The Cost of Sales Pipelines
Sales pipelines are a big deal. In recent research, we discovered that 72% of business-to-business companies expect their managers to hold pipeline review sessions with their reps at least once per month and most often weekly. We also learned that those sessions last an average of 53 minutes each. So if your organization is similar to the others in our study, your sales force is making an enormous investment in managing your sales pipeline. Literally, you’re probably spending hundreds or thousands of hours on it every month.
So what do we get for all that effort? Not much, really. It turns out that the primary reason sales forces engage in these sales pipeline discussions is not very productive. We don’t do it to help our sellers win more deals. Nor do we do it to identify bottlenecks in our sales processes or to shore up sales rep performance. No, the number one reason companies maintain a sales pipeline is something that has almost zero impact on business results. Sales pipelines are primarily used to generate sales forecasts.
In fairness, sales forecasting is a necessary activity. Senior leadership uses them to communicate expectations to shareholders, to allocate corporate resources, and to identify strategic initiatives. But are they really the most important thing we can do with your sales pipeline? Are they really worth the thousands of hours each month that go into preparing them? Surely there is something else we could do with all that time.
A Smarter Investment
Yes, there is something better to do in these meetings between our sales managers and their reps… It’s called coaching. While forecasting is an attempt to predict the future, coaching is an effort to do better today. Forecasting involves scrubbing sales data and ‘doing the math,’ while coaching involves scrubbing sales behaviors and doing the right things. Sales forecasting might be necessary, but sales coaching is important. So how would we integrate coaching into these pipeline review sessions? Literally, how would coaching fit?
‘Coaching’ is a term that is loosely defined in most people’s minds, but the most classic image is that of a sales manager making joint sales calls with a seller. During these calls, the manager observes the salesperson’s behaviors and provides feedback on the interaction to improve the seller’s skill. And while joint sales calls are great opportunities for coaching, they’re not the only venue where coaching can take place. In fact, I would argue that call coaching is less valuable than the coaching that can occur during those 53 minute pipeline reviews.
The joint sales call is at the tail end of a series of critical decisions that salespeople have already made. They first have determined that the potential customer represents a qualified opportunity to pursue. They then prioritized that customer over others that they could have alternatively visited that day. They have also crafted an approach to win that opportunity – what to say during the sales call and how to position themselves against the competition. In essence, the sellers have decided that this is the best use of their time.
If these preceding decisions were made poorly, then a sales manager is making a joint sales call on the wrong customer at the wrong time to say the wrong things. The coaching that will take place on this call might improve the salesperson’s skill in executing a customer interaction, but that coaching will not result in a sale. It will not move the seller closer to achieving their quota. It really won’t matter. It’s a waste of everyone’s time – the seller, the manager, and the bewildered customer.
But if the sales manager had used that 53 minutes earlier in the week to really vet the salesperson’s pipeline of opportunities, some better decisions might have been made. Perhaps the manager and seller would have concluded that this was in fact not a qualified opportunity and shouldn’t even be in the sales pipeline. Maybe they would have identified a better opportunity to pursue instead that would have yielded a better outcome. Perhaps they would have taken the time to map a winning strategy for that customer, and the sales call would have been impactful. Maybe the manager wouldn’t even have needed to tag along, because the stage would already be set for a successful conversation. Just maybe.
This is the power of coaching when it is applied to the sales pipeline. The sales pipeline defines a salesperson’s weekly agenda. It’s like the seller’s roadmap to achieve their quota. And if that roadmap is littered with road blocks and dead ends, then the seller is on a long road to nowhere. But if that roadmap is sure and true, then the path to quota is easily traveled. The salesperson will spend their week dancing from one successful sales call to another. The conversations will be productive, and the deals will be won. Things will be good for everyone involved.
A Brighter Future
When coaching is applied to the sales pipeline, good things happen. If the pipeline is plump with qualified opportunities, then the seller is on a fast road to quota. In fact, our research showed that companies with effective pipeline management grow revenue 15% faster than those without. But our research also revealed that the sales pipeline is generally relegated to a much more mundane and administrative task – creating sales forecasts. And honestly, that’s a waste of valuable time. Hundreds and thousands of hours each month, in fact.
So if your sales force is in the majority that views the sales pipeline primarily as a forecasting tool, imagine the possibilities. Imagine a world where all of those hours spent of forecasts become hours spent coaching. A world where your sales pipeline is clean and your sellers are pointed toward their best opportunities. Imagine a week filled with brilliant sales calls and won deals. Ironically, imagine a world where your sales forecasts are actually achieved… Because you’re paying less attention to them.