Previously, I talked about the three spinning wheels that all winning companies have mastered: they’ve learned why it’s important to keep all three working for them in tight synchronization. I’ve also explained how all companies who are great at growing their sales and customer base while attracting great talent have common traits in how they manage all three of those spinning wheels.
Today, I want to zero-in on the first of these three: Pipeline Velocity.
All about the flow
When we talk about having a healthy pipeline velocity, we’re describing a capacity for generating high quality and high quantity leads: getting them to flow through your business efficiently.
Getting it right means having a system. And from that, it means that you are adopting a set interdependent parts to form a greater whole. The team you build to make that happen lends itself to a process for managing leads from the qualification to the closing stage.
Do this right and you have a steady flow that grows at the same rate that your company does.
The kind of acceleration I am talking about here is not a one-time event. It’s repeatable and scalable. It has to be. Otherwise you risk becoming a one-hit wonder. A well planned, carefully achieved pipeline velocity, on the other hand, keeps your business growing with the right kinds of prospects, new projects, and new customers.
There are four steps you need to take to make it work for you.
1. Make a commitment
I like what Peter Drucker once said about this: "Unless commitment is made, there are only promises and hopes…but no plans." By committing to achieving positive pipeline velocity, you are saying yes to a plan for your business that is both simple and scalable, that reflects the buying process of your organization and that is measurable with achievable targets. Of course none of that can happen unless you decide early on to stick to your plan.
Like most commitments made in life, this is one where you need something that holds your feet to the fire to ensure you follow through. That is why recommend to my clients that they implement a data-driven tool that tracks the entire process—use the CRM or ERP of your choice. Just as important, you need to ensure all members of your sales team use this tool regularly. As your data within the tool builds to chart your progress, you will have an in-depth assessment of how well you are doing, and how well you will be going to do in the future. By choosing the right tool and being consistent in your use of it to analyze data, you gain a clear picture of the future state of your business as well as a leading indication of where you are headed in the future (and if that direction has you headed towards your goal!)
2. Define the quantity you need
Like any good process, your pipeline velocity hinges on having a clear definition of inputs. When it comes to quantity of leads and prospects needed to fill your pipeline, what you need to figure out is how many do you require to consistently hit your growth goals.
Fortunately there’s an easy, three-step formula you can use to solve this:
- Required revenue divided by your average sale = number of new customers.
- Now take your number of new customers and multiply by 3 = opportunities at the proposal stage.
- One last step. Take your number of new customers and multiply by 8 = total opportunities required in the pipeline in all stages.
Here is an example that shows how this formula works: If you need $1,000,000 in revenue and your average sale is $50,000, you will need 20 sales to hit your goal. This means you will need 60 proposals to be submitted throughout the year with an average closing rate of 30% and, you will need a territory that can produce 160 leads
3. Define what a high quality leads look like
Just like quantity, you need to define what your best customer looks like. The right place to start is by looking at your existing customer base and analyze who provides you with a high rate of return business combined with a satisfying profit margin.
Just as important—but difficult to pinpoint with data—which customers are fun to work with: delivering an enjoyable experience while you deliver a great product or service. All these factors should come into play as you define these high quality leads.
Engage Selling client Doreen Ashton Wagner of Greenfield Services calls this exercise “defining your perfect customer.” She and her team created what they call a “perfect customer questionnaire” that must be completed by their sellers. It includes information about the prospect size, location, buying personalities as well as information about past buying behavior. In short, it’s a qualification checklist. And it keeps the team focused on selling only to the best (or perfect) prospects. The process works so well, I wrote about it in my recently published book, Nonstop Sales Boom.
4. Know your outcomes
There are only three outcomes possible during the prospect qualification process: the prospect is qualified fully and can move into the pipeline; the prospect needs work to qualify; or the prospect is not worth keeping around at all.
Let’s just address the first group here. What happens next to those qualified prospects?
There’s no profit in having qualified leads enter the pipeline and sit there stagnant. Velocity is all about movement. Once in the pipeline, you will need a way to measure the movement of the prospects from the beginning of the sales cycle to the end. This could be a simple process of three steps or a complex multistep process that includes team selling, stage gates and internal conversations.
Your decision will be based on the complexity of your offering. Regardless, you must measure progress in the pipeline weekly to understand if you have positive velocity. This includes monitoring whether quality leads are flowing into the top of the pipeline at a consistent rate based on the requirements as set out in Step #2.
Summing up and looking forward
Get to know all three elements that you need to master to put your business in the winner’s circle. Pipeline Velocity is a major component and deserves you full attention. Getting is right will give you the keys to unlock a way of working that can create the nonstop sales boom you’re looking for, year over year.