Pipeline: 5 Ways to Determine if You Measure Up

Sales Pipeline KPIs

 

“We have a sales execution problem.”

 

One simple question asked across the conference room table from the CEO of software company, “Why am I here?” The most common response?  You got it. If we drill down a bit further, we might hear:

  • Our customers delayed purchases this quarter
  • We had break-downs in our sales process
  • We have plenty of leads, but we’re not converting them

The pattern indicates lost confidence in sales leadership and a need for political cover.

 

Pipeline is your most predictive KPI

Sales Operations is scrambling to produce analysis on close rate, conversions, CRM compliance and forecast accuracy. But, these are merely symptoms. In the spirit of managing expectations, I tell the CEO that the real problem is demand. Predictable results and reliable sales forecasts require the executive team to be informed and focused on the one metric that provides a software business an element of predictability.  A sure way to protect against all of the things that can go wrong in a sales cycle is you must have more deals in play than needed to make the number. Customer priorities change, budgets are cut, champions transfer and sometimes you just lose.

 

Forecast-Accuracy

 

 

 

 

 

 

A more strict definition of Qualified Sales Opportunity will initially make the problem appear “worse”. But, at least you know where you stand. You really should not expect to improve pipeline just by measuring it. Yet, both quantity and quality improve quickly. Why?

 

The Hawthorne Effect

A Harvard University study set up to show how work conditions affect productivity instead reached an unexpectedly conclusion.  The most significant influence on worker’s performance was simply the focus and ongoing attention of  management during the study. Raising the visibility of the pipeline metric to a level equal to forecast is an example of the time-honored “You can expect what you inspect”  principle popularized by W. Edwards Deming.

 

Measure Up
  1. Pipeline is only as good as your Opportunity definition
  2. Set minimum criteria for current quarter opportunities
  3. Scrub without fear until you get to the truth
  4. Weeks 2, 4 and 8 are your key snapshots for close-rate
  5. Create layers of accountability from sales rep to SVP

 

Pipeline numbers look good and you still miss?
  • Are you prematurely converting leads to opportunity when they really require nurturing?
  • Does each opportunity in the pipeline meet minimum criteria for a current quarter close date?
  • Does your sales process include verifiable outcomes that demonstrate actions the customer is taking to advance their buying cycle?
  • Is management encouraging overly optimistic forecasts because they can’t handle the truth?

 

Resources

 


 

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About Neal Murphy

Neal Murphy is the publisher of Enterprise Sales Operations and former VP of Worldwide Sales & Operations with 20 years experience in enterprise technology.

+Neal Murphy +ESO