Revenue is customer money. It is the oxygen of every company. It is what sustains organizations to be able to offer and deliver value to its customers. Paychecks are made up of… yes, you guessed it… it is customer money!
To have revenue, you must have customers. And to have customers, you need to be able to acquire and retain them. For new client acquisition, the key is in the pipeline. The sales pipeline represents the future livelihood of the organization.
Seems pretty straightforward so far... but I’d bet at least half of the people reading this are already thinking, “Not ours.”
The reason is that there are three major problems with pipelines.
1. Lack of opportunities in the pipeline
Two months ago, both local sales reps from a technology consulting company were fired. No new business had been recently acquired and the pipeline was looking bleak. At the same time, all of the highly-skilled consultants that had been on the bench (to no fault of their own) were laid off. Most of those that were assigned to current projects were safe… at least for the time being.
Now some of those projects are ending, no new sales reps have been hired, and the pipeline is still empty. Even the consultants that are working projects fear they are about to be on the bench and at risk. Some have already jumped ship and others are about to leave soon.
The moral: With no new opportunities in the pipeline, there will be no new clients. No new clients = no new revenue (and even less oxygen to sustain the organization).
2. The pipeline isn’t accurate
Whether or not the pipeline is generated out of the CRM based upon opportunities, or tracked separately in excel or some other tool – it probably isn’t accurate.
There isn’t a clear definition or process on what gets added to the pipeline and when.
It requires the sales person to add the opportunity (either to CRM or to the pipeline tracking) which isn’t done consistently.
Opportunities aren’t qualified (the driving force for the customer to make a change either isn’t there or hasn’t been uncovered).
The pipeline stages are based on ‘the selling process’ instead of being aligned to the customer’s buying/decision process.
For the opportunities that are in the pipeline, the potential revenue and likelihood to close are often inflated (as a result of the previous two items).
Opportunities that are not advancing never come off of the pipeline (or remain there for too long).
3. Low pipeline effectiveness
The formula for new client acquisition and pipeline effectiveness (illustrated in the following image) begins with the number of qualified opportunities.
In fact, research shows that most people concentrate efforts on trying to increase the # of opportunities. However, the challenge is this is the highest area of defect and takes the most amount of time. If the goal is to fill the pipeline with opportunities, there will be much less time left to work on increasing the $ value of opportunities, increasing the % win ratio, and/or decreasing the length of the sales cycle.
Your pipeline represents your future oxygen. Related: Why Your Prospects Don't Buy From You.
The ability to acquire new customers requires being in the customer’s operating reality, aligning to the customer’s buying/decision process, prospecting, being able to ask effective questions, communicating value, and overcoming objections – all topics covered in Butler Street’s Sales Effectiveness training.
In Butler Street’s Pipeline Management course, participants learn to align the selling process to the buying process, the specific actions that need to be taken at each stage to advance the process, understanding the components of pipeline effectiveness, where to concentrate efforts, and how to increase new client acquisition. Contact us for help solving these 3 major pipeline problems.