First, I have to credit my friend John Cousineau with this title. It came up in a call we had recently. It seemed an appropriate, is slightly salacious, title for this subject.
I must review hundreds of pipelines and funnels every year. A majority of the funnels and pipelines are overinflated–by a large amount! Lots are the result of “wishful thinking” or simply pursuing unrealistic deals, yet sales people will carry them in their funnels, even reporting on them, for months. “You know this isn’t going to happen, ” I ask, “Why do you still carry this in your funnel?”
Responses are all over the place, in lots of cases, it is truly wishful thinking on the part of sales people, they think that if a customer returns a call, it’s immediately a real opportunity and they put it in the funnel. There are lots of other excuses people give.
There is a category of answers that disturbs me, it’s the response, “My manager insists that I have a full funnel. I’ve been doing everything I can, but I just don’t have the opportunities I need in the funnel. So, there are these deals, I know they probably will never close, but at least I get my manager off my back.” While it’s wrong, I really have a lot of empathy for these sales people. They know what they are doing, but they don’t know what else to do, and they aren’t getting help. In many cases, they fear if they don’t have a full funnel, they will be fired.
I talk to managers about this problem, not surprisingly, they often cite the same reason, they’re managers insist on full funnels, but they and their people can’t find enough good, highly qualified opportunities. And the problem keeps going all the way up to the top of the business.
No one likes an empty funnel, but a funnel full of deals that will never close is even more dangerous. It fools everyone about the state of the business. We see an apparently “robust” funnel and think the business may be on track for meeting it’s plan. A number of years ago, I reviewed a business that was struggling. The Board had invited me in. Revenues were plummeting, but management kept showing them pipelines that were robust, filled with opportunities. It begged the questions, “‘What’s happening to our revenues then? Why aren’t we closing the business?” Their original attempts to solve the problem were all misdirected, they looked at symptoms, did things like reducing prices, parachuted executives into sales situations, did all sorts of things. Nothing was working. They started casting wider nets, looking for business, adding even more stuff to the funnel, but stuff where they had little experience. Still nothing was happening, they started making the cutbacks across the company. Cutting everything, because they really didn’t know where the problems were.
When I was asked to look at the situation, at first I was perplexed, “What’s wrong? They seem to have lot of opportunities, they aren’t closing them, this is really confusing.” Then, sitting down with the sale people and managers, we started going through their pipelines. We focused on finding the right deals in their sweet spot. At the end of an arduous and slightly painful process, we whittled th pipeline down–at the end, only 12% of the original deals remained–but they were rock solid in the sense they were deals they should close if they executed their sales process well. None of us were happy with what we found, but we now could start looking at understanding the real problems and developing the real solutions to grow the business. We learned a lot. In one area, we learned the need for my client’s solutions in a specific market had virtually collapsed–not great news, but important for in making decisions in the investments the company was making in this market segment. In some areas, we found the previous cutbacks had severely impacted their ability to deliver in areas that had been very strong. In another, we found we had great solutions, but virtually no visibility to customers looking for those solutions. We needed to invest in marketing programs in this segment—much to the relief of the VP of Marketing who had been struggling with an underinvestment in marketing programs in general. We went on, systematically looking at the issues, determining what we needed to stop, where we needed to invest and how we could regain growth. It was a long process, but over time, we built the plan, and folks executed sharply.
There is and should be pressure on sales people to keep their funnels full. We want sales people pursuing enough opportunities to achieve their business plans. At the same time, that pressure shouldn’t cause us to relax the standards of carrying strongly qualified, real opportunities in the pipeline. We’re only deceiving ourselves. It masks problems with the business or causes us to find the right solutions to the wrong problems.
We have to lay ourselves and our funnels open–naked (bet you were wondering how I’d work that in), for everyone to look at and understand. Good or bad, they have to accurately reflect what’s happening in the business. Only then can we start to truly understand what the challenges are and address them. It may be a sales person issue—then managers must coach and develop the person to improve their abilities. It may be a substantive shift in markets, a change in competitiveness. All the problems are solvable, but first we have to recognize they exist. The funnel/pipeline is a key indicator. We have to be prepared to run naked through our funnels!
