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Sep 17 17

“Amping Up” Your Pipeline Reviews

by David Brock

Managers spend an inordinate amount of time in pipeline reviews.  Largely, I think this is the result of lack of clarity of what they want to accomplish in pipeline reviews or too great a focus on the numbers and not what produces the numbers.  (but these are topics for other articles.)

Probably 95% of all pipeline reviews I sit in are wasted efforts.  The manager will start reviewing the pipeline, immediately finding a deal that catches her eye, deciding to deep dive into that.  Guess what, all of a sudden the pipeline review has become a deal review!

The conversation goes on, eventually, the manager has finished harassing the poor sales person about the deal, they go back to the pipeline review, the conversation continues, she finds another deal and the cycle starts all over.

In the end, the key question we have to answer about the pipeline is never answered:  “Do we have a healthy pipeline that enables the sales person to make their numbers.”

I spend a lot of time on Pipeline Reviews in Chapter 23 in Sales Manager Survival Guide.  It focuses on the fundamental things we want to understand in the review:

  1. Do we have a high quality, high integrity pipeline?  I’ll let you review the detail in the book, but the net is:  If you have crap in the pipeline, deals that are only wishful thinking, then everything else is wasted effort.  The pipeline has to be high quality–regardless how bad it looks after you clean it, now you can figure out what to do about it.
  2. Do you have sufficient volume in your pipeline?  Simply, do you have a sufficient quantity of deals and dollar volume of deals to achieve your goals?
  3. Do you have sufficient velocity in your pipeline?  Having the right volume is meaningless if those deals are stuck.  It’s critical to look at flow.  Generally, things like total sales cycle, days in stage, movement from stage to stage are great indicators of velocity.

You may be scratching your head at this point, thinking, “OMG, to understand the pipeline we have to have a sales process that our people are using!”  That’s the funny thing about the pipeline, if you don’t have a sales process that your people are using rigorously, it’s impossible to build a pipeline that is meaningful.  All you have is meaningless data based on individual opinions and wishful thinking.

But let’s assume you have these basics in place, what are some things you want to look at to get more insight into the pipeline and help coach your people to improve performance?  Some thoughts:

  1.  Product mix:  If your company has a wide product mix (i.e you have more than a single product line), you want to make sure the sales person is selling the entire product line.  Think about it, if you have two product lines, and two sales people each making their numbers at $5M, but one sells only one product line, and the other has sold $2.5M of each, which is doing better?  It’s the second, because she is executing the company strategy, selling the entire portfolio.  The first, in fact, is under performing–even though he is making is number.  He’s missing all the opportunities for the other product line in his territory.  You want to make sure there is a good mix across your product lines and the sales person isn’t just selling his favorite product.
  2. Customer mix:  This is similar to the product mix concept, is the sales person focusing only on a few customers, selling to them, or are they covering a large number of customers in their territory?
  3. New qualified deals:  This may be similar to customer mix, but what is the sales person doing to bring new deals into the pipeline?  Too often, we focus on the bottom of the pipeline and what’s exiting (hopefully won) and not on the new opportunities coming into the pipeline.  It’s important to look at what new deals are entering.  Are their enough?  Are they the right kinds of deals?  Are they the right quality?  If this is a problem, you need to look at the sales person’s prospecting activity.
  4. Balance in $ Volume and Deal Volume.  I’ll pose this scenario.  The healthy pipeline volume for each of your 3 people is $1M each, your average deal size is $100K, which would mean the healthy pipeline would have 10 deals.  Lets say sales person A has 10 deals with a total value of $1m or more.  Sales person B has 1 deal, but it’s $1M.  Sales person C has 50 deals at an average of $20K each.  You can probably see where I’m going.  while all the pipelines are “healthy” from a $ value basis, there are some real challenges with the pipelines from sales people B and C.
    1. As a side example, you’ll want to look at win rates on a deal volume and $ basis.  Recently, I was doing a review with a very excellent sales person.  His win rate on a $ basis was more than 3 times his win rate on a deal basis.  What’s that mean?  Well, he’s very good at winning the high value deals, but not great at the low value deals—which represents a coaching opportunity.  The win rates are unlikely to match (other than in a theoretical world), but if there is a huge difference points to some challenges and opportunities for the sales person.

I’ll stop here.  Get the fundamentals of pipeline management right with your people.  Make sure they understand their own healthy pipeline metrics—it’s different for each person.  Make sure they have healthy pipelines or you are helping them figure out how to build healthy pipelines.  Over time, look deeper into the pipelines to make sure they reflect the core priorities and strategies of the organization.

Again, if you want to brush up, it’s in Chapter 23 of Sales Manager Survival Guide.  Other chapters address how you deal with some of the problems you discover in these pipeline reviews.

 

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Sep 15 17

Can Revenue Be Predictable?

by David Brock

I saw an interesting question on LinkedIn, “In SaaS businesses, can revenue still be predictable?”  My reaction to this question, not just limited to SaaS, is “Absolutely—-sort of………”

Building predictable revenue streams is nothing new to sales.  The creation of SaaS companies with a high volume, high velocity model for acquiring customers wasn’t the inception of predictability in revenue generation.

