Sales pipeline

How to Rebuild Your Sales Pipeline

6230 Fairview Road, Suite 200 Charlotte, North Carolina 28210 USA Author: Tim Sullivan 704-364-9298 www.spisales.com or www.solutionselling.com

How to Rebuild Your Sales Pipeline As the economy looks to be improving, businesses are realizing the importance of rebuilding their sales pipelines. The recent bear economy has claimed many sales pipelines as victims. Customers are more hesitant to enter the buying cycle, more hesitant to make the final purchase decision, and the sales pipeline is harder to keep full. Forwardlooking sales executives must learn to identify the reasons for these problems, and also deploy strategies to combat the pipeline challenge.

Now that mid-level managers no longer have purchase authority, sales people may not have the right skills to deal with higher-level executives

Understanding current buying cycle trends is vital to interpreting the sales pipeline. There are three stages of every buying cycle. In the first phase of the cycle, buyers determine what they need to address a business problem or opportunity. The second phase focuses on finding the right solution: the right products or services to fulfill the need.

During this phase, cost becomes less relevant. The third and final stage occurs when the buyers become concerned with the risk of their potential decision. In a down economy, this risk becomes greatly exaggerated. This is the reason for the pipeline challenge.

Times Have Changed During the economic boom of the 1990’s, most high-tech companies enjoyed countless sales and seemingly limitless revenues. Subsequently, budgets were large and mid-level managers were vested with the authority to close sales themselves.

Now, the world is much different. During tough economic times, companies perceive a greater amount of risk. To

combat this risk, companies usually do two things: §Cut budgets to retain cash. §Raise purchase authority levels to higher amounts and higher positions in the organization.

Mid-level managers previously responsible for making deals are no longer in that position. Higher-level executives have taken back that authority. The combination of dealing with high-level executives and buyers’ exaggerated perception of risk presents a dilemma for many sales people. Many have never had to sell in a difficult economy, nor have they had to develop the type of skill or business acumen to be able to do it.

Concerns During Tough Economic Times Even though companies feel as though their sales people are doing the necessary things in order to acquire business, their objectives are thwarted because customers, for one reason or another, are refusing to buy or to close.

The customers become fearful of committing to a deal because they feel the risk is often higher than the expected benefits and subsequently they freeze.

Today, we are beginning to see the condition of the economy improve, probably diminishing the customer’s fear or risk, and allowing more sales to close.

However, there is concern with the conditioning of sales people or the training of buyers in negative sales behaviors. Prime examples of this are huge discounts and excessive concessions.

Why Are Pipelines Harder To Fill Today?

How the Best Companies Overcome the Pipeline Challenge

There are three reasons why pipelines are harder to fill in today’s economy:

Even though many companies are having a difficult time combating their pipeline challenge, some of the best companies have been able to prosper.

The majority of them follow basic business principles that allow them to be successful.

1. Sellers are not getting enough prospects into the top of the funnel. Customers are more reluctant to even begin the buying cycle.

An exaggerated perception of risk causes customers to hesitate to buy, prolong the process, or drop out of the buying cycle

2. It is taking longer to move prospects though the buying cycle. Customers are being more thorough in their evaluations and comparisons, prolonging the entire evaluation process.

3. More opportunities or possible transactions are dropping out of the funnel at some point during the process. This can be attributed to two factors: a. First, because fewer opportunities are present, many sales professionals become reluctant to qualify their prospects. This is the worst thing possible to do. Qualifying is necessary in order to avoid a pipeline clogged with bad opportunities. b. The second reason why more and more customers are dropping out of the pipeline is simply due to the risk factor. Customers disqualify themselves at different times throughout the process because they believe the venture is too risky or they do not have the money to spend at the time.

The combination of these factors yields the inability of sales managers to accurately forecast their revenues.

1. The best companies know how to accurately assess the volume, speed, balance, and quality of business in their pipeline.

2. They manage their opportunities.

The best companies are able to find new opportunities, qualify or disqualify them, and pursue the qualified opportunities in an effective manner with the necessary resources.

3. Most importantly, the best companies and the best sales people are able to execute almost flawlessly. They work to quell the customer’s perception of risk, while at the same time closing the deal at reasonable prices, terms, and conditions.

Exaggerated Pipelines: How Much Is Actually There?

Forecast revenue more accurately by assessing both the volume and the quality of opportunities in the pipeline.

In a typical transaction, most sales managers do not only want to know where the buyer stands, but what the seller has done in order to improve the likelihood of closing the deal. The seller must become involved with the customer. The seller must be able to answer a few valuable questions to effectively evaluate his or her performance. § § §

Is the business problem defined?

