and a budget.

Once you take a lead into discovery, there should be little stress in how you are going to work together. This makes the discovery process easy and really enables you to decide if you have the time to focus on making them an opportunity. See the Sales Evangelist has an entire company on the shoulders and there is no room for bad opportunity.

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