Hi David,
Great post, great topic. Going through an existing funnel is like weeding an overgrown garden. Or, as I told my new team when I took over as VP Sales, “Better we weed through these opportunities than the CEO starts weeding through us.”
The filter we used to remove the wheat from the chaff was:
1. Did the company have a lot of revenue?
– startups are easy to close, and the old team was paid by the contract.
2. Did the company have a lot of users?
– ours was a telecoms service with relatively fixed setup costs.
3. Was the company innovative?
– no sense chasing a prospect if he’s not psychologically ready to implement.
4. Were they in our three target markets?
– I generously gave the other more difficult markets to our business development team.
Companies that couldn’t make it through those screens were tossed out – and we lost a lot of “prospects”. As you point out, however, getting a clear view of reality is a much better place from which to plan steps forward.
Thanks for the post.
Thanks for the comments Matthew. One of the reasons funnels are filled with junk is that sales people do a terrible job of disqualifying. Focusing on opportunities that fit your sweet spot and eliminating everything else drives dramatic improvements in productivity.
Great post David!
From VP’s right down to the front-line sales rep, it’s unfortunate how many people still focus on quantity rather than quality. Chasing empty leads is such a waste of time, effort, and energy. People could be so much more productive if they focused only on high-value or high-quality prospects.
Cheers!
Kelley
Kelley, thanks for the comment. Focusing on high quality leads– or prospecting to find high quality leads is critical. It’s pointless to deceive ourselves and others with a funnel full of trash. Thanks for your great contributions–as usual.
Wonderful explanation of the root causes of phony funnels David. Trickle down success is possible when top levels make sales managers comfortable presenting the naked truth and sales managers make their teams comfortable with the same. The truth will set you free.
Couldn’t have said it better! Thanks for the comment Gary.
Hi Dave
I’m going to suggest to John that he lock in the IP for that phrase while he has still the chance. I suspect that very soon everyone from pharmaceuticals manufacturers to Wall Street brokerage houses are going to be injecting it into their ads. “running naked through the high yield certificate space” and so on…
Since you are an outsider, it’s not surprising that you would find fudge in more than one sales funnel. In the weekly review call, the emperor’s new clothes are always full of sunshine and rainbows, but the gaps are obvious to someone who is not on the payroll.
Reason: Many sales organizations are still running on fear and intimidation. No one dare speak of the fact that they are not prepared, not properly trained or simply having a bad week. They have been conditioned to think this can only result in negative consequences.
The remedy is for managers to change this mindset. They have to convey that their goal is for people to be working at the top of their game, but if for some reason they are not able, they need to speak up and work together to figure out why, not bury their heads in the sand for fear of getting it sheared off.
Nicely Done!
Don F Perkins
Don, a couple of things, you may recall I claimed the IP rights to the phrase in our phone conversation 😉 (Royalty free by the way)
Seriously, the fear you mention exists in subtle and not so subtle ways in many organizations. It keeps us from facing reality and dealing with the core issues. Life and business would be so much simpler if we were able to do this. Thanks for the comments and allowing me to set the record straight on IP ownership 😉
Hey Dave,
I have always seen a full pipe as subordinate to sales.
Therefore if a salesman is selling I don’t care at all about his pipeline, if the sales keep coming I don’t care if he spends all day drinking coffee.
Of course when a salesman is struggling I always tell them to call on more customers and work harder, but that can be done together and we can together make sure that he is not calling on any customers that will not buy our product. Instead focus more time on the quality prospects and looking for more quality opportunities.
//Daniel
Thanks for the comment Daniel. If your business has a very short sales cycle, the pipeline is less important. For most of the folks I work with, the cycle is measured in weeks, months, even years. In this case a strong accurate pipeline is critical–both for personal productivity and for the organization is critical.
Whenever a salesperson is struggling, whether it’s the quality of opportunities in their pipeline, or the results they are producing, coaching, developing them is critical. Thanks for adding to the disucssion.