Paul provides tips to manage your sales pipeline heading into Q4 2022.
Many salespeople do not have a full pipeline. You need the 3-2-1 pipeline ratio. (Listen to find out what that is.)
In tough times, your pipeline ratio changes to _______.
How often do you purge your pipeline of dead and stalled deals?
You must increase your activity level to maintain your pipeline.
Did you enjoy the podcast? Go to Itunes to rate/review the podcast: https://podcasts.apple.com/us/podcast/the-q-and-a-sales-podcast/id1485103513. Click “Listen” then the “ratings and reviews” button.
Visit www.ToughTimer.com to get started on the 30-Day Tough-Timer Challenge!
Order your copy of Selling Through Tough Times from Amazon or Barnes & Noble!
Click here to purchase the latest edition of Value-Added Selling!
Thank you for tuning in. Our show is updated weekly with the questions you ask. So, please go to the home page to ask the question that you want answered.
Thank you to our production team at The Creative Impostor Studios.
Be sure to follow our show in your favorite podcast app and share this episode with a colleague or friend.
And most importantly…make it a big day.
How do I review my pipeline?
(Transcribed from podcast)
We have another fitting topic today. We’re going to talk about pipeline review and the importance of maintaining a healthy pipeline of opportunity. It’s a great topic as we wind up the summer months. I know summer is kind of a, it’s a time filled with relaxation, vacation, staycations, any other “ations.” So now is the time to refocus our energy and effort as we embark on the final stretch of this year’s selling season. So—How do I review my pipeline?
Before we get into that, remember to pick up your copy of Selling Through Tough Times. One of the most important aspects of selling through tough times is maintaining a high activity level that will generate a full pipeline. In this book I detail exactly how to do it. On today’s episode, I’m going to give you a preview of that. But you can pick up your copy and all the info you need in the book available at Amazon; available at Barnes & Noble, wherever you buy your books.
So let’s get to it. How do I review my pipeline? Well, here’s the big challenge. I’ve realized after training tens and thousands, hundreds and thousands of salespeople is that many salespeople just do not have a full pipeline. And not having a full pipeline creates so many issues. It’s going to create desperation to discount more. It’s going to impact your quota. It’s going to impact your company’s performance. It’s going to impact your confidence. Nothing will give you more confidence and more success than having a swollen pipeline of opportunity. So we’re going to talk about how to make that happen.
Let’s begin with tip one. So I’m going to give you a few ratios to consider. The first one is what we call a 3-2-1 pipeline ratio. This means for every red-hot prospect that you have in your pipeline, you need two qualified opportunities, and three potential opportunities: 3-2-1. That is the formula to remember.
And here’s the idea. We know that to win an opportunity it’s going to require calling on a lot of prospects, a lot of opportunities, so we need to maintain that balance. So for every red-hot prospect that you have (and a red-hot prospect is defined as an opportunity with 90% certainty that you’re going to close the business. In fact, this opportunity may have already given you a verbal commitment to buy.) With 90% certainty, you can say we’re going to win the business.
Now, a qualified prospect means that, okay, there’s about a 50% chance that we could win some of that business. You need two qualified prospects for every red-hot prospect.
And then, number three is a potential. This could be a qualified prospect. It could be good business. You don’t know yet whether you have a good chance or not. So 3-2-1. The key here is you want to maintain balance. You want to maintain balance. So every time you win a piece of business, sure, celebrate the success, but you quickly need to fill that opportunity because you know, for every one red-hot prospect that you secure, that you close, you’re going to need two qualified and three potentials to help you win an additional opportunity: 3-2-1.
Now in Selling Through Tough Times, we talk about increasing your activity level. The ratio is not 3-2-1 when we’re facing tough times. So if we do dip into a recession, your new ratio is 6-2-1. So for every red-hot prospect you have, you need two qualified and you need six potentials. The reason why, it is going to take you six potentials to whittle it down to two qualified. And of those two qualifieds, you’re going to get one of them: 6-2-1 is your Selling-Through-Tough-Times formula. So remember those numbers. Keep that in mind. And again, every time you win a deal or you lose a deal, either celebrate it or learn from it, get over it. And then you’ve got to fill that pipeline up again.
