Why driving to a theoretical coverage factor is a flawed Sales model….

December 8, 2014

Many organizations look to their CRM tools to measure and monitor pipeline coverage; they set arbitrary measures like 3x (3 times) or 5x coverage to expected targets - in other words, if an organisation has a requirement to sell $100 of something they want $300 or $500 dollars worth of opportunity in their sales pipeline…

 

Now don’t get me wrong, there is nothing wrong with driving this expectation across the business, and in a article I wrote last week see here... I talked about this very subject, the problem is it can drive very lazy sales management habits, and the wrong behaviour and outcomes at a sales level.

 

Let me explain...

 

The most import elements of managing a sales person and outcomes is understanding the “shape” of a pipeline, and understanding which part of the business has responsibility for each component or stage, so your sales manager/s can focus on closing deals. 

 

Let’s break a pipeline into 6 logical parts:

 

Stage 1 – Lead Creation (this is generally some form of campaign, e.g. telemarketing, eDirect Mail, Trade Show leads lists, response to an ad etc)

Stage 2  - Lead Qualification (this is where someone contacts the lead with some targeted questions around specifics)

Stage 3 – Opportunity Identification – the lead qualification process has uncovered a live opportunity

Stage 4 – Opportunity Qualification – where the sales person et al, spends times testing the customer’s intent

Stage 5 – Opportunity Development – proposal development and presentations

Stage 6 – Deal is Won, lost, or not pursued

 

 

 

Here’s an example of a pipeline by stage in table and graphical form….

 

 

Fig 1.

 

As you can see in Figure 1, an ideal pipeline as above is shaped liked a funnel (hence the term sales funnel), however where a great deal of oganisations trip up, is charging sales teams with the full pipeline responsibilities… 

 

Your sales people should be focused on the pointy end of any funnel – they should be building out relationships, progressing deals through the sales stages in a timely manner (velocity), qualifying opportunity, crafting and building proposals, looking at what if/what else scenarios, presenting their ideas and proposals and ultimately closing business… in other words they should be operating in stage 3 – 6…

 

Sales managers should be working with their sales people on quickly qualifying at Stages 3 and 4, freeing up time to delve more deeply into the later stage of 4, looking at stalled deals, and fleshing out stage 5 to best position your organisation’s chances of winning these deals – the activity level of a sales person should be the inverse of the pipeline graph in figure 1 and should look more like the graph below in figure 2…

 

Fig. 2

 

So this begs the obvious question; “Who drives the activity and funnel development of the earlier stages of 1, 2 and 3?  That’s the question you need to figure out…

 

Stage 1, is clearly the responsibility of the Marketing group, there needs to be plans in place around Campaigns, their expected returns, and programs to measure, monitor, and capture each and every lead.

 

Stage 2 and 3, needs to be a cost effective process for filtering the wheat from the chaff, and could be an out-sourced, or in house, Telemarketing group chartered with campaign follow up, lead qualification and first level opportunity identification… this responsibility could sit within the sales or marketing group or across both… i.e. sitting in marketing and switching across to the sales group once it becomes a live opportunity….

 

And then obviously Stages 4 – 6 are the responsibility of the sales group…

 

It’s vitally important that you get these pipeline stages and responsibilities right…. As I mentioned above, too many businesses charter the Sales Group with the full pipeline responsibilities… this drives an organisational and sales management behaviour that has a tendency to focus on pipeline coverage and “size” of the pipeline, rather than shape and “quality” of the pipeline. As a past sales manager, I would much prefer to have a sales person with 3 good quality deals in their pipeline, than 10 average ones…. Focusing your metrics and measures on pipeline coverage alone will teach your sales managers and sales people bad habits and will see them focus on the wrong things….

 

So, yes by all means measure and track Campaign coverage, early stage opportunities, and late stage deals… just remember though, that each component has it’s place and it’s the “shape”, “velocity”, and “quality” of the pipeline you should be applying to your sales teams – not just total coverage….

Please reload

Featured Posts

Why driving to a theoretical coverage factor is a flawed Sales model….

December 8, 2014

1/1
Please reload

Recent Posts
Please reload

Archive
Please reload

Search By Tags
Please reload

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square