Recently, a reader wrote, asking a lot of questions about pipelines–what are they, why are they important, how do we leverage them, and so forth. At first, I was surprised by the question, I think of this as basic and fundamental to selling. As I reflected, I realized this is a bad assumption.
For example, I know of very few sales training programs that teach pipeline concepts (we’ve been doing this for the past 30 years). Second, when I look at most sales pipelines, they are a disaster. Pipelines are there, but opportunities are in the wrong stages, close dates are, too often, past events–on live deals, there is bad quality, and people don’t know how to use them.
It’s not only a challenge to sellers, but most sales managers, while they put up a false front, really don’t know how to look at pipelines.
As a result, I thought it worthwhile to do a tutorial on pipelines. I’m focused on writing this from a seller point of view. Managers use pipelines a little differently, I’ll briefly cover this at the end of the article.
So strap in…
The pipeline is the collection of all qualified opportunities we are working on. Sometimes people call this the qualified pipeline, but the terms are really synonymous. Prospecting opportunities are not part of the pipeline. Sometimes, I call this the “above the pipeline, or unqualified space.” We have to track our prospecting opportunities, but we need to keep them separate from the pipeline metrics.
Without a healthy pipeline, you have no ability to assess how you will do or what you might change.
The fundamental reason for this is that until the opportunity is qualified and moved into the pipeline, we have no idea whether it is real. Including prospecting opportunities in pipeline metrics is meaningless. Again, we have prospecting metrics through which we are tracking activity.
The pipeline enables us, in a data-based manner, to answer the question, “Are we pursuing enough opportunities to achieve our goals?” We know we will win and lose some, so understanding our pipeline and metrics help us answer this question.
But there are some important nuances in this question and how we answer it. It’s not simply pursuing enough opportunities to hit our number. But there are a number of dimensions about a healthy pipeline:
This is slightly redundant to the previous section. Too many sales people don’t understand the importance of the pipeline to them and their personal performance. They think it’s just something managers care about and inflict on them.
In some sense, they aren’t incorrect. Too many managers obsess over the pipeline, without really understanding it, how to use it as a diagnostic tool, or how to coach to it. And, too often, management obsession is only because their managers ask for it.
But fundamentally, the pipeline is a critical tool for the seller, the individual contributor. Our job is to achieve our goals, to hit the numbers. We need to have a tool that enables us to answer this question. We need a tool that helps us diagnose challenges to achieving our goals. We need to have a tool that enables us to assess alternate strategies to achieving our goals.
We see so many errors with sellers and managers in understanding the power of the pipeline. I don’t know how many times, I’ve seen the single fix to anemic pipelines is, “Prospect More!” This is usually followed by the mandate, “You need 3X coverage!” If you have a 20% win rate, 3X coverage will never get you to your goals! If you have a 20% win rate, prospect more may not be the most impactful strategy. Increasing your win rater, increasing your average deal size, decreasing sales cycles may be more important and more achievable.
So if you don’t get it yet, forget about your managers! Worry about yourself and your performance. Without a healthy pipeline, you have no ability to assess how you will do or what you might change.
I snuck the concept of healthy pipelines on you. But this is one of the most important concepts in pipeline management. The majority of pipelines I look at (and I look at thousands) are very unhealthy. They are filled with opportunities that are not real (not qualified), wishful thinking, opportunities that are outside our ICP, and so forth. If the pipeline is filled with junk, then all the metrics are meaningless. There are several components to looking at pipeline health:
These are the fundamentals in assessing a healthy pipeline. And these provide some insights to fixing unhealthy pipelines. Too many don’t understand these leverage points. Too many have only one answer to unhealthy pipelines, “Prospect more!!!” There may be more effective ways to build a healthy pipeline, plus the “prospect more,” strategy often results in lowering quality, just to fill the pipeline–which changes the pipeline dynamics. Things like increasing win rates, deal size, or reducing sales cycle enable us to build healthy pipelines.
I’ve covered the basics of pipelines, I’ll lightly touch on a few additional topics that are critical and provide refinements to building and managing your pipeline. I won’t go deeply, perhaps taunting you on future posts:
There’s so much more, but start with this and master the basics.
Dave has spent his career developing high performance organizations. He worked in sales, marketing, and executive management capacities with IBM, Tektronix and Keithley Instruments. His consulting clients include companies in the semiconductor, aerospace, electronics, consumer products, computer, telecommunications, retailing, internet, software, professional and financial services industries.
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