Tip number two. On a weekly basis, purge your pipeline of dead and stalled deals—dead and stalled out deals. I’ve seen this happen so often. Salespeople will keep a deal in their pipeline that is either dead or stalled out or just isn’t going to happen. You need to purge your pipeline of those opportunities. Give yourself a realistic picture of what your pipeline looks like. Without a realistic picture, how are you going to be successful?
And salespeople will keep an opportunity in their pipeline too long because they hope it’s going to go through or Oh, just by sheer will I’m going to get them to call me back, even though I’ve called them 20 times and they ignored me and also emailed me and told me never to call ’em again or email ’em again. I’m going to eventually get that business. No, you’re not. Get over it. Purge your pipeline. Do this on a weekly basis. And what this will do is it’s going to give you an accurate picture of where you stand. It’s going to give you a sense of what you need to do, and it’s also going to motivate you and also generate some activity on your part. So every single week, purge your pipeline of opportunities that are either dead or not going to happen. That is critical.
And number three. You have to be realistic. Here’s what I’d recommend. Calculate your average deal size. So let’s say your average deal size as a salesperson is, I don’t know, $100,000. Okay, great. Now you also need to calculate your average sales cycle. This is how long it takes you to close a sale. From initial contact to contract, what does that look like for you? What does it look like for your company? Now, if the average deal length is let’s say three months, we’ll use simple math, right? So your average deal size is $100,000 and your average timeframe is three months, calculate the averages and then assess the viability of each one of your opportunities. Because you have to realize, a deal that is significantly higher than the average is less likely to close. That’s the reality of it. Don’t get frustrated by it. Don’t accept it either. Just acknowledge it and be aware of it.
For example, if you’re working on a deal that is a million dollars, your likelihood of closing that versus a $100,000 deal, it’s going to be lower. Not only that, but if you’re working on a deal that the average sales cycle is three months, and this deal is now 10 or 11 months, your likelihood of closing that deal is going to go down. Just be aware of that and know that, hey, maybe we need to backfill with some more opportunities.
And use this as you purge out your pipeline as well. If you’ve got a million dollar deal in your pipeline that has been in there for 12 months and nothing has happened, purge it. Get it out of there. It’s giving you an inflated sense of what is really available—what’s viable. And not only that, you know what a lot of salespeople leave it in there, because they’re afraid. They’re afraid to take it out because once they take it out, it’s gone. It’s already gone. Just remove it. Make sure you purge it. So that’s tip number three: you’ve got to be realistic.
And one thing I would encourage—and this is just kind of a bonus tip—as we go through tough times, we’ve got to maintain a high activity level that will ensure filling that pipeline. That’s going to ensure a full pipeline is just increasing that activity level. I remember, found a stat one time, (it’s from a purchasing manager’s study) that during a recession, salespeople will reduce their selling activity to 62% of what they normally do. So let’s say simple math. Normally during a week, you’ll make a hundred sales calls. Well, during a recession, you would only make 62. That’s what this data is basically saying is that you reduce your selling activity.
Well, what if you decided to increase your selling activity while your competitors are reducing it. Think about it. If you increased your activity by 25%, you could effectively double your coverage vis-a-vis the competition. Here’s how that may look. During tough times, you usually make a hundred sales calls. So does your competition. Well, during tough times, they’re going to reduce that down to 62. If you decide to bump yours up to 125—increase by 25%—you are now making twice as many calls as your competition. That level of activity is going to turn into greater results. So make sure you keep your activity level high, especially as we enter this final stretch in this selling season. Be prepared, be realistic, purge your pipeline, and make it happen.
Make it a big day.