Analyze and Review the FRONT of the Pipeline…Why?

The vast majority of pipeline reviews or discussions focus on what’s closing this week, this month or this quarter.  Sales manager’s typically dig in to the details of the latest proposal and associated meetings, calls, and e-mails regarding the transition from proposed business, to a verbal agreement, to contract negotiation and signatures.  Sales executives maintain a similar focus on the “end game” as that is the pre-cursor to “pay day”.  I would not quibble with the notion that such analysis on this portion of the pipeline is important, but I believe it is also a two-edged sword.  Sales organizations that overweight analysis and focus on the bottom of the sales funnel risk erratic monthly or quarterly attainment.  If the sales team develops a group of prospects, moves them through the cycle, and then closes a percentage of  them, the result is that your have superior attainment in the months at the end of the sales cycle duration, and reduced attainment in the interim while the focus returns to the front of the pipeline. 

The best way to smooth out monthly attainment, either as an individual or a team, is to place a significant emphasis on how many new, qualified opportunities are entering the FRONT of the pipe ( top of the funnel) during the review interval.  If your typical sales cycle is 75-90 days, a percentage of the new, qualified opportunities entering the cycle in March are the business that’s closing in June.  If you or your team spends most of March closing January’s new opportunities, and the top of the funnel languishes, then you will have a good March, but a less than stellar May and June.

My contention is that a balanced review of the top, middle, and bottom of the pipeline funnel is the best practice to drive consistent overall performance.  This approach has other benefits including identifying and addressing opportunties that are “stuck” in the middle of the pipeline, as well as providing the sales leadership team immediate notice of a lack of qualified, new opportunities which will negatively impact future attainment.  In this manner, there will be some time to take action.

As my colleague, Dave Kurlan says “the sales pipeline is the single, most accurate predictor of future revenue”.  Let’s give equal time to the FRONT of the pipe!

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8 Responses to “Analyze and Review the FRONT of the Pipeline…Why?”

  1. Guido Schenk Says:

    I think the discussion on whether you focus on top or bottom of the funnel reflects the style of you as the sales manager (btw- sales reps tend to follow the example of their managers): If you see yourself as the “closer”, who manages to push clients for a signature, you most likely focus on the top – as this gives you your greatest satisfaction.

    In many cases, the best closers are the best sales reps. As organisations tent to promote the best sales reps to sales managers, it is no surprise that most sales managers spend most of the time discussing the top part of the funnel with their sales reps.

    Sales managers, who know how to make a difference throughout the whole cycle, will almost naturally have the balanced approach and rather act as a sounding board to their reps and not as the best closer of the company.

  2. Peter French Says:

    I believe there are good bottom line results associated with loosing early, i.e. concentrating on the suspects entering the funnel rather than the traditional concentration on the outcomes of the sales process. This “Loose Early” slide illustrates the cost of hanging-in-there, and if you’d like the words around it drop me a line.
    http://www.supersmous.co.za/DownloadFiles/Loose_Early.pps
    The other aspect brought up by Sarah, concerned a “dashboard” which builds; in an objective way; the credibility of the salespersons delivery of their process. We built a Pipeline Management tool that uses 7 criteria to display this. You can get a document describing this free tool at;
    http://www.supersmous.co.za/DownloadFiles/Science_n_Strategy.pdf
    Look at page 5 among the other concepts discussed and download the FREE tool from a hyperlink in the document.

  3. Sarah Hinchliffe Says:

    I completely agree that you have to manage the entire pipeline to have a balanced sales activity. I run a monthly balanced scorecard, which includes the following measures: number and value of new opportunities identified, number and value of opportunities closed and value of the rolling 12 month pipeline. Based on the various parameters of my business, I know my target figures for each measure and can build up a profile of whether we are doing enough of each activity type – identifying, developing and closing. Whilst it is easy and tempting, with experience, to rely on gut feel for this, it is useful to be able to provide evidence and see trends in black and white (and Red/Amber/Green!)

  4. sellgosell Says:

    I agree that there is WAY too much focus on the things closing in the next rolling two weeks. From my experience, when I see this occurring it tells me I have a sales management problem or a systems problem.

    It usually comes down to lack of training, poor time management or a lack of understanding of how to manage opportunities at the top of the funnel.

    On rare occasion I have seen Sales Managers over burdened by trying to manage the team and cover their own numbers. I have also occasionally seen Directors/VPs put such a laser focus on opportunities in the “red zone” that a Sales Manager feels the need to stay focused there just for the CYA factor.

    It makes much more sense to manage the top of the funnel to both keep the junk out and to give you more time to shift and reposition the opportunity to maximize your chance of winning it. If you have not managed to fix your weaknesses until the last couple of weeks, just about the only tool left in the bag is giving away margin, which magnifies the problem and usually ends up being self defeating in the end.

    Great post.
    Val
    saleslaundry.com

  5. Nic Coppings Says:

    Without a true Opportunity Identification and Qualification process- the pipeline is nothing but a wish list. Being able to develop the relationships so that you truly understand the clients problems is what determines the validity of a pipeline. If you don’t gather this information, you might as well put anything you like in the top end and then pray that revenue falls out the bottom.

    Most sales people will try to keep things in a pipeline based on sketchy intelligence about the opportunity. True Business Developers look to disqualify early- so as not to waste their time pursuing opportunities that will ultimately not generate revenue.

    You can focus at any level of the pipeline but without a process that validates the information early, you will never truly believe that what is in the pipeline is worth anything. Ask the hard questions early to validate that what you have is truly qualified- if not don’t waste your time pursuing it!

    • dklawjr Says:

      Thanks Nic. Agreed. Sean and I discussed the same concept. I believe it is important to have criteria (qualifications) for allowing an opportunity to move into the sales funnel, and have additional criteria for moving it to the next stage. The status of an opportunity versus the criteria is the basis for discussion and analysis.

  6. Sean Conrad Says:

    The challeng often is, does both sales management and the salesperson have the guts to qualify hard in the top of the pipeline? Reviewing the pipeline is a waste if you don’t actually do anything during the review… otherwise you are better off making more calls trying to fill the top than reviewing it. The only way the reviews of the top will help is if there is desire to makes tough decisions, to fire some of those prospects and focus your time on the better ones or finding more.

    If a top of the funnel review consists of “yeah we don’t have enough in here”, then is it really worth taking the time to do it?

    • dklawjr Says:

      Sean-Good point(s) and I couldn’t agree more. The key is to establish criteria for establishing what is qualified at the top of the funnel, as well as criteria for promoting a sales opportunity to the next stage of the sales process. Those criteria are the basis for discussion and review. Those opportunities that don’t meet the criteria should be either “fired” as you say, or sales activities should be executed to meet the established criteria. Thanks for the comment and feedback!

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