An important and vital responsibility of a Sales Manager is a regular review of their sales peoples’ pipeline. But repeated pipeline reviews are often a source of stress between sales managers and sales people. As you might expect, there are the usual focus points when it comes to questions at a typical pipeline review:
- What deals will close this month?
- What cover does the sales person have to meet their quota?
- How much of the pipeline is new business versus add-on?
- How does the pipeline feel relative to other months?
- Is marketing delivering on their lead gen targets?
- What are the next steps in the sales process?
- Is senior management from the prospect engaged?
- What is the average deal size?
- Where is the competition on individual deals?
Invariably most sales people, who are under pressure to deliver, will try to concentrate the discussion on Marketing’s contribution to inbound leads. While this may be a valid concern it can quite often hide the fact the salesperson’s own management of their pipeline is poor. A good salesperson will generate continued input to their pipeline in the absence of leads from other sources. A bad salesperson will hide behind Marketing and try to mask their under performance by inflating their pipeline with opportunities which are not likely to close.
So what is a good leading indicator of this, or where should the manager look? The place to start is the average age within the pipeline of new business. If the average age of closed/won business is significantly lower than the average age of open or closed/lost opportunities, then it’s highly likely the sales person is holding onto deals which won’t close instead of creating and adding new opportunities to their pipeline. The tendency to “beat a dead horse” rather than cold call is very strong in inexperienced sales people or those who are accustomed to a regular supply of leads from Marketing. A simple view of the average age of the pipeline by sales stage will highlight if there is an issue. If the average age of open opportunities is more than one and a half times that of closed/won deals then further investigation is required.
Encouraging and training the sales person in understanding a better use of their time would be to do their own demand generation through cold calling or cold connecting in the social world is key. The salesperson will defend why different opportunities deserve to stay open. But ultimately if your company has a particular set of sales cycles/close rates/sales velocities then these are not likely to shift dramatically over time. The reality however is too many managers neglect to focus sufficiently on age when reviewing their sales peoples’ pipeline.
.
.
.
.
