The Perfectly Balanced Sales Pipeline
By Tom Reilly
Imagine a steady flow of new business without peaks or valleys. Imagine the effect on your sales. Imagine the impact on your income.
Whether you call it territory management, pipeline management, or opportunity management, maintaining a steady flow of new business is challenging. For most salespeople, the sales calendar is a roller-coaster ride—up one month and down the next—of euphoria and disappointment. This makes sales forecasting an impossible task. The answer to this dilemma lies in the metrics by which salespeople live.
Closing sales is a productivity metric based on achievement. Calling is a performance metric based on activity. Structured properly, performance leads to productivity. This means that salespeople must schedule activities that lead to achievement. They perform to produce. This is more an organizational versus a selling-technique challenge.
A simple formula for guaranteeing a steady flow of business is 1-2-4. This means for every short-term opportunity, there must be two intermediate, and four long-term opportunities in the works. For example, for every piece of business that you will close in the next 30 days, you need two that will close in the next 90 days, and four that will close beyond this. You may work on shorter or longer lead times, but the ratio is always the same.
The 1-2-4 ratio is based on average closing ratios, and it has been documented as a success strategy for salespeople in all industries for decades. To get the most value from this idea, study your potential book of business and evaluate how your opportunities compare to the 1-2-4 ratio. Adjust as necessary, if your goal is to have a steady flow of business.
Tom Reilly is literally the guy who wrote the book on Value-Added Selling (McGraw-Hill). Visit us online at www.TomReillyTraining.com.