What True Story Does Your Sales Pipeline Tell You about Your Business?

Posted by Dave Kurlan on Thu, Nov 05, 2015 @ 12:11 PM

Yesterday I was looking at the dashboard in my new car and noticed that one of the gauges could be swapped out.  There aren't any fixed gauges on this dash because the gauges, ranges and needles are displayed digitally. I can even change their color!  The thing that caught my interest though, was the flashlight effect where the ticks to either side of the needle are brighter and bolder to draw attention to where the needle is pointing.  That got me thinking about the dashboards for my company.  First I looked at the dashboards for Kurlan & Associates and because of what I saw, I never got to the Objective Management Group dashboard.

We use Membrain for our CRM/Opportunity/Pipeline Management system because it's the one we recommend most often to our clients and if we're going to recommend a CRM application, shouldn't it be the one we use, embrace and love?

While changing the filters for one of the graphs, I noticed some things that I hadn't noticed the last time I checked in.  And I promise, the things I noticed are probably occurring at your company too.  The question is, can your CRM application let you know (and do you know) what to do next?  So here's what I found that was so interesting.

In the past two months, there were 40 new opportunities added, bringing the number of active opportunities in the pipeline to 80. That's an average of 1 new opportunity per person, per week, which is exactly what it should be in our business.  So that's good.  But I also noticed this:

There are currently 16 highly probable, closable opportunities representing 20% of the pipeline which is a lot better than what we normally see.  For instance, for every 2 new clients, it historically requires the following:

  • 20 suspects that convert to,
  • 10 prospects that convert to,
  • 5 qualified opportunities that convert to,
  • 3 closable opportunities.

In other words, only 10% of the prospects we begin talking with typically become clients.  Not because we aren't effective or that prospective clients go with other companies; but mostly because half of the 20 suspects we start conversations with are either the wrong person for us to be speaking with or there isn't a good fit and we disqualify them!  Similarly, we often disqualify half of the remaining 10 prospects because they don't have or won't spend the money to work with us.  That's how we get from 20 to 5.  And as with any business, we don't close every one.  Some decide to do nothing at all and once in a blue moon, a prospect chooses to go with another company.

I also noted that there was forward progress made on 58 opportunities - meaning that no single opportunity is sucking up the team's time or resources at the expense of other opportunities.

The metric that really stuck out for me though was that 22 of the 80 opportunities were stalled.  They had exceeded the baseline number of days allowed for an opportunity to remain in a particular stage of the sales process and our dashboard in Membrain has some very compelling data about opportunities that stall.  The image below represents the graph of stalled opportunities. Green represents an opportunity that we closed and gray represents one that we archived or lost.

This small red line in this graph indicates that when an opportunity stalls for more than 19 days, the chances of closing that business decrease dramatically, from 78% to less than 50%.  It further illustrates that if an opportunity stalls beyond 35 days, there is very little chance that the opportunity will close, with the win rate dropping to just 10-15%.

So when I saw that there were 22 stalled opportunities, I dug a little further and found that all of them were stalled beyond 35 days.  So the probability of any business occurring with these opportunities is already below 15%.  Next I wanted to identify which stage of the pipeline they were stalled in.  In Baseline Selling, we have 5 stages of the pipeline where opportunities are either:

  1. On Deck - 1st Meeting has not been scheduled.
  2. 1st Base - 1st Meeting has been scheduled but not yet held (Suspect).
  3. 2nd Base - 1st Meeting has been held and it is a real opportunity (Prospect).
  4. 3rd Base - Opportunity has been thoroughly qualififed (Qualified).
  5. On the Way Home - Opportunity is Closable (Closable).

I found that all but four of the stalled opportunities were on Deck.  So either a lead had come in, someone had expressed interest or we were referred to the company but no meeting had been scheduled - after more than 35 days!

That's the beginning of the process of reading a useful CRM dashboard.  The data tells us where the problem is, who has the problem, and what we should be asking.  In this case, one person - a very busy senior sales expert - was responsible for 36% of those stalled opportunities.  So while we can understand how the business interfered with getting meetings scheduled, it is still not acceptable.  The opportunities should have been handed off to a consultant on the team who isn't as jammed with training, consulting and coaching as he is.  In another case, one person was only responsible for 5%, or just 1 of the stalled opportunities.  That's good, right?  No, it's bad.  Everything is relative.  He doesn't have as many opportunities in the pipeline as the others, so his 1 stalled isn't an indicator that he's moving things along as much as it's an indicator that his pipeline is too small!

While most of my articles address sales selection, sales force evaluations, sales competencies, sales DNA, sales strategy, sales process and sales tactics, sometimes getting the pipeline right can make all the difference in the world.  Of course, to get the pipeline right, you must have an application that gives you the right information, in an easy-to-access format.  You also need an application that your salespeople embrace and always keep up-to-date so that you have real-time data.  And finally, you must be willing to consistently review your dashboard and let it tell you a story.  What story is your dashboard telling you today?

