Sales Pipeline problems and how to fix them

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Sales Pipeline Management is crucial to a successful business and that without it you cannot succeed. It helps to keep track of the business your sales team has pursued, and it functions as a measure of predicted turnover. The more accurate you manage your sales pipeline, the more accurate you can predict your turnover. It’s therefore important to recognize problems early on and have an understanding of how to solve those problems. This can greatly improve your sales and make your predictions more accurate. Here we present the most common pipeline problems we identified and how you can solve them.

Response time: How fast are you?

Sales people tend to focus on sales numbers as the sole metric. But, do you know that the largest driver of lead to sale conversion is the time it takes to respond to a customer? Industry data indicate that leads receiving a call-back in two minutes or less were four times as likely to buy as an average lead. Despite that, most companies prioritize attracting new leads over follow-ups.

What you should do

First of all, you need to establish benchmarks for how quickly your sales team is following up on leads. From there set goals to shorten this timeframe. Start communicating the response metric performance to your sales people in performance reviews and keep track of your performance and the relation between the response rate and the volume of sales.

Are you realistic?

According to research the major cause of forecasting frustration in a company is stalled opportunities and unrealistic timelines (i.e. overly aggressive close dates). If your sales management is focused on chasing accurate numbers or helping with late stage terms and conditions, they are not helping sales reps choose the right opportunities to pursue or helping to uncover unforeseen customer problems. In short, sales management is not focussing on how they can help their reps create real customer value. That has a major impact on forecast accuracy and pipeline velocity and the underlying causes can be directly related to a number of factors such as:
• Proposing solutions too early in the sales cycles
• Misunderstanding customers’ needs and decision criteria
• Adopting incorrect strategies because of failure to identify where the customer is in the Buying Cycle

What you should do

The solution to stalled opportunities and wild timeline fluctuations is quite straightforward. World class sales organizations focus nearly twice as much on the front end of the pipeline where the funnel is wide and the opportunities to create value are numerous. Also, good pipeline management and forecasting first and foremost relies on leading indicators – leading indicators are found in the early stages of the sales cycle by good buyer analysis and questioning.

Are you obsessed with your prospects?

Every company wants to have so many good prospects that salespeople don’t have time to develop them all or they simply lose track of how many there are in the pipeline. But this scenario is rather rare. A much more common scenario is that salespeople become obsessed about each and every prospect in the pipeline. Why? The answer is simple. Because they have too few of them.

What you should do

If your salesrep had twice as many prospects entering the pipeline they would naturally have to prioritize those who are easier to move along or more likely to result in a sale sometime soon. Having more prospects entering the top of your pipeline not only means more revenue emerging at the end but also:
• A sales operation that’s more productive and generates more revenue with its headcount.
• A better book of business, that means bigger accounts and more profitable and consistent accounts.

Are they the right clients?

Have you identified the right clients? Do you try to make all the leads pay off or do you focus on the most promising? That’s a real struggle for every salesperson that has limited time to pursue all leads.

What you should do

Are you aware of the Pareto principle? Maybe you have heard of the 80/20 rule:

80% of your sales comes from 20% of your customers

You should try to find 20% of your customers that are likely to generate the most sales and focus most of your time, energy and resources on them. In order to do that you should take into account the business value of each client and how much of your time they require. It’s important to look for red flags like constantly asking for things but hardly ever placing an order. Another suggestion would be not only to focus on the most promising 20% of customers, but also step away from the bottom 20% of “problem” customers that take up more resources than they generate revenue.

Do you ask for referrals?

Do you prefer doing business with people you know or with strangers? The answer is probably with people you already know. You need referrals for many reasons. When you’re introduced to a prospect through a personal recommendation, that prospect has a vastly higher comfort level than, say, a buyer you find through cold calling. Your new prospect is going to have more faith in you from the outset because he came recommended by someone they know and trust. But most companies do not incorporate asking for referrals into their strategy.

What you should do

Here are three ways that will help you get more referrals:

  1. First of all you should make it a habit. Incorporate asking for referrals into your strategy and sales process.
  2. Give your customer a referral first. Since you are in sales you know lots of people, so you could use your connections to bring some extra business for a prospect. After that it’s the right time to ask for a referral.
  3. Always have your customer contact the prospect. Once your customer agrees to give you a referral, don’t just settle for contact information. You can always contact the prospect and mention you customer’s name, but this happens a lot and tends to be meaningless. Instead, you should ask the referrer to contact the prospect and explain who you are and why you are worthy having a conversation with.

Analyzing Wins and Losses

Do you know how to eliminate wasted effort on things that do not improve your win rates? Do your salespeople make a good first impression? What is the most productive use of your company’s resources? A Win/Loss analysis reveals the strengths and weaknesses of your organization by providing actionable data to modify processes and improve win rates. Every executive needs to have this information in order to optimize go-to-market strategies and improve business’ performance. But most of the time executives are reluctant in asking for customers’ feedback and even more reluctant in utilizing this feedback.

What you should do

Incorporate sales reports on wins and losses as part of your sales process. You can send a questionnaire to sales leads that did not close and ask them why they didn’t choose your company and/or conduct an interview . Also, you should ask the ones that did close, what made them choose you in order to use this feedback to find your strong points, enhance your performance and repeat what made you successful.

We hope this gives a clear overview of most common sales pipeline problems and fixes. If you recognize any of these problems you now know what you can do to optimize your sales and revenue predictions. But hopefully your company is doing great and you never encounter any of these issues.