Advanced Pipeline Management
Read Time: 9 minutes
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In this week's newsletter we're going to play the role of plumber. The goal will be to inspect the pipes to assess whether or not we're going to make it.
All seriousness aside, if you're in a sales operations or sales management role you'll want to nail this critical skill.
In fact here's my pantheon for the all time greatest skills you'll need as a sales operations professional:
Knowing your business goals stone cold (if you don't know these then how the hell are you going to reach them)
Data driven recommendations and decisions
Developing and managing operating rhythms
Has the mindset that they are the COO to the CRO
Developing feedback loops to identify threats and opportunities well ahead of time
Forcing tradeoffs within the business
Making the investment case for strategic and tactical capacity
Thats it for starters. I personally think these are the most important big rocks to lift first for any sales ops leader.
I mentioned operating cadences. Let's talk about Pipeline Management for starters.
What is Pipeline Management?
Sales pipeline management is the process of managing a company's sales activities, from lead generation to closing a sale. It involves tracking potential customers as they move through different stages of the sales process and identifying ways to move them closer to making a purchase.
The sales pipeline is typically divided into different stages such as lead generation, qualification, proposal, negotiation, and closing. Sales managers can use various tools and techniques to monitor and manage the sales pipeline, such as sales tracking software, lead scoring, and analytics.
Effective sales pipeline management can help organizations to identify potential bottlenecks, improve the efficiency of their sales process, and increase revenue. It allows sales teams to focus their efforts on the most promising opportunities and provides visibility into the sales process, allowing managers to make data-driven decisions.
Is it the same as Forecasting?
Pipeline Management and Forecasting can look and feel very similar to one another, but they are different. Pipeline Management focuses on the here and now. Forecasting looks at the picture of tomorrow.
In fact if you sequence your operations you'll want pipeline management to be completed so that it can serve as an input to your forecast. Like computer programs, pipeline reviews and forecasts are susceptible to the adage garbage in, garbage out.
When sales reps bicker over having to fill out the CRM I envision star sports players complaining about practice. Complaining about eating right. Complaining about putting in the work. Sure, there are now technologies which can auto capture a good majority of effort to save time. Go get those tools. But until then, fill out the CRM.
Not doing so puts the business in a bind. It's as if one sailor decided to turn off the radar while it was sailing through fog.
So what should Ops do to help these pipeline reviews?
Glad you asked! Here's a few tools you can use to de-risk your pipeline.
Pipeline Coverage Ratio
Adjusted Pipeline Ratio
Stalled Deal flag
How you run your cadence
If you don't have any of these in place I suggest layering them in one at a time. Going from 0 to 100 MPH in three seconds might be fun for the driver but it can be terrifying for the passengers in the back.
Ops… you're the driver here.
Sales is the passenger.
Pipeline Coverage Ratio
Without spending too much time looking at data we definitely need a way of looking at the pipeline and have the ability to say… WE'RE GOING TO MAKE IT! Essentially it's your gas fuel gauge showing how many miles are left in the tank.
Just because the gauge says you're going to make it. Does that mean you will? Think about it. Many factors play in:
How heavy footed you are with the pedal
Are you blasting the AC?
The weight of your vehicle
Same goes with the pipeline. Instead of a fuel gauge, pipeline coverage is expressed as a ratio of total pipeline value against the period's target. For example, if your target is $250,000 and you have a pipeline of $1,000,000 then your pipeline is 4.0x. If your win rate is
Flaws of the Pipeline Coverage Ratio
There are four fundamental flaws of this metric. Let's discuss them so we can work on an adjusted version of the metric.
Opportunities reflect Seller Hope more than Buyer Intention
Deal Value may not be actually reflected
Segments blended together may obscure the normal distribution of your deals. Outliers can throw your coverage ratio off
Deals may over inflate pipeline is Close Dates are wildly off
Now that we've covered a few of the flaws the question is why should we use this metric? I see it as a gas gauge. You still need it because it's a quick, useful heuristic. But once again at operators we deal in nuance.
Adjusted Pipeline Coverage Ratio
Let's make a few tweaks to counter the issues with PCR. Here are a few methods to use:
Exit Criteria strictly enforced and monitored/coached by managers
Pricing for early stage deals use a conservative plug in line with your average
Pipeline Coverage Ratio developed for each segment
Outliers are recategorized as upside deals. The thought here is to reduce the business’ reliance on White Knight deals
Close Dates deviating from your sales cycle from that stage are excluded or penalized (i.e. Stage 1 deal with Course date this quarter but your sales cycle is 120 days)
These are a few ideas you can use. If you have other adjustments you use I'd love to hear about them (send email reply).
In a previous post I covered two other tools: Hygiene Score and Stalled Deals. Check out those articles for more tools. I encourage you to go review your own cadence to see if any of these tools can help you drive further improvement within your business.
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