How to Rebuild YourSales Pipeline

6230 Fairview Road, Suite 200Charlotte, North Carolina 28210 USA

Author: Tim Sullivan704-364-9298

www.spisales.com orwww.solutionselling.com

How to Rebuild Your Sales Pipeline

As the economy looks to be improving,businesses are realizing the importanceof rebuilding their sales pipelines. Therecent bear economy has claimed manysales pipelines as victims. Customersare more hesitant to enter the buyingcycle, more hesitant to make the finalpurchase decision, and the salespipeline is harder to keep full. Forward-looking sales executives must learn toidentify the reasons for these problems,and also deploy strategies to combat thepipeline challenge.

Understanding current buying cycletrends is vital to interpreting the salespipeline. There are three stages of everybuying cycle. In the first phase of thecycle, buyers determine what they needto address a business problem oropportunity. The second phase focuseson finding the right solution: the rightproducts or services to fulfill the need.During this phase, cost becomes lessrelevant. The third and final stageoccurs when the buyers becomeconcerned with the risk of their potentialdecision. In a down economy, this riskbecomes greatly exaggerated. This isthe reason for the pipeline challenge.

Times Have Changed

During the economic boom of the 1990’s,most high-tech companies enjoyedcountless sales and seemingly limitlessrevenues. Subsequently, budgets werelarge and mid-level managers werevested with the authority to close salesthemselves.

Now, the world is much different. Duringtough economic times, companiesperceive a greater amount of risk. To

combat this risk, companies usually dotwo things:

�Cut budgets to retain cash.�Raise purchase authority levels to higher amounts and higher positions in the organization.

Mid-level managers previouslyresponsible for making deals are nolonger in that position. Higher-levelexecutives have taken back thatauthority. The combination of dealingwith high-level executives and buyers’exaggerated perception of risk presentsa dilemma for many sales people. Manyhave never had to sell in a difficulteconomy, nor have they had to developthe type of skill or business acumen tobe able to do it.

Concerns During Tough EconomicTimes

Even though companies feel as thoughtheir sales people are doing thenecessary things in order to acquirebusiness, their objectives are thwartedbecause customers, for one reason oranother, are refusing to buy or to close.The customers become fearful ofcommitting to a deal because they feelthe risk is often higher than the expectedbenefits and subsequently they freeze.

Today, we are beginning to see thecondition of the economy improve,probably diminishing the customer’s fearor risk, and allowing more sales to close.However, there is concern with theconditioning of sales people or thetraining of buyers in negative salesbehaviors. Prime examples of this arehuge discounts and excessiveconcessions.

Now that mid-level managers nolonger have purchase authority,

sales people may not havethe right skills to deal with

higher-level executives

Why Are Pipelines Harder To FillToday?

There are three reasons why pipelinesare harder to fill in today’s economy:

1. Sellers are not getting enoughprospects into the top of thefunnel. Customers are morereluctant to even begin thebuying cycle.

2. It is taking longer to moveprospects though the buyingcycle. Customers are beingmore thorough in theirevaluations and comparisons,prolonging the entire evaluationprocess.

3. More opportunities or possibletransactions are dropping out ofthe funnel at some point duringthe process. This can beattributed to two factors:

a. First, because feweropportunities arepresent, many salesprofessionals becomereluctant to qualify theirprospects. This is theworst thing possible todo. Qualifying isnecessary in order toavoid a pipeline cloggedwith bad opportunities.

b. The second reason whymore and morecustomers are droppingout of the pipeline issimply due to the riskfactor. Customersdisqualify themselves atdifferent timesthroughout the processbecause they believethe venture is too riskyor they do not have themoney to spend at thetime.

The combination of these factors yieldsthe inability of sales managers toaccurately forecast their revenues.

How the Best CompaniesOvercome the Pipeline Challenge

Even though many companies arehaving a difficult time combating theirpipeline challenge, some of the bestcompanies have been able to prosper.The majority of them follow basicbusiness principles that allow them to besuccessful.

1. The best companies know howto accurately assess thevolume, speed, balance, andquality of business in theirpipeline.

2. They manage their opportunities.The best companies are able tofind new opportunities, qualify ordisqualify them, and pursue thequalified opportunities in aneffective manner with thenecessary resources.

3. Most importantly, the bestcompanies and the best salespeople are able to executealmost flawlessly. They work toquell the customer’s perceptionof risk, while at the same timeclosing the deal at reasonableprices, terms, and conditions.

An exaggerated perceptionof risk causes customers tohesitate to buy, prolong the

process, or drop out ofthe buying cycle

Exaggerated Pipelines: How MuchIs Actually There?

