The Pipeline Review
I was meeting with a client, we were doing the first pipeline review as part of their implementation of the Sales Execution Framework. Pipeline reviews are a great starting point for the process, a good pipeline review helps identify and isolate potential challenges as well as the performance leverage points.
The client was a very large company, the current pipeline had thousands of opportunities. They had always done pipeline reviews—I suspect a number of the managers were thinking, “Why are we doing this, we do them all the time–isn’t there a better way to identify our performance leverage points?”
But they were really struggling to meet their numbers, performance was way off and they didn’t know why. Their mantra of “doing more” wasn’t working. They needed to figure out what the real performance issues were.
Starting out, we focused on pipeline quality and integrity. It’s impossible to understand pipeline health if it’s filled with garbage.
First, we looked at deals with passed due target close dates. 6% of the opportunities in the pipeline had target close dates that were 90-450 days in the past. When I asked, “What’s happening to those, are they still real, why aren’t they updated,” no one knew the answer, they had to ask the sales people what had happened.
Next we looked at deals that had been in process an abnormally long time. The average sales cycle was about a year. 10% of the opportunities had been in process for 3 years or more. While it was a small percentage, 12 opportunities had been in the pipeline for 10 years–never moving.
Next we looked at overly optimistic close dates. We already knew the average sales cycle was about a year. We looked at opportunities that had just been qualified, 15% had unrealistically short sales cycles–sales people were estimating sales cycles of less than 60 days—25% of what was the normal sales cycle.
In 30 minutes, we had discovered at least 31% of the pipeline opportunities were inaccurately represented in the pipeline, or even not real. We went through other issues, in an hour, we discovered a number of issues. For example while their average deal size was over $1M, over 50% of the opportunities in the pipeline were less than $100K. Only 1% of the qualified opportunities had plans in place to move the customer to a buying decision.
We adjourned. The managers had to go to their people to clean up the pipeline. There were too many quality/integrity questions to really understand the pipeline and to begin to address performance issues.
When we reconvened about a week later, they had cleaned up the pipeline. 27% of the opportunities that had been in the pipeline, were eliminated as bad opportunities or opportunities that were wishful thinking.
The numbers were grim. There wasn’t enough volume to make their numbers. There were some velocity issues. The number of opportunities less than 10% of their average deal value was still very high.
But now we could begin to identify the problems and begin to develop solutions to those. As grim as it looked, we were able to develop an action plan to improve performance.
Three months later, we got together again. Yes there were some integrity/quality problems in the pipeline, but it was only a few percent. More importantly, we were starting to see pretty dramatic performance improvements. We had found more efficient ways of handling the low value opportunities, freeing people to focus on the high value opportunities–this alone changed the pipeline dynamics and the number of opportunities needed to achieve their numbers.
Forecast accuracy improved dramatically, they were no longer allowing opportunities that were wishful thinking into the pipeline. Win rates were improving, both because they were focused on higher quality opportunities, but every opportunity in the pipeline had a close plan in place, that was kept updated in regular opportunity reviews.
Cleaning out the pipeline made the performance problems obvious, enabling the management team to work with sales people to improve performance. Those problems had always been there, but management couldn’t “see them” because of all the garbage and clutter in the pipeline.
We always need to deal with facts as we assess our own performance or that of our organizations. Clouding them with garbage doesn’t help, in fact it masks the issues preventing us from facing reality.
However bad a situation might look, when we focus on reality and the facts, we can always figure out solutions and a path to recovery.
Are Sales People “Coin Operated?
We are facing a crisis in sales retention. Average tenure for sales people and managers has plummeted to 16.5 months. As I speak to sales executives and managers about the reasons for the increasing voluntary turnover, too often, they respond,
“It’s all about compensation! Sales people are coin operated, if they have the opportunity to make more money some place else, they will go after that opportunity.”
But the data shows a completely different picture. In a Gartner survey of over 200 sales people, the following shows the top 10 reasons about why sales people leave.
Compensation is the leading reason, but only beats manager quality by 1% point. But what this chart shows is there are a lot of other reasons that cause sales people to leave or to be unhappy. People rarely leave just because of compensation, but because of a number of reasons.
Yet, somehow, too many managers ignore those reasons, choosing to do nothing about these.
The crisis in sales person retention is, in reality, a leadership problem. Managers are failing to create workplaces where people feel valued, can grow, develop, and contribute.