Has the seller gained access to power?

Has he or she created a vision?

If these questions are answered, the likelihood of closing the deal greatly increases.

Sales managers and executives must remember that it is not only the amount of money in the pipeline, but also the quality of the opportunities that really matters. One must be careful not to become overzealous and give opportunities in the pipeline more probability than actually exists.

PxPxVxVxC=Sale

To appraise the value of what is actually in the pipeline, first, have a defined sales process. Then create milestones in the pipeline that are based on the buyer’s behavior. Milestone measurement determines the real volume of the pipeline. With this knowledge, sellers must then go out and create new opportunities to fill the void in the pipeline.

A Cheat Sheet for Quality After the volume has been determined and the opportunities have been found, the most important thing to do is assess the quality of these new opportunities.

But how does one correctly assess this quality? Sales Performance International has developed a successful sales formula to properly evaluate quality of opportunities in the

pipeline. The five critical elements in this process are: 1. Do I understand the problem, the pain, or the critical business issue of the key people within the opportunity?

2. Do I have access to power? Do I have access to the people with influence and authority?

3. Do those people have a vision of a solution; a vision of capabilities that match what we can help bring to the table?

4. What is the value? Do they quantifiably understand what the value is, and believe we can bring change to the table?

5. Can we exert some element of control into how or when they are going to buy?

The application of this formula will allow sellers to weed out the bad deals early in the process, subsequently unclogging the pipeline and allowing for more sales productivity.

The Activity, Not the Result An important step to rebuilding the sales pipeline is to ensure that each sales person is fully engaged in the new process. They must change any negative behavior for the pipeline to remain full and flow smoothly. An important point for sales people to remember is to not always focus on the end result of their objective. Instead, they should focus on the activities that produce the desired result. In order to be successful, they must define specific activities that build those allimportant pipelines and then measure volume and quality against those activities.

Find Opportunities in Places You Never Looked Before

Try not to focus only on the end results, but to focus on the activities that achieve the results.

There are two types of companies where sellers find opportunities: companies who are looking for a solution and companies who are not looking.

When asked, virtually every sales person says they focus on companies who are looking for a solution.

Unfortunately, this is not always the most successful method of prospecting. If a sales person or a business is able to sustain their pipeline by using only this method, continue – however, this is usually not the case. In today’s economy, businesses need to reach those who are not looking in order to sustain their pipelines. There is an immense population of companies who are not looking, but who would greatly benefit by a sales person’s products or services.

If a seller is able to take a dormant opportunity, one that is “not looking”, and is able to convert them to “looking”, research by our clients has found that the seller is going to win more than 90% of the business.

The new definition of prospecting, as defined by Keith Eades, President of Sales Performance International, sheds a new light on the entire process.

Prospecting is the “actual building to stimulate or create demand for your products or services. It’s a skill; it’s the ability to do something.”

The Value Proposition The chief way for a salesperson to stimulate interest from a prospect is to generate curiosity. A Value Proposition is a tool geared at generating curiosity by allowing a prospect to see that they can greatly benefit by the purchase and implementation of your products or services. For example, if a sales person tells a company executive the following: “We believe you can increase revenues by 10 million dollars for an investment of as little as 1.5 million dollars.” Regardless of how basic it may sound, the executive is likely to be highly receptive to this proposal.

A Value Proposition is effective for two different reasons: §

It is not correct to dismiss those that are looking, but this different approach can help sellers or sales teams that are unable to sustain their pipelines by solely working in the “looking” area. §

Do not view prospecting as tedious – you are creating demand for your product or service.

Turn Latent Opportunities into Active Ones The skill of prospecting is the most effective way to turn latent opportunities into active ones. Over the years, prospecting has garnered a negative connotation - “cold calling”.

Many sellers believe their time is too valuable to prospect and that this process should be handled by the marketing department of the company.

Instead of dismissing this activity as tedious, sales people should view prospecting as a chance to interact with future clients.

It is centered on the prospective customer - to successfully attract a customer’s interest, a seller must demonstrate knowledge of their critical business issues and their need to find a solution.

There is no mention of the product - instead, only a solution is offered, and the customer is able to see the future value.

In the past, when the economy was more stable, it was common for sales people to effectively sell by doing product demonstrations to mid-level managers. Now, in uncertain economic times, companies want to see the value of a buying decision before anything else. Showing value is the best way to stimulate interest.

If journeymen possess a solid process, they are often able to outperform the eagles.

