Creating Value in Sales Pipeline Conversations

We are all familiar with pipeline conversations. In fact, many sellers and sales managers dread them. Why? Because they see little value in them. The shame of this that there is a lot of value to be gained from these discussions.

A Tale of Two Sales Managers Pipelines

We’d like to start this blog post with a story. A story about two sales managers in the same organization.

Manager #1’s team:

  • Closed $4.7M in business
  • Had a 36% win ratio
  • Contributed 17% of overall business revenue

Manager #2’s team:

  • Closed $7M in business
  • Had a 70% win ratio
  • Contributed 59% of overall business revenue

Which manager and their pipeline would you want in your organization?

What if we told you that manager #1 had a $41M pipeline and manager #2 had a $29M pipeline?

We decided to follow this rock star Manager #2 around to understand what he was doing differently. Here’s what we found:

  • His group was doing the same amount of prospecting as every other team
  • However, he was maniacal about what stayed in the pipeline….and what got pushed out. He qualified and qualified and qualified.

He also:

  • Met more frequently with his sellers.
  • Was the only one of the managers who had a separate meeting for early stage opportunities. He would do it as a group.
  • Would ask about very specific things like: do you know who the decision-maker really is? Do you know the timelines?  If not, he would say “Do NOT put that in my pipeline!.“
  • Was not unique by other measures. He was equally trained and also had the same late stage meetings as other managers.

The only thing he did differently were those early stage pipeline conversations aimed at DIS-qualifying the bad stuff early and often.  Looking for reasons NOT to put it in versus reasons to include it.

And as it turns out, his experience is not unique.

Sales Pipeline Conversations Are a Big Deal

While it should come as no surprise to you, according to research we did with the Sales Management Association, managers spend a lot of time having pipeline conversations. We were surprised however, to discover just how often and how long.

  • 72% of managers responding had several meetings a month with over half having one or more a week
  • The meetings averaged 53 minutes in length

One or more meetings per week and each lasting 53 minutes is a lot of resources and energy focused on the pipeline. So, we must be good at it right? Unfortunately, no. Fifty six percent of our survey respondents said that their effectiveness in managing pipelines is either poor or neutral. More than half!

And that’s a shame because it pays to be effective at sales pipeline management.

Our research shows that effective pipeline management has a positive impact on revenue growth. No brainer, right? In fact, our study showed an increase of 15% in relative revenue growth.

So, your managers are spending the time, they are just not spending it in the most effective ways, focusing on the things that actually make a difference. But if they shift their approach, they have the potential for a big impact on your organization.

How Do You Use Your Sales Pipeline?

We looked at 82 companies, over 178k salespeople and over 18k managers. The below objectives are all important things for a sales manager to do but they are not all equal.

Relative Importance of Pipeline Uses

In terms of managing your team and moving opportunities through the pipeline, some of these activities are more value-added.  They can influence what your sellers are actually doing today.

Pipeline activity influence on performance

We are not suggesting that forecasting is not important; You can’t NOT do forecasting, but….

Best Practice: Separate Forecasting and Pipeline Management

Think about your current pipeline meetings. How do those meetings generally go?  Very commonly, these meetings are about scrubbing data for the forecast. Again, forecasting is vital but it is about predicting the future. Pipeline management is about what we can influence today for tomorrow. And while this is always important, we’d argue that it is even more important right now. By recognizing that forecasting is a unique activity and treating it that way, we can focus our pipeline discussions on how to move the specific opportunities through the pipeline.

Building a Healthy Pipeline

There are two key questions to consider when qualifying an opportunity.

1: Can we win it?

  • Do we know the customer’s needs?
  • Do we have the right solution?
  • How do we fare against the competition?
  • Is our pricing in line with the customer’s budget?

#2: Do we want to win it?

  • How much resources will the pursuit consume? What are the opportunity costs?
  • Can we preserve our margin?
  • Can we manage the scope?
  • How does this deal benefit us? 

These are two of the most important filters you want to apply to opportunities when thinking about entering the into your pipelines.

Have 20 Minutes and Want to Learn More?

Watch Michelle Vazzana’s Session from the 2020 Sales Management Association Virtual Conference