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Sales Pipeline – Why Your Sales People Forecast Too High

Posted by Douglas A Wick on Mon, Oct 4, 2010

Do you have trouble anticipating what your sales will be from month to month?  Do your sales people have difficulty giving you an accurate forecast on what they will produce each month? 

If yes you need help benchmarking the sales system your team is using.  More specifically you need to get your sales people in agreement on how they measure the prospective candidates and anticipated sales they have in their pipeline.  Dave Kurlan of Objective Management Group wrote a book on sales, Baseline Selling, that should be a must to have in your sales library and be part of your sales management philosophy.   It compares selling to baseball and uses terms to help understand how the selling process can be compared to playing baseball.

Baseline Selling resized 600

Just as in a baseball game you put runners on base, your sales process should look at stages where prospects are in your sales process in order to determine the likelihood of converting them.  It’s likely that your sales people are measuring a prospect who they feel may score [convert] this month that hasn’t even reached first base.  Depending on how long your sales cycle is, it may not even be possible for a prospect to score in a month, even if they were a good candidate.  You need to define what your pipeline looks like through defining the stages for your sales process.   Have you done that?  Do your sales people have any idea which prospects will convert and which won’t?  Do they have a concept of where each prospect is in terms of conversion?  A systematic sales process that your sales team follows allows you to forecast more predictably.  It also assures that your sales people are doing a better job selling.

According to Kurlan and Baseline Selling, your sales pipeline should have four stages:

  1. Suspects (1st meeting scheduled) [Prospects you have scheduled an appointment with to begin the sales cycle.  This means that until a prospect has scheduled an appointment with you, you don’t have a suspect; they are still a prospect and would not be considered part of the sales pipeline.  They are simply a lead until they make an appointment.]
  2. Prospects (need, compelling reasons, SOB Quality) [Prospects have reached second base.  They need what you have.  Have a compelling reason to do business and have developed SOB quality. (when your prospect or customer pays more attention to you than to any of your competitors) You’ve differentiated yourself, demonstrated your expertise, developed a relationship, etc.,]  
  3. Qualified Opportunities (fit, timing, spending, decision making, process, criteria, etc.) [Prospects are qualified in every conceivable way and you are equally qualified to do business with them.]
  4. Closable Opportunities (committed to buying from you) [These are opportunities that should close.  You know when and for how much.]

The fourth discipline we’ve described in Strategic Discipline is flow charts of your most critical systems.  If you’re like most companies [91% don’t have a formal structured Sales Process according to Jeff Thull, Mastering the Complex Sale.] you simply don’t know enough about your sales process, and haven’t structured it so you can measure how well your sales people are doing. 

What should you and your sales people be measuring to determine how likely a prospect is to converting?  Nineteen questions you should be asking to quantify your sales pipeline in my next blog. 

Topics: Work Process Flow Charts, Dave Kurlan, Sales Discipline, Baseline Selling

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The Strategic Discipline Blog focuses on midsize business owners with a ravenous appetite to improve his or her leadership skills and business results.

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