In a typical transaction, most salesmanagers do not only want to knowwhere the buyer stands, but what theseller has done in order to improve thelikelihood of closing the deal. The sellermust become involved with thecustomer. The seller must be able toanswer a few valuable questions toeffectively evaluate his or herperformance.

� Is the business problemdefined?

� Has the seller gained access topower?

� Has he or she created a vision?

If these questions are answered, thelikelihood of closing the deal greatlyincreases.

Sales managers and executives mustremember that it is not only the amountof money in the pipeline, but also thequality of the opportunities that reallymatters. One must be careful not tobecome overzealous and giveopportunities in the pipeline moreprobability than actually exists.

To appraise the value of what is actuallyin the pipeline, first, have a definedsales process. Then create milestonesin the pipeline that are based on thebuyer’s behavior. Milestonemeasurement determines the realvolume of the pipeline. With thisknowledge, sellers must then go out andcreate new opportunities to fill the voidin the pipeline.

A Cheat Sheet for Quality

After the volume has been determinedand the opportunities have been found,the most important thing to do is assessthe quality of these new opportunities.But how does one correctly assess thisquality? Sales PerformanceInternational has developed asuccessful sales formula to properlyevaluate quality of opportunities in the

pipeline. The five critical elements inthis process are:

1. Do I understand the problem,the pain, or the critical businessissue of the key people withinthe opportunity?

2. Do I have access to power? DoI have access to the peoplewith influence and authority?

3. Do those people have a visionof a solution; a vision ofcapabilities that match what wecan help bring to the table?

4. What is the value? Do theyquantifiably understand whatthe value is, and believe we canbring change to the table?

5. Can we exert some element ofcontrol into how or when theyare going to buy?

The application of this formula will allowsellers to weed out the bad deals earlyin the process, subsequentlyunclogging the pipeline and allowing formore sales productivity.

The Activity, Not the Result

An important step to rebuilding thesales pipeline is to ensure that eachsales person is fully engaged in the newprocess. They must change anynegative behavior for the pipeline toremain full and flow smoothly. Animportant point for sales people toremember is to not always focus on theend result of their objective. Instead,they should focus on the activities thatproduce the desired result. In order tobe successful, they must definespecific activities that build those all-important pipelines and then measurevolume and quality against thoseactivities.

Forecast revenue moreaccurately by assessing boththe volume and the quality ofopportunities in the pipeline.

PxPxVxVxC=Sale

Find Opportunities in Places YouNever Looked Before

There are two types of companieswhere sellers find opportunities:companies who are looking for asolution and companies who are notlooking.

When asked, virtually every salesperson says they focus on companieswho are looking for a solution.Unfortunately, this is not always themost successful method ofprospecting. If a sales person or abusiness is able to sustain theirpipeline by using only this method,continue – however, this is usually notthe case. In today’s economy,businesses need to reach those whoare not looking in order to sustain theirpipelines. There is an immensepopulation of companies who are notlooking, but who would greatly benefitby a sales person’s products orservices.

If a seller is able to take a dormantopportunity, one that is “not looking”,and is able to convert them to“looking”, research by our clients hasfound that the seller is going to winmore than 90% of the business.

It is not correct to dismiss those thatare looking, but this different approachcan help sellers or sales teams thatare unable to sustain their pipelines bysolely working in the “looking” area.

Turn Latent Opportunities intoActive Ones

The skill of prospecting is the mosteffective way to turn latentopportunities into active ones. Overthe years, prospecting has garnered anegative connotation - “cold calling”.Many sellers believe their time is toovaluable to prospect and that thisprocess should be handled by themarketing department of the company.Instead of dismissing this activity astedious, sales people should viewprospecting as a chance to interactwith future clients.

The new definition of prospecting, asdefined by Keith Eades, President ofSales Performance International, shedsa new light on the entire process.Prospecting is the “actual building tostimulate or create demand for yourproducts or services. It’s a skill; it’sthe ability to do something.”

The Value Proposition

The chief way for a salesperson tostimulate interest from a prospect is togenerate curiosity. A Value Propositionis a tool geared at generating curiosityby allowing a prospect to see that theycan greatly benefit by the purchaseand implementation of your products orservices. For example, if a salesperson tells a company executive thefollowing: “We believe you canincrease revenues by 10 million dollarsfor an investment of as little as 1.5million dollars.” Regardless of howbasic it may sound, the executive islikely to be highly receptive to thisproposal.

A Value Proposition is effective for twodifferent reasons:

� It is centered on theprospective customer - tosuccessfully attract acustomer’s interest, a sellermust demonstrate knowledgeof their critical business issuesand their need to find asolution.

� There is no mention of theproduct - instead, only asolution is offered, and thecustomer is able to see thefuture value.

