Repeated pipeline reviews are often a source of great stress between sales managers and sales people. As you’d expect, there are the usual suspects when it comes to questions at a typical pipeline review:
- What deals will close this month?
- What cover does the sales person have to meet their quota?
- How much of the pipeline is new business versus add-on?
- How does the pipeline feel relative to other months?
- Are marketing delivering on their demand gen targets?
- What are the next steps in the sales process?
- Is senior management from the prospect engaged?
- What is the average deal size?
- Where is the competition on individual deals?
- So on and so forth
Invariably most sales people, who are under pressure to deliver, will try to concentrate the discussion on marketing’s contribution to inbound leads. Whilst this may be a valid concern it can quite often hide the fact that the salesperson’s own management of their pipeline is poor. A good salesperson will generate their own pipeline in the absence of it from other sources. A bad salesperson will hide behind marketing and try to mask their underperformance by inflating their pipe with opportunities that are not likely to close.
So what is a good leading indicator of this, or where should the manager look? The place to start is the average age of pipeline for new business. If the average age of closed won business is significantly lower than the average age of open or closed lost opportunities, then it’s highly likely that the sales person is holding onto pipe that won’t close, instead of creating their own pipeline. The tendency to ‘beat the dead horse’ rather than cold call, is very strong in inexperienced sales people or those who are used to over supply from inbound. A simple view of the average age of the pipeline by sales stage will highlight if there is an issue. If the average age of open opportunities is say, more than one and a half times that of closed won deals then further investigation is required.
Encouraging/training the sales person that a better use of their time would be to do their own demand generation through cold calling or cold connecting in the social world is key, regardless. The salesperson will defend why different opportunities deserve to stay open, but ultimately if your company has a particular set of sales cycles/close rates/sales velocities then these are not likely to shift dramatically over time. The reality however, is that too many managers ignore age when reviewing the pipe.