And before you comment, I'll make the first one:

"Dave, you talk about consistently reviewing the dashboards, but in this case, you weren't aware of the stalled opportunities until they were all beyond 35 days.  Isn't that hypocritcal you fat, old, sales guy?"  Someone was going to write that so I figured I would save him the trouble.  Yes, it would have been a male troll.  And yes, I should have been on top of that, but I wasn't this month.  And hey, my mistake is your gain because it made for a good topic for the blog, didn't it?

Don't miss this article that was published on LinkedIn Pulse about Fred - The Top Salesperson or a Horrible Salesperson?


Topics: Dave Kurlan, sales process, sales pipeline, sales win rate, sales opportunities

Opinion: Why Sales Win Rates Have Reached an All-Time Low

Posted by Dave Kurlan on Wed, Nov 27, 2013 @ 07:11 AM

conclusionOne of the findings in the most recent Sales Performance Optimization Study, from CSO Insights, revealed that the win rate for deals has reached an all-time low.  

Does that surprise you?  

Does this represent a change in buyer behavior?  

Is it a result of more competition?  

Are salespeople less effective?  

Is it the economy?  

Has there been a decrease in demand for our products and services?  

Is sales process having an impact?

Let's discuss the degree to which each of these possible reasons may be the actual cause.

Change in Buyer Behavior - Behaviors are always changing and while it may be true that sales cycles are getting longer, there are only four buyer-side behaviors that can really impact sales outcomes:

  1. Relationships,
  2. Access to Decision Makers,
  3. Making price a primary criteria for decision-making, and
  4. An eventual decision to do nothing.

The reality is that all four behaviors have always been in play and there is nothing to suggest that any of them are suddenly having any more of an impact than before.

More Competition - Competition tends to be somewhat cyclical, but for some businesses, the effects of globalization, the internet, mergers and acquisitions and the ability to buy from anyone, anywhere, at any time, have increased the number of customer options.  Practically speaking, most companies do not increase the number of vendors they decide to speak with.  If they usually select from among 5, they are still selecting from 5.  It's too much work to look at 10 and most companies are attempting to create less, not more work for themselves and their staffs.  So, while there are more companies that can provide products and services in more locations, companies are not including more of them in their searches.

Ineffective Salespeople - The latest reports indicate that there are now 15.8 million people selling in the US alone.  Objective Management Group (OMG), having assessed 700,000 salespeople, tells us that one key piece of data remains unchanged.  The divide between effective and ineffective salespeople remains the same.  There is still an elite 6%, another 20% who are quite effective, and then the rest, 74% continue to be ineffective.  With the sales population increasing to nearly 16 million in the US, 74% of a much larger number means that there are simply more salespeople that are ineffective.  The two primary areas of ineffectiveness continue to be the inability to sell consultatively (customer-focused) and ineffective qualifying.  While these two factors make a considerable contribution to lost sales, the reality is that they aren't contributing any more today than they were in the past.

The Economy - There is no question that the economy is still having its troubles.  The Obamacare fiasco is scaring business owners and consumers alike.  I spoke with an owner yesterday who was totally freaking out over the 40% increase in his costs to provide health insurance.  

Despite that, the report in question indicated that the loss rate is at an all-time low.  That has to include 2008-2010 when the economy was really in the tank.  So, while the economy isn't creating a confidence-fest, it shouldn't be having any more of an impact than it has in the years 2011-2012.

Decrease in Demand - If you're selling typewriters or newspapers, sure.  If you own a travel agency selling anything other than tours and corporate travel, sure.  But all indications are that for most other products and services, the only thing going down is margins, so I don't believe that this could be the cause either.

Sales Process - Despite the pleas from me and a host of other sales experts, it is my opinion that most companies are not taking sales process seriously enough.  Oh sure, they have sales processes, but OMG's data says that these processes are either ineffective or not being followed in 91% of the cases.  Salespeople are in love with the demo - perhaps more than ever - and when you combine that with the following factors...

  • The internet,
  • Availability of knowledge and information,
  • Technology to demo online and on-demand,
  • Free trials, and
  • Demo-centric metrics,

...it's no wonder that companies, their sales leaders, and salespeople are demoing early, skipping over the most important milestones in the sales process and selling much more transactionally than they would like to admit.  But demos are like the 15 minutes of previews we see at movie theaters.  As each preview finishes, we make a 1 of 4 decisions:

  1. Must see it as soon as it is released.
  2. Can wait for it to be released on DVD.
  3. No hurry - we can see it anytime.
  4. No way. No interest.

Your prospects are making the very same decisions about your demos and if your demo isn't creating reaction #1 above, then the quotes and proposals that follow are sure to create...losses.

My assessment of the all-time low win rate is that there are a combination of factors that may be having a slight impact on this metric.  However, the ease of getting people to watch a demo, while failing to follow a modern, best-practices sales process, is the biggest factor.

I have written extensively on sales process and you can find more on that topic here.

Image credit: dskdesign / 123RF Stock Photo

Topics: Dave Kurlan, sales study, closing ratio, sales win rate, sales loss rate, ineffective salespeople

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Best-Selling Author, Keynote Speaker and Sales Thought Leader,  Dave Kurlan's Understanding the Sales Force Blog earned awards for the Top Sales & Marketing Blog for eleven consecutive years and of the more than 2,000 articles Dave has published, many of the articles have also earned awards.

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