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Pipeline Management- what it is, why it is essential, and how you can get started

Small to medium-sized businesses succeed or fail based on their ability to convert
available market and sales opportunities into profitable customer relationships. The
power of any company to scale up depends on a predictable, repeatable sales process.
Pipeline management is crucial for any growing organization, big or small, to
understand where prospective customers are in their particular buying journeys. Without
this visibility to expected revenue from a pipeline of qualified opportunities, companies
cannot correctly plan and allocate human and financial resources to the relevant areas
of their growing business. In addition to this strategic visibility, customer-facing
organizations require a mechanism to continuously review and coordinate activities that
assure advancement of prospects through their buying processes — keeping the
prospect engaged, triggering desired outcomes at each stage, and overcoming
blockages.

If this is true, why do so many growth companies fail to establish active visibility into
their deal flow by instituting a formal pipeline management system? What does this
even say about the existence of a repeatable sales process? Is this deficiency due to
lack of time, experience, interest, or simply not understanding the necessity or value? If
customer acquisition is indeed the life-blood of any high-growth organization, why do
companies often overlook or fail to prioritize an effective pipeline management
process?

With these questions in mind, we wanted to reach out to a pipeline expert to learn a little
more…

Steve Quehl has served as either a full-time or fractional head of sales for the better
part of his forty-plus-year career. Part of his consultative process and initial due-
diligence involves intimately understanding a customer’s pipeline management (if any)
and building out a more comprehensive and repeatable process.
We asked Steve a series of questions to better understand what a pipeline is, why it is
essential, and how organizations can adequately leverage one.

Why is a pipeline management process necessary?

A pipeline management process is necessary to:
Formalize the development and transition of potential revenue opportunities from
qualified leads to cash in the desired timeframe

  • Understand, prioritize, and mobilize sales and supporting activities necessary to
    create a “coverage” (insurance) model for meeting financial obligations,
    beginning with the forecast.
  • Create forward visibility and contingency plans based on known factors and
    metrics, as opposed to emotion or hope

Is a pipeline more important for mature organizations, growth-companies, or
even start-ups?

All the above. Each has its individual properties and thus operates as a function of its
maturity within a particular market. Organization models should follow process in the
efficient delivery of value propositions to buying entities. Pay attention to the conditions
and experience factors related to each of these elements before applying specific tools
and approaches.

How do you create a pipeline?

By definition, a pipeline is a collection of qualified business opportunities. Each
opportunity is a unique entity in some particular stage of development or
readiness to buy, or what we refer to these days as the Buyer's Journey. The
Buyer Journey should detail the phases and steps that each prospect undergoes
to execute the purchase of a specific solution offering to obtain the desired
outcome and expected value. Contrary to entrepreneurial bias, a seller cannot
impose a sales cycle and define the buying steps—the buyer is in control of their
decision process. Knowing what compels them directs sellers to respond with
activities and assets that enable buyers to move from one buying stage to
another.

  • Creating a pipeline starts with understanding what makes an opportunity qualified
    and rigorously eliminating any that do not fit the criteria.
    •  Establish a rule base for entry, movement, and maintenance as well as
      purging across agreed phases
    • Thoroughly document and update opportunity characteristics, e.g.,
      company details, contact information, problem/solution definition(s);
      appointments, activities, next steps, results, obstacles.
    • Chart sponsors, deciders, opponents, influencers; decision process and
      timeframe; budget and priority
    • Assign responsibilities and accountabilities for information input, upkeep,
      accuracy, and review process
      • Make visible to management team and review weekly
      • Establish KPI and metrics to monitor health and influence on
        business outlook
      • Average deal size; conversion rate; sales cycle length;
        velocity
      • Number of fully qualified reps; deals per rep; rep turnover
        and ramp time

What is the on-going maintenance of a pipeline, and how can you ensure you
keep this prioritized?

