Does your business have a growing sales pipeline? Or is it just another pipedream you’ve been meaning to realise but find you’re too busy with the day-to-day running of your business? You’re not alone.
For wholesale distributors and SME owners, looking to grow, a healthy sales pipeline is the holy grail of sales management.
Most businesses track sales pipelines and yet few think they’re managing theirs well.
In fact, recent research conducted by the Sales Management Association found 63 per cent of business owners, large and small, thought their business was ineffective at managing their sales pipeline overall.
This is despite SMEs saying their biggest challenge is growing sales and balancing this with managing cash flow.
It’s worth putting your efforts where it counts for maximum results. Developing a robust sales pipeline gives you:
- Insight into the total value of “active” new and repeat business opportunities;
- Business data to intelligently predict the value of leads likely to convert to sales – helping you match your inventory purchasing with your expected demand;
- Productivity tools to ensure your sales team focus on the deals that are most likely to close, helping your team reach their targets; and
- Increased accuracy around revenue forecasting you expect to secure in a given month, quarter or year, helping you manage your cash flow.
Know your customer
A sales pipeline informs your approach to selling. Maintaining a healthy sales pipeline is closely dependent on the condition of your customer relationship management (CRM) system and the sales processes you have in place.
Once you have your CRM in place and processes that your sales team are consistently following, the next questions to ask when developing a healthy sales pipeline are:
- Who is our customer?
- What makes them tick?
- What are they buying?
- How are they buying?
- How frequently are they buying?
- How can we serve our customers better?
Here is a roadmap to get you and your pipeline where you want to go:
1. Design your pipeline
Think of your sales pipeline as the visualisation of your sales processes to create an efficient system to progress leads throughout your sales cycle until you have converted them into happy customers.
As mentioned above, it provides a formula to estimate sales revenue so you can get a clear picture of what’s ahead – allowing you to better manage your inventory, your cash flow and your workforce.
This is important because developing and effectively managing a sales pipeline gives your sales team an opportunity to follow your proven sales processes and ensure they continue to match your customer’s buying cycle to maximise conversion rates.
Each step within a sales pipeline represents a pre-determined set of actions that need to be taken into account in order to progress the lead to the next stage.
2. Understand your business numbers
The sales pipeline doesn’t just manage the flow of business leads, it can assist sales managers and business owners in understanding the current value of sales conversations and their expected billing date – assisting company revenue forecasting, inventory purchasing and cash flow management.
To understand the genuine value of opportunities within the sales pipeline, key business data from all areas of the business will need to be considered, including information from finance, sales, marketing, customer service and stock availability.
Your CRM database should help you gain a 360-degree view of what is happening across the business that may impact on your sales pipeline.
The five key figures to calculate for your sales pipeline are:
1. Number of leads and prospects within each stage of the pipeline
2. Average value of prospects in pipeline and expected close date
3. Conversion rate – percentage of leads and prospects likely to progress to the next stage (Leads: Sales, Leads: Prospects, Prospects: Sales)
4. Age of the lead at each stage of the pipeline
5. The overall value of opportunities in the pipeline
Understanding your pipeline statistics provides a data-driven approach for your sales team to reach sales targets. The more data-driven your approach, the more ‘realistic’ the result and expectation.
3. Recognise your risks
Next step is to recognise the risks at each stage of the sales process; by doing this you’re in a better position to ensure the leads that come through at the beginning of the pipeline make their way through to a sale at the end.
Knowing your risks is important and may include issues around:
- Lack of product information;
- Lead times for new orders not matching customer expectations; and
- Inflexible pricing structures for important repeat customers or those buying in bulk.
A key indicator to be mindful of is the length of time a lead sits within one stage, without progressing to the next stage. This waiting period can decrease the possibility of a sale/conversion; which is a risk to the estimated revenue of the business and wasted effort by the sales team. It can also lead to a miscalculation in your stock purchasing and workforce capacity planning.
4. Review and monitor your pipeline
Now that your pipeline is set up, regular reviews of the pipeline will highlight any inefficient processes, aged opportunities or leads that are considered ‘high risk’ due to their size or lack of progression through the sales process.
It is vital that each stage of your pipeline is monitored separately, alongside its corresponding sales process.
If one section of the pipeline is experiencing a higher than normal drop-off or stalling rate, review the current processes and update as required.
By improving your conversions at each stage, you will soon see an increase in your overall sales result.
However, it should not just be left up to your sales managers. Empower your sales reps to manage their own individual pipelines and daily, weekly and monthly activities to ensure you are consistently achieving your sales targets.
A good CRM will allow your reps to track their activities (phone calls, emails, meetings and follow ups) providing reminders of the activities that have to do once they get into the office each day. The benefit of a cloud-based system is they no longer need to even come back into the office.
They can login when they are at home or on the road and be prompted by all the follow-up they need to do to make sure they are closing out those deals. By understanding their sales pipeline they will be able to focus their efforts on those deals that are most likely to close plus nurture leads and opportunities effectively depending on what stage of the journey they are at.
5. Integrate your business data and how the cloud can help
By the time you’re at step 5, it’s clear that it’s important to integrate the sales pipeline into broader business processes to maximise your sales revenue.
Knowing your sales cycles and the various stages you need to progress to convert customers to buy your product is important to ensure you consistently hit your growth targets.
Cloud-based business management software will integrate and automate key areas of the sales pipeline to save time and resources.
Enterprise Resource Management systems integrate business data from all corners of your inventory carrying business including financials, sales and marketing, CRM and supply chain management.
Providing transparency on real-time customer data allows you to match your purchasing of stock with your expected demand.
Plus, having a unified solution with your financials will also ensure you get those invoices out to customers as soon as possible helping you to get paid faster! And that’s an invaluable benefit for businesses looking to grow!
To close the business loop, use data collected from your sales pipeline in conjunction with your sales transactions historical data to recognise trends. This empowers you to create accurate data-driven sales and revenue targets for your company and individual sales team members.
Stephen Canning is the CEO of cloud-based business management software provider JCurve Solutions.