Sales Pipeline Management & Tips To Consider To Hit Your Sales Quota
If you want to make your sales quota, start by consistently managing a sales pipeline. That means ensuring that you’re doing enough prospecting to meet your sales goals, and, equally as important, working on the right kind of sales opportunities.
1. Set Prospecting Goals that Tie to your Sales Goals
The first step in building a robust pipeline is setting realistic prospecting goals. A great way of doing this is to “reverse engineer” your sales goals into prospecting activity levels.
For example, let’s assume that you want to close $1,000,000 in sales next year. Start by calculating the number of deals you need to close in order to achieve $1,000,000 of sales. If your average deal size is $20,000, then you’ll need to close 50 deals in a year in order to meet your sales goal of $1,000,000.
Fifty deals a year, or slightly more than four deals per month, sounds easy enough, but now you need to translate that into actionable activity levels. That means analyzing data from your CRM system to determine your pipeline ratios.
What is your proposal to close ratio?
If your ratio is 2:1, then it’s obvious you’ll need to submit 100 proposals per year to close 50 deals and achieve your sales goal.
How many qualified meetings result in proposals?
If it is 3:1, then you’ll need to have 300 qualified meetings over the next year in order to submit 100 proposals.
The next calculation is the number of prospects you need to speak with in order to get 300 meetings. Let’s assume that your ratio of conversations with prospects to qualified meetings is 5:1. That means you need to have 1,500 conversations in order to get 300 meetings.
Now the big one: how many calls do you need to make?
Typical connect rates are 8:1 – i.e., eight call attempts for each connect. That means that you need to make 12,000 calls in order to have 1,500 conversations. That translates into 48 call attempts per day (assuming 251 business days in a year).
What salespeople often find by doing the prospecting math is that achieving their sales goals typically requires a higher than anticipated number of prospecting calls.
2. Take a Shortcut: Existing Customers and Referrals
While most of us associate cold calling with prospecting, prospecting really means finding new business, irrespective of the source. Researchers have consistently found that sales professionals have a much higher success rate booking appointments with existing customers and referrals than with cold leads. Often the success rate is 3-4 times higher, depending on the industry. So to significantly increase your prospecting efficiency, take a shortcut: initially focus your prospecting time on existing customers and referrals.
Unfortunately, many sales professionals don’t ask for referrals enough or do not use the right technique. If you have a good relationship with a prospect or customer, here are a couple simple rules to remember about referrals:
- Ask at every opportunity. Ask for a referral after a sale, when you receive a turndown, when you are cold calling and the prospect doesn’t have a need, or when calling on existing buyers. Of course, ideal time to ask for a referral is when you have closed a deal or solved a problem for a buyer because the decision maker is feeling positive about you and your company. That being said, even if you’ve been turned down, it’s OK to ask for a referral. At that point, the prospect is no longer feeling defensive and may be helpful.
- Make it easy for the person to provide you with names. Be specific, and describe what your ideal prospect looks like. For example: “Do you know who I should talk to in IT regarding…?”
- Finally, always ask permission to use their name!
3. Spend More Time on your Best Opportunities
This final technique is not really about expanding your sales pipeline, but rather improving its overall health through better qualification. Remember, your most precious resource is your time. A classic trap that sales professionals fall into is spending too much time with unqualified opportunities, while not spending enough time with highly qualified opportunities. So without carefully qualifying your sales opportunities even a seemingly full sales pipeline might not yield superior results.
Let’s assume that after 1-2 meetings you’ve determined that the opportunity satisfies the basic BANT (budget, authority, need, and timing) conditions. Is that enough? No. While BANT is a great starting point, it misses two fundamental issues that go to the heart of a qualified opportunity: (1) Is the opportunity worth pursuing in the first place? And (2) Can you win?
The criteria outlined below will help you assess whether a sales opportunity is worth pursuing. Typically, these criteria are best used after your first meeting where you’re uncertain or something just doesn’t feel right about the opportunity.
- Revenue Potential
- Based on the customer’s growth, what is the long-term revenue potential of this opportunity?
- Are there up-selling and cross-selling opportunities?
- Profit Potential
- Does this opportunity meet your company’s minimum profitability requirements?
- What’s the long-term profit potential?
- Strategic Value
- Will winning this opportunity provide you with any competitive advantages in the marketplace?
- What will be the impact of losing?
- Implementation Risks
- Do you have adequate resources to successfully deliver?
- Is the buyer’s timeframe realistic?
Assuming you’ve determined that your sales opportunity is worth pursuing, you’re now ready for the second question, can you win? The criteria below will help you assess your competitive position.
- Solution Fit
- Does your solution meet the key buying criteria?
- Is it differentiated from the competition?
- Business Impact
- Have you identified the business impact of your solution on the buyer’s business, customers, competitive advantage etc.?
- Can you quantify the impact?
- Relationship Strength
- How strong is your relationship with the buyer?
- Have you established relationships with other decision makers and influencers?
- Executive Advocacy
- Do you have senior executive commitment and active support?
- If not, will your supporter give you access to senior executives?
- Decision Influence
- Do you have access to decision makers?
- Can you influence buying criteria?
- Strategic Value
- Is your solution linked to any strategic initiatives?
- Does it create new business opportunities for the buyer?
Sales success starts with building and maintaining a healthy pipeline starting with realistic goals that tie to your ultimate sales goals. A great way to productively use your prospecting time is to first focus on existing customers and referrals.
For many salespeople walking away from an opportunity, even a long shot, is a complete anathema. But remember, your sales success depends on making decisions on how best to allocate your time, including when to deem an opportunity as unqualified. So rather than mourn the loss of the opportunity (it likely wasn’t a viable opportunity in the first place), focus your efforts on your qualified opportunities and building your pipeline.
About David Jacoby
As a Managing Director at Sales Readiness Group, A Part of SBI, David helps large B2B sales organizations improve sales performance. Previously, David was a Principal at Linear Partners, a sales consulting firm providing sales strategy, sales operations, talent management, and interim management services to emerging growth companies. In the past, David has served as Vice President of Business Affairs of Xylo, Inc., where he was responsible for the Company's business development, sales operations, legal affairs, and financing activities.