Over the course of my career I’ve looked at thousands of pipelines/funnels. Most are pretty bleak, they don’t have enough opportunities to achieve their goals. Recently, I was in a meeting discussing the pipeline health. The managers, defensively, responded, “Dave, we know we need to get more in our pipelines. We are driving prospecting activities to load the pipeline…. Everyone knows they have to get to 3X pipelines within the next 60 days…..”
I replied, “But your win rate is 21%, you need roughly a 5X pipeline to even begin addressing the challenge. But there’s more. As I look at the ‘qualified deals’ in your pipelines, there seems to be a lot of garbage.”
On that bright note, the managers looked at me as though I was speaking a foreign language. “What do you mean?”
We dove into the pipelines, I started showing them things that made me question some of the opportunities? Some things I saw:
- Over 15% of the deals were opportunities that were very far outside their ICP. As I mentioned this, I asked, “How do you know these are real?”
- They had somewhere around a 90-120 day average sales cycle (based on win/loss analysis), 11% of the deals had been in process over 750 days, and the majority of those had not been contacted in the last 90 days.
- Roughly 20% of the deals had their target close dates changed over 5 times in the past 100 days. “Do we really understand what’s going on in these deals? Do we know how urgent the deal is to the customer or their commitment to do anything?”
- I had done deal reviews on a number of the qualified deals. As I discussed these with the management team, they recognized a lot of them were not qualified. Some of the sales people said, “We got an RFQ, so we put it in the proposing stage. Yet they had not yet spoken to the customer!” Similarly, when I asked the sales people why the deals were in a certain stage, they would respond, “These are the activities we are doing, that puts it in this stage.” But when I asked where the customer was in their buying process and if they were aligned, the sellers had no idea.
As we went through the pipeline analysis, it looked like at least 25% of the deals were probably not real and another 35% of the deals were incorrectly positioned in the pipeline. Now, all of a sudden, they realized they were in deep trouble. Even before we did this exercise, they didn’t have enough opportunities in the qualified pipeline, but now, purging the pipeline of these bad deals, they felt they were facing a disaster. They were panicking. Since they weren’t paying attention to the pipeline quality issues—looking only at volume, the real underlying problems were being masked, they didn’t recognize them.
Another review, started a little differently. It looked like they had a robust pipeline, it looked like they had far exceeded the coverage model. You could tell the managers were quietly “high fiving” each other as we went into the review. But as we got into it, we found a lot of the same issues discovered in the previous analysis. A number of the deals were, potentially, “real” but they had not been qualified yet were sitting in the qualified pipeline. Others were pure garbage or wishful thinking. By the time we had cleaned the pipeline, we were down to 70% of what they needed to make their goals. They started panicking, as they should have.
At least 75% of the pipelines I review have significant quality problems!
They are filled with bad opportunities created through pure wishful thinking. Or they have opportunities mis-positioned in the pipeline–the biggest sin is they are not really qualified. Or they aren’t driving the customer in their buying process, so opportunities are constantly slipping, or…….
Our pipeline metrics are meaningless if we are analyzing crap or garbage. While our volume/velocity numbers may look healthy, they may mask real problems underlying the pipeline health. And our natural reactions to do more, to fill the pipeline with more is probably misdirected. If we have filled our pipelines with garbage, it is likely that by blindly doing more, we will just get more garbage.
Then, over time, we see the impact, win rates plummet, average deal values fall, average sales cycles skyrocket. Our people are busy, but they aren’t closing deals.
We are simply managing Zombie Pipelines.
Pipeline metrics are meaningless without high quality, high integrity. The good news is that once we purge our pipelines of garbage, once we have a high integrity pipeline, we can begin to understand the real issues and we can recover. But until we see this, we are just blind.