How to Manage a Sales Pipeline

By Paul Reilly

Unemployment is dropping. Consumer confidence is rising. The economy is humming along. Business is good, if not great! And salespeople are crushing their quotas. However, good economic times mask bad sales behavior. During these booming times, pipeline management becomes even more critical!

Here are a few pipeline management challenges facing salespeople…

Under-pressured pipes

Even in great economic times, some salespeople struggle to find enough viable sales opportunities. The salesperson can have a tough competitor in their market. The salesperson could be brand new. Some salespeople can also rely too heavily on the big deals that fall through. Whatever the reason, these salespeople don’t have enough opportunities to fill their pipeline. This lack of opportunity leads to frustration and even self-doubt.

Over-pressured pipes

Pipes can only contain a certain amount of material; a sales pipeline can only sustain a certain amount of opportunities. To focus everywhere is to focus nowhere. An abundance of opportunity creates an absence of focus. Salespeople miss details and must spread their attention.

During these peak economic times, opportunities can be taken for granted. Each opportunity becomes increasingly replaceable. Salespeople tell themselves, “It’s alright that I lost that opportunity. There will be another one.”

Clogged pipes

When pipes clog, nothing gets through. The same is true for sales pipelines. Too often salespeople fill their pipelines with massive opportunities that take too long to close. These massive opportunities obstruct the progress of other opportunities. Managing a pipeline is about achieving balance among various opportunities.

Whether you have under-pressured, over-pressured, or clogged pipes, the end result is the same—poor performance. Identifying the issue is the first step. The next step is to fix it. Here are a few tips to help you more effectively manage your sales pipeline.

Label your opportunities

You can break down any opportunity into these three categories:

  • A red-hot opportunity (RHO) is a high-probability opportunity that is more “when” than “if.” You are 90-100% sure it will happen short term.
  • A viable opportunity (VO) is a moderate-possibility opportunity that is more “if” than “when.” You are 50-90% sure this will happen in the intermediate future.
  • A potential opportunity (PO) is neither “when” nor “if.” It is “maybe.” You are less than 50% sure it will happen long term.

Once you define your opportunities, remember to apply the 1-2-4 ratio. For each RHO in your pipeline, you need 2 VOs and 4 POs to maintain a steady flow of business. Another way to frame this is that for every short-term opportunity, you need 2 intermediate opportunities, and 4 long-term opportunities. An additional way to view this is that for every “when,” you need 2 “ifs” and 4 “maybes.” This is 1-2-4 pipeline management.

Review your opportunities regularly

Always be aware of where your opportunities are in your pipeline. On a weekly basis, analyze your sales pipeline.

Review your RHOs and determine what needs to happen to close the deal. Review your VOs and determine what needs to happen to heat up those opportunities. Analyze your POs and determine a strategy to turn them into more viable opportunities.

Every time you win (or lose) a sale, it’s no longer in your pipeline. Celebrate your successes and learn from your failures. And then find more opportunities to back-fill the opportunity, won or lost.

Clean your pipes

Too often, salespeople allow opportunities to sit and settle in their pipeline. Salespeople don’t want to admit defeat. Foolish optimism takes over and they become prisoners of hope. You can’t build a house on a weak foundation just like you can’t build a pipeline with weak data. It’s critical to regularly purge your pipe.

Some salespeople leave opportunities in their pipeline to gain a false sense of security. Salespeople will mask their failures until they can replace dead opportunities. A false sense of security is more harmful than insecurity. A positive sense of insecurity will compel you to act. For some salespeople, the loss of an opportunity can actually be more motivating than a win.

Review the size and timing of each opportunity. If you are working an opportunity that is three times the size of your normal opportunity, it’s less likely to happen. Don’t mistake that statement as pessimism; it’s just reality. Calculate the average time it takes to close a deal. If your pipeline is filled with opportunities that take three times as long to close, these deals are less likely to happen. I’m not suggesting that you abandon these opportunities. Balance these opportunities with smaller, short-term wins.

In sales, you cannot control the outcomes. You cannot control the buyer. Very few people can handle this level of uncertainty. Although you can’t control the outcomes, you can control the inputs. Use these tips to more effectively manage your sales pipeline. Managing your pipeline effectively ensures a steady inflow of new opportunities.

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2019-06-04T13:47:38-05:00