Leadership and sales management pipeline
Sales performance is often defined as the sum of many moving parts which are often impossible to measure or monitor consistently.
In my opinion, sales performance is a function of competencies, readiness, resources, opportunity and commitment which all translates to sales effectiveness and efficiency.
However, In my many years observing and or managing B2B sales teams across diversified channels in different counties, the single most important factor that defines a successful sales team is the sales management team. Assuming that the baseline factors such as competitive propositions, trainees and talented sales teams and optimized incentive plans are all in place, the right sales management team will determine the difference between a mediocre and a star team.
First things first – most folks fallaciously assume that a good sales professional will make a good sales manager. Nothing can be further than the truth. Sales management is a unique and rarified art that many folks just don’t get it.
I had a business plan ande was able to raise more than $3 million in funding from individual investors. My partners and the majority of the top management team that I hired were dedicated and superbly competent idividuals.”john lincoln, author
The single most important thing in B2B transactional sales management is the rigid and structured approach to pipeline management.
The sales manager will not only have to ensure that a pragmatic and solid pipeline management process is in place but will have to ensure that the team and the management fully internalize the intent and expected outcome of a sale pipeline management process.
Sales teams normally have the tendency to “fictionalize” the pipeline due to daily, weekly, monthly or quarterly target delivery pressures.
Mediocre sales teams do not see it a a critical tool to enable them achieving their targets but rather as a management tool to monitor and control sales activities. Likewise the management teams do not see it as the most important and critical sales tool to ensure the viability and sustainability of the company’s planned financial outcomes. They see it just as a monitoring and tracking tool.
If the sales teams and their management do not internalize what pipeline management truly means, and if it is not monitored and managed at each sales team member level in a structured and and deliberate review process, there is a high likelihood that the entity will not be around for long!
Sales pipeline management requires not just monitoring and obtaining different customers at each stage of the sales funnel. It requires a clear understand of the market to assign realistic probabilities for each stage of the pipeline to ensure that the desired targets are realized. This can only be achieved if the pipeline velocity of each sales team member is known and managed.
So what is pipeline velocity?
Pipeline velocity is the measure of the dollars in the pipeline over a period of unit of time per day, week, month or quarter.
So how does one measure pipeline velocity?
Pipeline velocity is a function of the number of opportunities in the pipeline, the average size of the deal or opportunity and the strike or close rate. The lower the average lead close time will yield a higher pipeline velocity.
This can be expressed as Pipeline Velocity (PV) = (number of opportunities x average deal size x strike or closing rate) / the average lead time for closure.
Let’s take an example to determine the pipeline velocity of a channel or a sales folk having 200 opportunities with an average deal size of US $150 per deal with a strike rate of 20% and an average closing duration of 5 days.
The effective pipeline velocity for this channel or sales person would (200 x 150 x 0.2) / 5 = USD 1200 per day.
Imagine what the implications of this number is in terms of sales targeting, productivity and profitable running of a sales operation.
A lack of understanding and knowledge of this will lead to excessive cost overruns and unrealistic expectations.
Woe betide a company that has not internalized sales pipeline management and the resultant pipeline velocity theory of. It might be too late before they realize the they are on a perishable path.
A note of caution: although these models work in most B2B environments, these are ideal for transactional sales and are not the only determinants in a large strategic sales environment.
JohnLincoln.one –The business growth hacker