One of a sales manager’s most important tasks is to monitor the sales production of each of sales team member. After all, the success of the entire organization depends on making sure the sales team is generating new business and driving revenue at an ever increasing rate. If a rep isn’t doing well, the sales manager needs to recognize that quickly, so appropriate coaching can be provided and/or changes in strategy can be implemented.
Most sales managers rely on two key tools to monitor sales rep productivity: pipeline and forecasting. However, highly effective sales managers understand that there is a difference between the two. Forecasting is focused on later stage deals – the ones that are far enough along that you can begin to get a feel for the likelihood of success in the current quarter. However, forecasting does little to help with future quarters. Technically, pipeline refers to every opportunity a sales rep might be working on – including the ones that are far enough along to be at the forecast stage – but there are many other opportunities in the pipeline that are not that far along yet. We can designate these deals as being part of the “forward” pipeline, because they are focused on the future development of sales that ultimately impacts later forecasts.
The problem this creates is that too many sales managers don’t differentiate between the two, which often leads to sales reps not working hard enough or smart enough to develop the deals farther back in the pipeline. If this situation persists, sales reps will spend too much time on the forecasted deals and the opportunities deeper in the pipeline will be neglected, leading to a decline in deals that reach “forecasted” status in the next quarter.
What steps can managers take to guard against this confusion?
First of all, create a realistic timeline defining how long it takes for an opportunity to move through the pipeline. A lot of organizations still rely on the old 30-60-90 day predictive approach, as in, “it looks like this opportunity is about 60 days from closing.” The sales rep bases this estimate on the level of progress that still must take place within the account. The problem with the predictive approach is it makes it very easy for deals to get stuck and then die before anyone realizes what has happened. The sales rep can just keep pushing the deal back another 30 days, waiting on things to happen, rather than being proactive and working with the customer to make the deal happen (or put it out of its misery and mark it as lost).
A more sensible way to manage the pipeline is to monitor opportunity progress based on the length of the sales cycle, and link the work being done on the opportunity to the time it should take to close the deal. We might call this the cadence or pace approach.
The cadence approach works like this: What is your typical sales cycle? If it is 24 weeks, then begin by determining what tasks need to be done each week in order to guide the opportunity along so it can close in 24 weeks. For example:
Who do you contact in the account, and when do you contact them?
What kind of information and materials do you send out each week?
When do you schedule the product demo?
What external and internal resources do you need to leverage to develop the proposal, and when do you meet with those folks?
By when should have the proposal in front of the decision maker?
You get the idea. So, what if you have an opportunity that has been in the pipeline for 10 weeks? If you have a cadence in place, it is a simple matter of checking to see what should have done at week 10. If it hasn’t been done, you know the opportunity may be in danger of being lost. As a sales manager, your responsibility at that point is to get with the sales rep, find out what the roadblocks are, and provide the coaching and support required for the sales rep to get the opportunity back on schedule.
Once you start managing the forward pipeline this way, forecasting becomes less urgent but also more accurate. Sometimes people try to attach a forecast to an opportunity based on the time it has been in the pipeline, which is not helpful or at all accurate. An opportunity shouldn’t be assigned a forecast status until certain key objectives have been met. For example, does it make any sense to attach a forecast status to a deal when you haven’t even submitted a proposal? Can you forecast the success of a deal with any degree of accuracy when the customer hasn’t agreed to any next steps? As part of your cadence process, you should create a set of benchmarks that define when an opportunity is forecastable; anything that hasn’t hit those benchmarks remains in the forward pipeline and the rep should work diligently to keep it on track.
Managing the forward pipeline using the cadence approach makes it much easier for the sales manager to implement effective coaching. Again, using the 24-week sales cycle as an example:
Let’s say that after 10 weeks the sales rep should have developed a thorough needs analysis, built a set of contacts within the customer organization, and have prepared a list of solution options to discuss with the customer. If your sales rep is now at 14 weeks with this customer and still doesn’t have these steps completed, that might be a good indication that he needs help with questioning skills to uncover needs and identify opportunities.
If, at 20 weeks, the final proposal should be headed off to legal to be reviewed by both sides, but we are now at 24 weeks and the rep is still wrestling with pushback on some issues from the decision maker, this could mean that the rep’s ability to handle objections and move through to closing is weak.
The important take away from all of this is that both the sales rep and the sales manager must work just as hard and just as smart when dealing with the forward pipeline as when trying to bring the forecasted deals in for a landing. The more seriously you attend to the forward pipeline, the happier everyone will be when the next quarter comes.
Recommended next steps:
Separate your forecast meetings from your pipeline meetings, and don’t confuse forecasting with pipeline management.
Consider switching from the 30-60-90 day approach to the sales cycle cadence approach, or at least installing safeguards to keep deals from staying in limbo if you stay with the old method.
Define cadence steps for each week of the sales cycle that conform to your sales process and the expectations of the organization.
Design coaching plans around each of the steps that can be leveraged to build sales rep skills when working through each stage of the cadence.
Refocus pipeline conversations around managing and coaching to the status of the forward pipeline.
Walter Rogers is the President and CEO of Baker Communications. Baker Communications is a sales training and development company specializing in helping client companies increase their sales and management effectiveness. He can be reached at 713-627-7700.
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