For decades, perhaps centuries, organizations have built models to predict revenue, all with varying degrees of accuracy.

In some businesses, there are highly predictable revenues based on highly sophisticated trend analysis.  These models take into account seasonality, economic conditions, market factors, phases of the moon (well, maybe not that).  For example North American retailers and anyone involved in Consumer Products, know the majority of revenue at retail occurs in the October-December period.  Forecasters can look at orders placed on manufacturers in the summer months, making reasonable guesses about revenue in the 4th calendar quarter (barring unforeseen events).

Every business, has models of some sort that are leveraged to predict revenue.  Whether it’s trend analysis, pipeline/forecast analysis, or knowing a very good fortune teller.

Revenue, even in SaaS companies, can never be predicted precisely, even the most advance AI algorithms can’t predict that this quarter’s revenue will be $3,798,231,456.34  plus or minus a few cents.  But we can have reasonable estimates of revenue.

A more interesting question is, “What drives unpredictability in revenue, and what can we do about that?”

There are any number of things that drive unpredictability in revenue—some, unfortunately, are outside our control or even our ability to predict the impact.  Acts of nature, like the recent hurricanes, create great disruption and unpredictability.

There are other areas of unpredictability, where we are likely to have very little ability to guess revenue.  Early stage start-ups, disruptive new product offerings, entirely new markets create great difficulty in predicting revenue.  Where there is no established model, no comparative and relevant data, it’s virtually impossible to predict it—consequently, trying to do so is a massive waste of time and usually results in nothing more than wishful thinking.

Massive changes in our markets, or our methods of going to market will impact the predictability of revenue.  For example, in many of the old line SaaS companies with a high volume/high velocity sales model, traditional methods of predicting revenue failed as they started attacking enterprise sales–SaaS companies developed new models for predicting revenue in these types of sales.

But there are areas of predictability that are completely in our control or ability to learn.  Having a sales process that’s tightly aligned to customer buying process–and making sure that our people are using the process rigorously drives great predictability in revenue.  After all, the process is designed based on our best experience of generating revenue.  Everything else held constant, if we keep executing the process with some level of discipline, we will be able to predict revenue within some band of confidence.

Leveraging customer validated buying signals is another way to drive greater predictability in revenue.

Without belaboring the point, the things that drive unpredictability in revenue, at least the things that are in our control, are when we stop consistently doing the things we know produce revenue.   It may seem like a “Duuuggghhh” point, but too many organizations are operating in this space—and it’s their fault they can’t develop greater predictability in revenue.

We will never perfectly predict revenue, and too many of our forecasting approaches are irrelevant and unhelpful in predicting revenue.  However, within certain ranges of predictability, we know the things that work and the things that don’t work.  We know if we execute consistently and with discipline the things that work we will are more likely to produce the outcomes that produce revenue.

Look at your own business–whether it’s your organization or your own personal territory.  Are you consistently focusing on the things you know produce revenue?  Are you stopping those things that don’t produce revenue?

Predictable revenue–at least for those things within our control, isn’t much more complicated than that.

 

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Sep 13 17

What’s Going On With Digital Business Transformation?

by David Brock

It seems impossible to escape the articles on Digital Business Transformation.  Sales/Marketing Automation Tools suppliers are jumping all over it, because it helps them sell more tools.  Pundits focus on how marketing and sales must leverage these tools to engage customers.  To some degree, I think much of the discussion is this year’s version of social selling, since that term has fallen into disfavor.

More broadly, the articles seem to focus on IT transformations and technologies like AI, Machine Learning, Robotics, IoT, etc.  It’s a brave new technology driven world.

All of these discussions are important, but I think they miss the critical issues, and possibly the critical opportunities.

It’s really not about technology!

Digital Business Transformation is this century’s Industrial Revolution.  It changes not only the way businesses work  (note I said business, not sales/marketing), but it changes everything in the world we live in.  How we engage and act with each other, how societies/cultures engage, how our communities and governments work, as well as how our businesses work.

If we could go back to the prior industrial revolution driven by things like “electrification,” “telephones,” etc in the late 19th and early 20th centuries, we’d probably find innumerable blog posts and tweets about what it means for sales and marketing (OK, maybe newspaper articles and bar conversations).  But the profound issues were how the industrial revolution changed everything.

As we look at Digital Business Transformation, there are huge opportunities and challenges for sales and marketing, just a few:

  1. It changes our own businesses and how we work, within our companies, as well as how we work with our customers.
  2. It changes the solutions we might offer our customers.  If our companies aren’t looking at what digital business transformation means to out solutions offerings, they are in this century’s equivalent of the “buggy whip business,” and you should look for job in an organization that recognizes the business opportunity.  All our products and services have to play a role in the digital transformation of the world.
  3. Our customers are challenged with their own digital business transformation—it present us great opportunities to help them understand and address the issues to them.  (Remember, the challenges are less the technologies, but what it means to them, their jobs.  It requires re-engineer their businesses and how they engage their customers.)

We are only at the very early stages of Digital Business Transformation, we won’t begin to understand the full potential or impact years, if not decades.

But if we are to exploit the full promise of Digital Business Transformation, we have to look beyond the technology and beyond what the technology does for sales and marketing.

 

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