Demystifying Pipeline Management
Pipeline management wins the prize for causing the most unneeded confusion and frustration by both sales management and salespeople.
As I work with all levels of sales management in both small and large organizations, I can always count on pipeline to be an opportunity for improvement. Pipeline management, like coaching, is something everyone thinks they are doing yet most of the time isn’t being done or done well. Very few have figured out the essence of what pipeline management actually is and how to get it executed well.
I see lots of evidence exposing many erroneous beliefs, practices, and traps such as:
- Pipeline is a synonym for forecast.
- Talking through each deal in a pipeline is productive.
- Having salespeople share the details of their pipeline in group settings is an effective and efficient learning and accountability practice.
- Bigger is better.
The Real Truths
Pipeline is a measure of sales activity effectiveness.
All sales managers track sales calls; most are challenged to follow through and analyze the progress and effectiveness of the sales calls. If done right the pipeline should show what new opportunities were added, what opportunities moved to the next stage, and which moved off. This data, when correlated with what type and quantity of calls as well as the dates when the activities were done, gives great insight into sales effectiveness.
Pipeline management is the regular discipline of analyzing sales effectiveness.
Many sales managers use the pipeline as simply a list of all the current deals. They use “the list” to have their salesperson step them through the details of each opportunity, share the next steps, and potentially strategize to move the opportunity better or faster. Even worse, some use one-on-ones or team meetings to gather data about opportunities. Pipeline management done well is very different than these common practices. Good pipeline management consists of a manager and a salesperson analyzing what the pipeline says about: the number and type of calls being made, the effectiveness of the calls, and determining the most critical sales activity or effectiveness gaps.
Forecast is the prediction of what business is expected to close and within what timeframe.
Forecasts require knowing what opportunities are being worked, when the buying decisions might be made, and what the chances are for winning. Things go awry when organizations focus salespeople more on what’s coming in instead of keeping them focused on call activity and adding and moving opportunities within the pipeline.
Forecasting should be a science that’s driven by management and based on the probability of each opportunity’s success. Managers create problems when they make their salespeople guess the probability of closing a particular deal. Often times the salesperson’s guess is not based on any previous performance history or a stage of the sales process, but instead just the salesperson’s gut. This practice of gathering the salesperson’s guess mixed with the sales manager’s intuition creates great inconsistencies and inaccuracies in a forecast.