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What does the sales pipeline tell you about your business?

20 Jun 2017

What does the sales pipeline tell you about your business?

Many businesses view their sales pipeline from a sales management and revenue forecasting perspective. They are so focused on meeting their sales targets that they fail to review and analyse their sales pipeline to understand the real performance of the sales and marketing function in their business.

We believe that the sales pipeline should also be viewed as a tool for optimising and increasing the efficiency of the sales and marketing engine in the business. Looked at analytically, the sales pipeline can help to identify where stages in the sales and marketing process are inefficient or underperforming. Your sales pipeline can effectively be viewed as a sophisticated control system with valves that control the flow of business opportunities. If the valve settings are optimised correctly and leaks minimised, it can enable a smooth flow of leads through the sales pipeline; developing an efficient engine that consistently achieves more with less.

Analysing the sales pipeline to identify areas of concern at different stages and then optimising each stage can have a massive impact on the overall effort required to deliver your target sales revenues. For example, if your business has a proposal conversion rate of 25%, i.e. you are winning 1 in 4 proposals. By changing how you approach and develop proposals to improve your conversion rate to 50%, you could still win that 1 contract but with only 2 proposals needed. Some of the businesses we are working with are achieving conversion rates of 67% (2 in 3 proposals). This way the business increases its efficiency by halving the amount of proposals required. This represents a significant reduction in effort to deliver the business needed enabling you to achieve more with less. Similar improvements and valve adjustments can be made at other sections of the sales pipeline. As a result, you may need to engage just half the number of target prospects and generate half the meetings to achieve the same results. Of course the other way of looking at it is that you could be doubling your sales revenues at no extra cost, just by being more efficient in your sales process.

Although this may seem very simple, many organisations still fail to act, analyse and optimise. In most cases, senior managers/ executives don’t realise how inefficient their lead generation engine actually is; perhaps because their sales targets are being met and the numbers achieved. But frequently it’s just overlooked as ‘natural wastage’ in the pipeline, when that doesn’t have to be the case. Within the business it can be difficult for senior members of the team to question this sensitive area as some regard it as a challenge to their role and authority. So this important issue often doesn’t get raised. It requires an external professional, acting independently, to challenge group thinking within the business and work collaboratively with the team to diagnose the issues and develop effective solutions.

With reducing budgets and greater accountability of sales and marketing functions, it is vital for organisations to take action now to save cost, time and effort in order to develop an efficient and sustainable sales pipeline. At Shaping Business, we work with clients (large organisations and SMEs) to analyse their sales pipeline, increase conversion rates and create a more efficient lead generation engine in the business.

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