Focusing on compensation is irresponsible management–it both increases the costs of selling, but it fails to address the other factors that cause people to leave. Stated differently, we don’t fix the attrition problem just by fixing compensation.
There’s a lot managers can/must do to fix retention, first in their own behavior and people management skills. Then in creating work places that attract and retain the right people.
Talent will become the greatest challenge to sales performance in the coming years. We don’t fix this problem solely through the comp plan.
The “Did I Manifesto”
My friend, Kevin Dorsey, wrote a fantastic piece on LinkedIn. Be sure to read it. Kevin outlines a number of important things, but underlying these in the importance of periodic self reflection.
For many, we are beginning a new quarter. It’s always a good time to go through a quick mental checklist about what we have done and not done in, for example, the past quarter.
Too often, we are consumed with our day to day activities, we lose site of what we are doing and where we are going. We end up reacting to the things that impact us every day, rather than proactively pursuing our goals. It’s so easy to get distracted, and to lose our focus.
Adding to Kevin’s list, some thoughts:
- Did I create value in every interaction with customers?
- Did I help my customers learn something new?
- Did I help the customer more effectively navigate their buying journey?
- Did I help the customer become more confident in their ability to make a good decision?
- Did I meet my commitments to my customers, my peers, my manager and my company?
- Did I act proactively in managing my time, territory and opportunities to maximized my productivity?
- Did I prepare effectively for every call and meeting?
- Did I use my time and my customer’s time as effectively I possible.
- Did I help my peers in achieving their goals?
- Did I keep a growth oriented mindset?
- Did I identify areas where I can improve my impact and performance?
- Did I learn something new and see a thing of beauty?
Kevin makes the point that some of these are difficult to measure, but I think we can measure many of these, even if it’s a self assessment on a 0-10 scale.
Long time readers will know I’m a huge fan of microimprovements. I challenge my self to get 1% better every day. I track myself on 20 “Did I’s.” I continue to be amazed at how just this simple activity keeps me focused and helps me grow. Perhaps that leads to another “Did I”
- Did I grow and improve–as a professional, a colleague, a friend, spouse, family member, and human being?
Sit down with most sales people doing a loss review. The majority of the reasons cited for losing are:
- Price
- Price
- Product deficiencies
- Restrictions in how we do business, contracts, etc.
- Price
According to sales people, why we lose has little to do with our own performance.
Ask customers why they chose to buy, or even why they couldn’t make a buying decision, the responses are seldom about the product or their confidence in the product/solution.
Yeah, I know I will be deluged with emails and comments saying I’m wrong with endless amounts of “evidence” that “If we just had a better produce, easier contracts, and, of course, better pricing, we would win.” And sometimes it may be true, but not as often as we would like to think.
As customers go through their buying process, by the time they have narrowed the alternative solutions they are considering, any of the alternatives will work.
So why do we really lose?
First, we “lose” at least 53% of the buying journey’s our customers undertake because of “no decision made.” It has nothing to do with solution selection, but more to do with their ability to manage their own buying process. In fact the biggest failure point in the buying journey often occurs before they even consider alternative solutions. (37% through their buying process).
Focusing on helping the customer navigate their buying process, effectively, reduces the number of losses due to no decision made.
Second, we fail to address customer decision confidence. This is a little tricky, we focus our efforts in making the customer confident in our solution. But it turns out that’s not really what the customer is worried about. Research shows, customers are overwhelmed with high quality information–from all the alternatives they are considering.
The issue customers are concerned about is less confidence in our solution, but confidence that they are making the right decision for them and their company.
It turns out decision confidence is very personal. It’s less about the data, facts and figures, which we tend to focus on in presenting our solutions, but more based on how the customers feel. Are they making the right decision? What are the risk of failure? What happens if they make a mistake? How will their management, their people, their peers feel about the decision? How will they make it happen?
The things they worry about, the things that impact their confidence are varied, but until we help them through that process, the likelihood they will make a decision and make a decision for us is very low.
Helping the customer with their confidence is really about caring. It’s caring enough to connect with them about how they feel, perhaps just listening to them, perhaps helping them think through what impacts their confidence. It’s always about them and their confidence, and not about what we sell.
Perhaps one of the biggest reasons we lose is because of decision confidence. The way we begin to address decision confidence is demonstrating we care.
Perhaps one of the biggest reasons we lose is the customer doesn’t believe we care about them.