The Business Development Letter

Not Everyone Is an Eagle

The Business Development Letter is another way to gain the curiosity of potential customers. A typical letter:

The steps to rebuild your sales pipeline are fairly straightforward, but your success will ultimately be decided by the people on your sales team. Sales talent can be categorized in two ways:

§ § § §

Names an industry or type of client you have worked with in the past Lists the chief concerns of that industry Asserts that you have been able to provide solutions for those clients Offers to share some examples of past solutions in order to help the potential customer

This type of letter brings up critical business issues and asks the questions that cause a company to require a certain product or service. The intent of the letter is to create curiosity in the mind of the prospect, and it helps sales people stimulate new interest and opportunities that add more quality volume to their pipeline.

The Evaluation Plan One of the most common complaints from sales people today is their inability to close the deal towards the end of the sale cycle. An Evaluation Plan can be an effective tool to aid a sales person in that type of situation.

The Evaluation Plan is simply the application of basic project management. Once a customer has begun to enter the pipeline, a sales person should suggest a series of activities for them to follow. Suggest the customer complete certain actions on certain dates, regardless of the length of the sales cycle.

Even though a sales person proposes an Evaluation Plan, it does not mean that he or she has total control because the deal is not finalized yet. The customer must take ownership. The customer assumes control once they begin to change the plan. Once the customer feels comfortable enough to take ownership of the plan, they will be more disposed to follow it through to the end.

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Eagles - make up close to 20% of the sales population. Eagles are those who possess an immense amount of intuition and always seem find the best way to close a deal. The best thing that an executive can do is to allow these eagles to continue on with their productive ways without interfering.

Journeymen - account for the remaining 80%. Journeymen are usually non-intuitive, successful, good salespeople. They achieve their success by strict adherence to a process that details each step along the way.

By following a set of guidelines for making a deal, they are able to get prospects into their pipeline and hopefully manage them successfully.

What Type of Seller Do Buyers Want?

Management often wants to hire a specific type of seller, but to the typical buyer, an ideal seller may have different traits.

Management generally seeks to hire very aggressive closers who possess good selling and people skills.

Companies feel as though this type of sales person is the best way to maximize revenue and business productivity.

Buyers, on the other hand, often look for a different type of seller. They want to work with a sales person who really understands their business. They want a sales person with good situational knowledge and a solid grasp on the capabilities their company offers. In other words, they are looking for an eagle performer who is able to integrate

their product or service knowledge with good people skills.

But can journeymen become eagles?

Sales Performance International believes that this is certainly possible.

If journeymen rely on a sound selling process, they can become eagle performers. Actually, SPI has found that if journeymen are intuitive and possess a solid process, they are often able to outperform the eagles.

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How to Assess Needed Change While people may realize that change is needed, not everyone knows what needs to be changed. SPI asks people to examine three basic areas of their business in order to evaluate what changes should be made to achieve more success.

power, vision, value, and control?

After this has been determined, make sure that the right resources are allotted accordingly.

Review your sales execution process. o Are enough new opportunities being stimulated in order to sustain a healthy pipeline? o Are your salespeople able to manipulate the process to overcome any exaggerated perception of risk?

4 Major Cornerstones ยง

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Evaluate your pipeline management process. o Do you have a consistent sales process? o Do you routinely measure pipeline volume, speed, balance, and quality? o Companies not only need to appraise the amount of business in their pipeline, but more importantly, the quality of business.

Evaluate your opportunity management practices. o Are you able to eliminate unqualified deals early in the process based on the following criteria: pain,

Four major cornerstones must be realized in order to create a high performance sales culture. ยง

A sales process must be followed within an organization.

Focusing on specific selling activities leads to desired results.

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A sales management system is necessary to secure productivity and success, even if a sales process may be in place. You need to be sure that you measure the quality of your pipeline against the process.

You should also use the sales process to forecast business. §

As the world, and especially the business sector, becomes more and more dependent on technology, it is necessary to incorporate automation to ensure a high performance sales culture. The sales process becomes much easier with the proper software and other technological aids.

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To communicate a uniform message to the customers, the integration of marketing into the sales process is essential.

Conclusion The 1990’s saw an unprecedented economic boom. Selling was easy and the business world had few worries. Today, the economic condition is completely different. The fear and worries of most companies have increased dramatically, making them more apprehensive to buy in the same manner as before. Most companies’ pipelines are mere shadows of what they used to be. Sales Performance International is fully aware of the current situation and has built the tools to combat these obstacles. By following a determined sales process and implementing the tools necessary to sustain this process, companies can increase not only the size of their pipeline, but more importantly, the quality of what is in the pipeline, allowing for improved sales performance.

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