Welcome to the second article in our series, “Stop Guessing! Sales Accuracy Redefined.” Previously, we discussed the importance of measuring your pipeline as percentage complete versus probability of close in order to grasp an accurate revenue forecast. In this article, we will take a closer look at the pipeline and the logistics of measuring percentage complete, reviewing the first half of the stages.
Measuring your sales pipeline as percentage complete, as opposed to probability of close, will give you a more accurate number for your sales forecast and a more complete picture of your future sales. By drilling down into a typical sales pipeline and its stages, we will get a better idea of how the percentage complete concept works, as well as how an opportunity moves through the pipeline. This article will review the first four stages of a typical sales pipeline; the next and final piece in our series will review the last four.
We’ll be using a sample pipeline based on the sales stages of one of Engage Selling’s clients. It’s important to ensure that your pipeline is customized to your business and it’s OK to have more, fewer or different stages than those we’ve defined in our example. We’ll be reviewing what qualities each stage has and its exit criteria. The important takeaway is to ensure you have similar criteria for whatever stages comprise your pipeline.
Stage 1: Discovery (Opportunity Initiation)
Once the sales department receives a lead and its contact details, discovery begins. Leads can originate from marketing, a networking event or a referral, your website or any other source. The objective of this stage is to gather basic information about the contact and make the initial call or email. An opportunity only enters the pipeline if you have had some preliminary conversation about the prospect’s search for a solution and determined that you are a potential match. Business cards collected at networking events and info forms from website don’t count for this stage until the seller has made contact with the prospect.
Exiting the discovery stage requires:
- Completing the conversation and establishing that the account meets criteria.
- Confirming client information and processing in CRM.
- Understanding the client’s buying position.
- Establishing a specific follow-up.
- Confirming lead source accuracy.
At this stage, your opportunity is only 0% to 5% complete in the sales pipeline, as you haven’t qualified the prospect or begun the sales process yet. You’re just getting started! However, it’s important to add the opportunity into the pipeline even at this early stage in order to track how many initial leads transfer into real, qualified leads and then lead to close. In large part, adding leads this early is about data gathering for later.
Stage 2: Pre-Qualification
After initial contact is made, you are now establishing credibility and rapport with the opportunity during the pre-qualification stage. As a seller, you are confirming the prospect’s desire for a solution and the time frame in which they’re working, as well as beginning to establish “why us,” as in why the prospect reached out to your company and what about your company stands out to them. The final objective of this stage is identification of key individuals, including CXO, VPX, directors and officers.
Exiting the pre-qualification stage requires:
- Converting the lead to a contact and associating with an account or company.
- Creating an opportunity.
- Confirming that this is a real opportunity within a specified time frame
- Adding all the additional contacts to the account
Exiting the pre-qualification stage completes 10% of the sales pipeline.
Stage 3: Qualification
The qualification process requires time and lots of contact with the prospect to ensure you differentiate your solution, establish credibility and learn more about the customer, including their current and future desired state. You must develop an understanding of their budget, constraints and ownership, their decision process and criteria and your competitors for the deal. You’ll also meet with all decision makers and quantify the ROI as well as the effort to win the deal. Finally, you’ll identify the internal team at your own company that will work on the sale.
In order to exit the qualification stage, you must collect the following information:
- Prospect’s size
- Current technical environment
- Buyer characteristics and their role in the process
- Buying profiles of all the buyers and influencers
- Decision criteria and the order of priority for each of those criteria
- Buying stage and timeline
- Business drivers and buying triggers
- The estimated price on your opportunity
Qualifying the prospect is a huge step towards completion of the sales pipeline; at this stage in our example, you’re 25% through the pipeline.
Stage 4: Solution Design
Once the prospect is qualified and initial information about the opportunity known, it’s time to get down into the nitty gritty of solution design. What, exactly, does the client want or need of your offerings? Which options make most sense and how will the solution be rolled out? This portion of the sales process is about deep conversations. From a sales point of view, it’s the time to engage the customer with references and case studies as the client is ferretting out whether your solution is the right one for them.
In the solution design stage, it’s important that all concerns, objections and impediments are aired and that the team understands any budget constraints so that the solution you are proposing in subsequent steps is precisely what the customer wants.
In order to exit the solution design stage, you must:
- Establish that the proposed solution meets the prospect’s needs.
- Receive internal approval on the solution design.
- Produce a proposal.
- Engage any required partners.
- Reach a conceptual agreement on the solution with the prospect.
- Define and approve the criteria for success.
- The pricing model is accurate and confirmed.
- Validate the timeline.
Completing solution design brings you to around 40% completion in the sales pipeline.
In our next article, we’ll continue reviewing the final four phases of the sales pipeline and bring the sales opportunity to a close—whether a win or loss—and 100% completion.