In the past, when the economy wasmore stable, it was common for salespeople to effectively sell by doingproduct demonstrations to mid-levelmanagers. Now, in uncertaineconomic times, companies want tosee the value of a buying decisionbefore anything else. Showing value isthe best way to stimulate interest.

Try not to focus only on the endresults, but to focus on the

activities that achieve the results.

Do not view prospecting astedious – you are creating

demand for your productor service.

The Business Development Letter

The Business Development Letter isanother way to gain the curiosity ofpotential customers. A typical letter:

� Names an industry or type ofclient you have worked with inthe past

� Lists the chief concerns of thatindustry

� Asserts that you have been ableto provide solutions for thoseclients

� Offers to share some examplesof past solutions in order to helpthe potential customer

This type of letter brings up criticalbusiness issues and asks the questionsthat cause a company to require acertain product or service. The intent ofthe letter is to create curiosity in themind of the prospect, and it helps salespeople stimulate new interest andopportunities that add more qualityvolume to their pipeline.

The Evaluation Plan

One of the most common complaintsfrom sales people today is their inabilityto close the deal towards the end of thesale cycle. An Evaluation Plan can bean effective tool to aid a sales person inthat type of situation.

The Evaluation Plan is simply theapplication of basic projectmanagement. Once a customer hasbegun to enter the pipeline, a salesperson should suggest a series ofactivities for them to follow. Suggest thecustomer complete certain actions oncertain dates, regardless of the lengthof the sales cycle.

Even though a sales person proposesan Evaluation Plan, it does not meanthat he or she has total control becausethe deal is not finalized yet. Thecustomer must take ownership. Thecustomer assumes control once theybegin to change the plan. Once thecustomer feels comfortable enough totake ownership of the plan, they will bemore disposed to follow it through to theend.

Not Everyone Is an Eagle

The steps to rebuild your sales pipelineare fairly straightforward, but yoursuccess will ultimately be decided by thepeople on your sales team. Sales talentcan be categorized in two ways:

� Eagles - make up close to 20%of the sales population. Eaglesare those who possess animmense amount of intuition andalways seem find the best way toclose a deal. The best thing thatan executive can do is to allowthese eagles to continue on withtheir productive ways withoutinterfering.

� Journeymen - account for theremaining 80%. Journeymen areusually non-intuitive, successful,good salespeople. They achievetheir success by strictadherence to a process thatdetails each step along the way.By following a set of guidelinesfor making a deal, they are ableto get prospects into theirpipeline and hopefully managethem successfully.

What Type of Seller Do BuyersWant?

Management often wants to hire aspecific type of seller, but to the typicalbuyer, an ideal seller may have differenttraits.

Management generally seeks to hirevery aggressive closers who possessgood selling and people skills.Companies feel as though this type ofsales person is the best way tomaximize revenue and businessproductivity.

Buyers, on the other hand, often look fora different type of seller. They want towork with a sales person who reallyunderstands their business. They want asales person with good situationalknowledge and a solid grasp on thecapabilities their company offers. Inother words, they are looking for aneagle performer who is able to integrate

If journeymen possess asolid process, they are often

able to outperform the eagles.

their product or service knowledge withgood people skills.But can journeymen become eagles?Sales Performance Internationalbelieves that this is certainly possible.If journeymen rely on a sound sellingprocess, they can become eagleperformers. Actually, SPI has foundthat if journeymen are intuitive andpossess a solid process, they are oftenable to outperform the eagles.

How to Assess Needed Change

While people may realize that change isneeded, not everyone knows whatneeds to be changed. SPI asks peopleto examine three basic areas of theirbusiness in order to evaluate whatchanges should be made to achievemore success.

� Evaluate your pipelinemanagement process.

o Do you have aconsistent salesprocess?

o Do you routinelymeasure pipelinevolume, speed,balance, and quality?

o Companies not onlyneed to appraise theamount of business intheir pipeline, but moreimportantly, the qualityof business.

� Evaluate your opportunitymanagement practices.

o Are you able toeliminateunqualifieddeals early inthe processbased on thefollowingcriteria: pain,

power, vision, value, andcontrol?

o After this has beendetermined, make surethat the right resourcesare allotted accordingly.

� Review your sales executionprocess.

o Are enough newopportunities beingstimulated in order tosustain a healthypipeline?

o Are your salespeopleable to manipulate theprocess to overcomeany exaggeratedperception of risk?

4 Major Cornerstones

Four major cornerstones must berealized in order to create a highperformance sales culture.

� A sales process must befollowed within an organization.Focusing on specific sellingactivities leads to desiredresults.

� A sales management system isnecessary to secure productivityand success, even if a salesprocess may be in place. Youneed to be sure that youmeasure the quality of yourpipeline against the process.

Project Direct CRM AB - turebergs allé 5 - 191 62 sollentuna www.projectdirect.se - sales@projectdirect.se