28. Sales Pipeline


Leads go in one end, customers out the other end…

We already discussed the metaphor of a sales “funnel.” Another popular way to think about and organize your list of potential and closed customers is as a sales “pipeline.” Simply put, leads go in one end of the pipeline, and customers come out the other end.

In this simple metaphor, the job of your sales team is to get people through this pipeline as quickly as possible and to reliably predict how many customers will exit the pipeline in any given week, month, or quarter. That is, your sales team must contact the unqualified leads and turn as many of them into customers as possible, as fast as possible, and do it according to a schedule that the rest of the company can use to plan. But how do you create that schedule/projection?

Customer management tools exist to help you do this. The most popular of these is Salesforce.com. If your business will have more than a handful of customers, then use a customer management tool to help you track all communications with your customers, to measure the speed at which they flow through the pipeline, and to make projections based on those measurements.

A great salesman once taught me the following technique: Each salesperson ranks all their potential customers. What are the odds of that customer buying your product in a given time period (that is, what are the odds of “closing a prospective sale”)? For big, complex sales, the time period is typically one quarter; for sales processes that last days or weeks, the time period may be a month.

The rankings are limited to three levels, depending on the likelihood that the customer will close in this time period:

  • 1%-49%—“Pipeline,” unlikely to close this period.
  • 50%-85%—“Upside,” not likely to close this period, but possible.
  • 85%-99%—“Committed,” as in the salesperson is committed to the company that this sale will close before the end of the time period (week/month/quarter/etc.).

This information is useful for both building sales projections (which is covered in the next chapter), and also for managing the sales team. It gives the sales manager an opportunity to see whether the quotas are likely to be met and, with repeated reviews, to see how quickly specific deals are flowing through these three stages.

This technique also helps the salespeople prioritize their own efforts, ensuring they give enough attention to the prospects that are committed but not yet closed. Repeatedly using this technique also lets the salespeople better understand their own personal pipeline speed, as they see, period after period, how many prospects move from “pipeline” to “upside” and from “upside” to “committed.”

That knowledge helps the salespeople ensure they are adding enough prospects into their pipeline each period to ensure that enough prospects exit the pipeline in the next time period.

To customize this technique for your own sales process, replace the three stages listed here with the actual stages from your own sales process and funnel.


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