  • A pipeline is a living organism, a leading indicator of the health of the business.
    As such, it must be fed and attended by the company's leaders, not just
    sales.  Establish a cadence for top-to-bottom review up to the board level
  • Executive management owns the success factors contributing to revenue growth:
    Product; Marketing; Sales; Customer Success; Finance; etc., should all be
    charged with collaboration around the pipeline to smooth and accelerate the deal
    flow. Aligning compensation will engender compliance and cooperation.
  • Sales management owns the process of weekly maintenance and review of the
    pipeline content, sales teams activities, and achieving expected sale results.
    Additions, subtractions, and wins must occur in an agreed-upon volume and rate.
    Accountability and commitment to meeting expectations begin here.
    Transparency and open communications are necessary to avoid surprises.
  • The world of sales is dynamic. Something happens every day, so capture it.
    Activities, people, next steps, results, and obstacles must be tracked to avoid
    surprises and ensure promised execution. Salespeople are notoriously poor at
    maintaining databases. Tie it to comp, or make it a condition of employment, but
    hold their feet to the fire.
  • At some point, companies may consider introducing sales operations staff to help
    input, track, maintain, and analyze pipeline information to keep the focus on the
    numbers and avoid reliance on hearsay and hope.

Do you need to create a pipeline for multiple business offerings, customers, or
even sales cycles?

  • This answer depends on the market, organization, maturity stage, and the
    business model. Remember, a pipeline information system is only as good as the
    maintenance and accuracy of the data on which it’s based.
  • At a minimum, you should distinguish new account vs. customer add-on revenue
    to account for customer acquisition costs

How can a growth company institute a pipeline, both quickly and effectively?

  • Create an Ideal Customer Profile
  • Research and map the Buyer Journey.
  • Challenge marketing to formalize the definition of a marketing-qualified lead; and
    the process to hand off to sales.
  • Have salespeople define the necessary qualities of a sales-qualified lead; and
    negotiate an SLA with marketing for proper pursuit, interaction, and support.
  • Get all information about qualified opportunities out of the heads of frontline sales-personnel and onto a form – whether paper or digital. Tools such as CRMs are helpful only if populated with meaningful data and maintained diligently.
  • Gather the management team and agree on sales stage criteria and rules.
  • Commit to a regular cadence of review and update.
    • If the CEO is the lead salesperson, as is the case in many start-ups, the CFO may have to force the update process.
    • If it’s a lone wolf salesperson, they may have to be corralled and motivated to document activities and next steps. Tying it to compensation is an effective tactic.
    • For a company with an established product-market fit that is preparing to scale up, invest in a sales leader with experience in pipeline management who will own and execute the process described above

While the points mentioned above may seem like a heavy lift for some organizations,
particularly small ones, a proactive pipeline management process is essential to any
organization that wants to grow. Without an accurate pipeline, management will be
making decisions based simply upon assumptions with no basis in fact. Bottom line, any
growing organization that does not have an effective pipeline management process in
place will struggle to compete with their competitors that have a keen focus on
managing and mapping their buyers’ journey.

Article by:
Beau Billington- the founder of the Free Agent, a consulting company immersed in the strategic-layer of the Gig Economy-

https://www.linkedin.com/in/beaubillington/

www.thefreeagent.com

With cooperation by: Steve Quehl is a Partner with TechCXO, which provides proven, hands-on C-Suite executives
for interim, fraction

al and project-based roles. Based in Atlanta, his practice stems from nearly
40 years of executive leadership, strategy, sales, and operations experience with market-
leading providers of enterprise software tools and applications solutions. He is a results-driven
leader with proven track record in various start-up, mid-market, hyper-growth and turnaround
situations across a broad industry and functional spectrum.

His technology and software sector experience spans enterprise applications addressing the
needs of manufacturing, supply chain/distribution, and financial services industries as well as
document and content management, security, expert systems and database management. In
addition to general management proficiency, he has successfully developed and optimized
direct sales, inside sales, channels and customer success functions.

https://www.linkedin.com/in/stevequehl/

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