What’s The Purpose Of A Pipeline Review?

I sit in dozens of pipeline reviews. They all tend to have the same format, someone displays a pipeline chart–sometimes a standard report in the CRM system, too often, an excel extract.

The report typically has a list of deals, target close date (usually we are focusing on this month or this quarter), and expected deal value. The deals may be positioned in sales stages, with subtotals for the total value of the deals in each stage, and the total value of the deals in the pipeline.

Then each manager reviews the pipeline. Typically, this is where the review goes off the rails. It devolves into a series of “mini deal reviews.” The sales person or manager gives an update about the deal, usually talking about what has happened. If it’s a deal forecast to close this month, usually someone asks, “Will we get it,” to which the response is always, “Absolutely.”

The pipeline review meeting continues with each sales person or manager discussing select deals, and what might be booked and when.

There’s seldom follow up on “did these things actually happen?” The next pipeline review looks the same, mostly ignoring what was discussed in the past review, but the format is the same, people do short reviews of deals and provide status update.

But these reviews seldom address the most important issues we need to understand in managing our pipelines:

• Do we have a high quality/high integrity pipeline?
• Do we have sufficient volume and velocity in the pipeline to achieve our goals?
• What specific actions do we need to take to address any problems we have with the pipeline? Who has responsibility, when must it be completed?

You can see this has a very different focus than most pipeline discussions. It focuses on the collection of deals we are working–not individual deals. We want to address the single issue, are we doing enough to achieve our goals.

Let’s dive in:

Do we have a high quality/high integrity pipeline? Too many pipelines are representations of wishful thinking. What we hope/want to have happen, not what’s actually happening. Too often, deals are incorrectly positioned in the pipeline. We position opportunities where we want them to be in our selling process, not reflecting where the customer is in their buying process.

Some of the biggest integrity issues I see, beyond the biggest, wishful thinking, include:

• The deal isn’t really qualified. Just because the customer is talking to us doesn’t mean they have a real need to buy. The customer may be interested in learning, they may think they want to buy, but until they have recognized: “The consequences of doing nothing are greater what we face in making the change,” the deal is not qualified.
• An unrealistic target close date. Too often, I ask, “What’s driving the close date? What are the consequences to the customer for not making a decision by that date?” Most of the time, sales people are clueless about this. But if we don’t know this, there is absolutely no reason to believe any target close date.
• We have chosen a sales process stage, based on the activities we have undertaken, not where the customer is in their buying process. We have a propensity of leaping to solutions–moving a deal into proposal, when the customer may still be identifying what they are trying to achieve and why.
• We have a probability of winning based on where we are in the sales process, not based on a customer propensity to buy.
• We have unrealistically short projected sales cycles or unrealistically long sales cycles. Sometimes deals happen fast, but rarely. That’s why we can understand what the average buying cycle is. Recently I saw a deal the sales person projected to close in 30 days, when their average cycle was 220 days. When challenged with why the sales person believed this, he shrugged his shoulders. In the same review, another sales person had been “working” a deal for over a 1000 days and could discuss the customer commitment/urgency to change.

There are lots more integrity/quality issues, I’ll stop here. But we have to minimize these, otherwise our pipeline is just a fiction.

The next step, once we have a high quality/high integrity pipeline is to address the question, “Do we have enough in the pipeline to achieve our numbers?” Typically, we have a concept of coverage; that is what multiple of deals/$ volume do we need to achieve our goals. This multiple is based on a win rate. Somehow, that coverage number always seems to be “3.” I guess it’s based on an assumption the organization has a 33% win rate. Unfortunately, too often the win rate is something else, so we aren’t looking at the volume accurately.

Then, we look at velocity. Having sufficient volume is meaningless if deals are stalled. Are they moving from stage to stage, are they moving through the pipeline at roughly the right rate.

All of this focuses on “Do we have enough going on to make our numbers?” The reality is, too many organizations don’t. We don’t have sufficient pipelines. So the most important part of the pipeline review becomes a problem solving discussion.

Usually, when we don’t have enough in the pipeline to make our numbers, the rote answer is, “Prospect more!” That may be part of the answer, but there’s a problem with that. There is a significant time lag, we have to find new opportunities, qualify them, and manage the customer through the buying process. If we have long buying cycles, let’s imagine a year, prospecting helps us build the pipeline for a year or more out, but it doesn’t help us today.

But we also have to look at what we can do now. How do we tilt the numbers in our favor? Are there opportunities we can build “must win strategies?” (We don’t build those in the pipeline meeting, but identify potential opportunities for deep dive deal strategy sessions/reviews.) Are there opportunities we might be able to help the customer compress their buying cycle? Are there opportunities we might move from next quarter into this quarter?

The pipeline review focuses on whether we are pursuing enough high quality deals to make our numbers, when we need to make our numbers. And if we don’t have enough, the pipeline review is a problem solving session to develop specific action plans to develop a healthy pipeline.

Are you getting the most out of your pipeline reviews or are you just having status reports?