Is having a growing sales pipeline one of your goals for 2017, or is it just a pipe dream you’ve been meaning to realise but you’re too busy with the day-to-day running of your business? If it’s the latter, you’re not alone. Recent research by the Sales Management Association found that 63% of owners of both large and small enterprises thought that their business was ineffective at managing their sales pipeline. One of the biggest challenges for SMEs is often how to grow sales, and balancing this with managing cash flow. Having a strong sales pipeline can help give you:
- Insight into the value of new opportunities.
- Data to predict the value of leads likely to convert to sales and thereby helping you match inventory levels with expected demand.
- Productivity tools to ensure your sales team focus on the deals most likely to close.
- Increased accuracy around revenue forecasting, helping you better manage cash flow.
So how do you get a well-functioning sales pipeline? First you need to invest in a decent Customer Relationship Management (CRM) system. Without a decent tool to help you track and manage your leads and prospects, you won’t get far at all. You then need to set up the CRM to ensure it captures the information you need. This will ensure you have a robust and constantly growing sales pipeline. Here are the steps.
- Understand the process. Think of your sales process and all of the steps involved in moving a lead through the sales cycle until they are converted into a customer. It’s important to know your customer and be able to answer questions such as: who are they; what are they buying; how are they buying; when and how frequently are they buying? This will then help you design the pipeline so that it becomes an effective tool for your sales team to maximise conversion rates.
2. Understand the numbers. A well-designed pipeline doesn’t just manage the flow of leads. It can also help with revenue forecasting, inventory purchasing and cash flow management by giving business owners and sales managers an understanding of the current value of potential leads, their likelihood of converting and their expected billing date. Key figures to know:
- Number of leads and prospects within each stage of the pipeline.
- The average value and expected close date of prospects.
- The likelihood of prospects and leads closing (this can be expressed as a percentage at each stage e.g. 20% for SQL, 40% for meeting held, 60% for proposal sent, 80% for terms accepted, 100% for won.
- The age of the leads at each stage in the pipeline so that you can keep track of any ageing leads.
- The overall value of opportunities (i.e. the value and the likelihood of closing)
3. Review and revise. As with any process, it’s important to review your pipeline regularly to ensure it is working efficiently. You may need to make adjustments along the way to ensure leads are being processed and not stalling as they move through the pipeline. Taking the time to properly set up your sales pipeline with a CRM will enable you to not only better manage any potential leads to progress them through to sales. It can also help you stay on top of your inventory requirements by giving you visibility of demand. You can then better manage cash flow as it enables you to measure what revenue will be coming in and when.
If you would like to know more about developing sales and other KPIs for your business, send us an email, we’d love to help.