In the sales environment, the term ‘sales pipeline’ is a similar kind of concept. The sales force is constantly busy making contact with prospects, pursuing leads, sending proposals and closing deals – all these activities are continually flowing in and out of the pipeline.
The definition of a 'sales pipeline' is the organised presentation of data at various stages of the sales process used to track, analyse and forecast all sales opportunities. How this pipeline is managed is what is of critical importance to business revenue. A badly managed or ineffective pipeline will result in targets not being met and ultimately a loss of revenue.
Most CRM software includes a sales pipeline or opportunity management tool. Not all, however, are effective at clearly and easily showing the different stages of the pipeline, making it difficult to manage the pipeline.
|Sales forecast for real-time pipeline analysis|
Often companies are very good at historical data, i.e. reports and analytics about past opportunities and sales. Historical information is important in analysing problems and trends, but just as critical to the success of a business is real time customer and partner information. If past data is a rear-view mirror showing where things slid off the road, real-time data is a global positioning system showing precisely where things are now and the shortest route to your destination!
Five reasons sales pipeline visibility will help you close more deals
1. Provides real-time data for improved forecasting: Real-time data ensures a birds-eye view of sales across all stages, territories, products and teams. This includes new leads, how many prospects have been contacted, how many proposals and quotes have been generated, how many opportunities are in the pipeline, which prospects have a higher probability of buying , the total value of the pipeline and how many deals have been won.
This is helpful for three reasons:
i) A salesperson has instant information at hand showing where to focus his efforts and highlights the stalled/ stuck opportunities requiring attention. This means there will be less lost opportunities which translate into lost revenue.
ii) Up-to-date information means sales managers can more accurately predict whether targets for that quarter will be met.
iii) Avoids incorrect estimation of demand which can either have the production line manufacturing too much or ending up falling short.
2. Identifying the level of risk: Ideally, a sales pipeline should be smooth-flowing from one stage of the process to the next like identifying a new lead, first contact, meeting the prospect, sending a quote/ proposal, follow-up, closing the deal..Occasionally, opportunities stall and don’t move forward to the next stage. Without high sales pipeline visibility the salesperson may forget about it or not pick up that an opportunity is stuck. This impacts the entire sales process and the bottom line. Again, lost opportunities mean lost revenue and prosperity for competitors. The ability to get insight into problems in the pipeline means corrective action can be taken to get the process back on track. The salesperson can adjust their focus to customers needing attention or the sales manager can make an informed decision on where best to allocate a salespersons time.
A healthy pipeline shows that all opportunities are receiving attention at all stages of the sales cycle.
3. Managing multiple product lines and business units: In smaller companies, keeping track of the sales process is relatively simple. For bigger companies with multiple product lines or various business units, an efficient and intelligent CRM software solution is of utmost importance in order to manage the end-to-end sales process competently. In a large company without an efficient CRM software in place, hundreds of leads and sales opportunities could fall through the cracks.
With a sales force that is pursuing myriad leads and opportunities, each involving multiple steps to close a sale, managing the pipeline can become challenging. Time is limited – a sales person can only do so much in a day. This is when the pipeline helps the salesperson stay on top of his game by identifying the higher value opportunities to be pursued and locating bottlenecks in the pipeline.
4. Maintaining sales pace/ pipeline velocity: Pipeline velocity refers to the rate at which opportunities move through the sales process, from new leads to won deals. Every company wants opportunities to advance from one stage to the next fairly quickly - the faster the sales cycle progresses, the more deals that are closed and revenue is added to the bank.
Once a business has determined its ideal sales pace, identifying deals that have lost momentum and are off-pace becomes easier. This again means corrective action can be taken to get deals back on track.
5. Redeployment of the sales team: In all four points above, you see that the major benefits of sales pipeline visibility is an overview of the sales process, identifying problem areas and being able to facilitate efficient movement from one stage to the next.
Another way this is accomplished is by the sales manager having data at their fingertips on each salesperson’s progress - they will notice patterns emerging for each person. For instance, one salesperson may be very good at quickly pursuing leads, but neglects following-up regularly on deals already in the pipeline. Another rep may perform exceptionally well in certain territories and poorly in others.
In addition, salespeople are often in pursuit of closing deals quickly, sometimes to the detriment of prospecting that builds future revenue. The sales manager can monitor and address neglected prospecting activity that will have a negative effect on future sales.
Armed with this sort of information, the sales manager can make the call to reallocate the sales force across various territories based on their strengths in order to keep the sales cycle flowing smoothly and ensure the quarter’s targets are met.
In today’s fast-paced consumer world, customers are able to compare products and services with a touch of the button via the internet and their cellphones/ smartphones - this means customers have evolved to a level where they are much more demanding when it comes to service and quality. To survive, companies need to stay ahead of the game, have their finger on the pulse and react faster to changes in the market. To win over this new hybrid consumer, quick action and regular communication with a customer thinking of buying your product, could make the difference in them choosing you over your competitors.
Lastly, CRM software offers a variety of ways to study and enhance the sales pipeline - forecasts, dashboards, system and custom reports, graphical representations of key information, etc. An effective CRM solution ensures steps are incorporated in the business process and workflow to prevent deals from falling through using holistic customer details, big deal alerts, competitor mapping, activity management, escalation rules and automated non-core tasks.