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Sales Performance Blog

14 Jun 2017

How to Assess the Health of Your Sales Pipeline

By: Justin Zappulla

The primary focus of most sales professionals and their respective sales organizations is hitting quota each month/quarter/year. While that remains at the top of mind for most, it is also imperative to regularly evaluate the entire sales pipeline from a broader point of view, including deals that were just created or those that may be stuck in limbo and haven’t advanced. Assessing the health of your pipeline, and doing it frequently, will set yourself up for maximum success for the following month, quarter, year and beyond.

There are four essential questions you should ask yourself, in order to get to the bottom of how and why you should regularly assess the health of your sales pipeline:

Question 1: Do you have enough prospects at each stage of your pipeline? This question is fundamental in examining your sales pipeline. A healthy pipeline will include prospects at each stage of the process. The obvious mistake many sales professionals make is by devoting too much time and energy on deals in the closing stages, while missing out on discovering and creating new opportunities.

In the long-term, this can have serious consequences. Solely focusing on only closing prospects will eventually lead you high and dry once those sales have closed. Ideally, you want to have opportunities at each stage - realistically those that have a chance of advancing onto the next stage, and keep the pipeline moving.

It is also imperative to develop a sense of your stage-to-stage conversion ratio. Ask yourself how many opportunities must be created in order for at least some of them to make it all the way to the final contract stage.

To provide you with a simplified example, let's say you have twenty opportunities at the very start of your sales pipeline. Estimate that about 50% of these opportunities will peter out, and will not make it past the first meeting. This leaves you with approximately 10 opportunities left. However, about 70% of these will also fall off once you give a presentation or demo. This ultimately leaves you with 3 viable opportunities that have a decent chance of converting into customers.

This example demonstrates just how important it is to have opportunities that will convert to sales at each stage of the process. It is essential that you pay close attention to the amount of opportunities that are open during any of the major stages in your sales pipeline, including those at the very early stages.

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Question 2: Is your pipeline moving? Ultimately, a pipeline must flow. Opportunities that spend far too much time stagnating in one stage should be a red flag to you. Part of evaluating your pipeline is thinking critically about what opportunities are currently in your pipeline, and deciding which of them deserve more attention or may be better off if they were moved back to a marketing nurturing track.

Keeping opportunities open solely for the sake of appearance, or to prop up your numbers, while knowing there is little realistic chance of converting the prospect, will lead to bad data that will only distort future projections and forecasts.

Question 3: Do you know which deals within your pipeline you need to focus on? If you have already been thinking about the other two questions, then this one should be an easy one to answer. You are already well aware that you will not close every deal in your pipeline. While some salespeople may choose to try and chase everything in their sights as a strategy, that is not always viable.

Top salespeople are able to set qualification criteria, and rigorously apply these at each stage. There is a laser focus on the right deals, and generally, they have a good idea of how many are likely to close and which will drop out at each stage.

Question 4: Is your pipeline accessible and up to date? Part of maintaining a healthy pipeline is disseminating information accurately and correctly - everyone must always be on the same page. Streamlined communication, in particular notes within your CRM, may often seem arduous, but is necessary. Visibility and openness are key in the sales process, so it is important to keep information up-to-date, and review regularly.

A healthy sales pipeline is essential to a healthy business, and therefore maintaining this pipeline is of the utmost importance. If you are able to answer yes to all of these questions, then you are already in pretty good chance. Strive to improve and innovate where possible, and nurture prospects at every stage of the process to ensure a consistent and effective sales strategy.

Categories: Sales Prospecting, Sales Management

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