What’s holding your sales team back?
A recent survey found that 57% of sales reps missed their quota in 2018. That number ballooned to 84% in 2020 due to the pandemic. Sales teams have bounced back since the pandemic, but quota attainment is still pretty terrible.
Is it your sales team or your sales process?
According to a LinkedIn report, top-performing salespeople meet 125% (or more) of quota. How are they doing that? Is it just because they’re that good, or do they have a process in place they’re using? Today, we’re going to look at a crucial element of the sales process top-performing salespeople rely on.
The sales pipeline.
What is a sales pipeline?
This sounds like such an insulting question, doesn’t it?
Asking a salesperson or sales manager if they know what a sales pipeline is, sounds condescending – even disrespectful. Here’s why we need to set a baseline for this question.
The term ‘sales pipeline’ is used synonymously with other terms. Many people, salespeople, sales managers, stakeholders, etc., use the following words when they talk about a ‘sales pipeline.’
- Sales forecast: An estimate of the number of deals you expect to close in a given month, quarter, year, etc. This forecast is typically about financial projections; it’s a way to make educated guesses about the revenue you expect to bring in.
- Sales funnel: This is a visual representation of the buyer’s journey from beginning to end; your funnel visualizes the number of people you have lost or expect to lose at each phase of the sales process.
- Sales process: A series of repeatable steps you follow to move a prospect from an interested buyer to a satisfied, repeat customer.
- Sales pipeline: A record that tracks (a.) the number of deals in progress, (b.) where each prospect is in the sales process, and (c.) the actions each salesperson has taken to progress/close the sale.
It’s really common for people to use the words above synonymously, as if they all mean the same things. But they don’t mean the same things.
This is why I’m defining our terms.
When I refer to your sales pipeline, I’m talking about the record-keeping system you use to track your deals, prospects, and the actions taken by salespeople on each of these accounts.
What do top performers include in their sales pipeline?
This isn’t just about what’s in your pipeline.
It’s about the things top performers include in their pipeline, the way they use their pipeline, and the habits they develop around their pipeline. Before we determine what goes into a rainmaker’s pipeline, we need to take a look at what they do.
- They’re always prospecting: Top performers use the principle of backward induction. They look forward to the end result they want (i.e., $250K in sales commissions per year), then they reason backward (i.e., 100 leads per mo., 35 proposals per mo., close 12 deals per mo.). Backward induction is the reason why they’re always prospecting and always closing.
- They’re always disqualifying: Some prospects aren’t actually ‘prospects.’ These are people who, for whatever reason, don’t have the ability or willingness to buy. These leads are quickly removed and are not counted in the overall pool of leads. These top performers are able to quickly sus out knowledge vampires, tire kickers, price shoppers, and other time wasters.
- They require and earn commitment: “Send me a proposal, and I’ll take a look.” This is a common attitude with prospects. Top salespeople handle this differently. “Let’s say, Mr. Prospect, that this proposal shows we’re a great fit for you. What happens next?” Their response should be something along the lines of “We’ll talk terms and prepare to close the deal.” Their response gives you immediate clarity, showing you what your next steps should be.
- Document prospect interactions: Apparently, only sales reps believe bad leads exist. Marketing, sales managers, and executives all seem to believe salespeople throw good leads away. Good documentation gives you the evidence you need to convince decision-makers, stakeholders, and other departments that specific leads should be discarded. This is helpful as it identifies poor lead sources over time.
- They close consistently: Mediocre sales people run from confrontation, objections, risk, or seemingly unanswerable questions. Top performers lean into these; they see them for what they are, a natural but inevitable part of the sales process. They ask questions, listen to prospects, and provide them with the right solution (even if it’s not theirs). When there’s a fit, these salespeople close the sale with confidence, knowing that their solution is the best option on the table.
These habits are the base requirements to maintain top performance.
Why do we need to focus on what top performers do if we’re trying to build a strong sales pipeline?
These habits tell us what we need to have in our pipeline. If we’re looking at these habits closely, a few things stand out.
01. Top performers have a steady supply of leads
If marketing isn’t generating enough, sales reps will need to know how to prospect to generate enough leads to meet their quota. If a marketing channel isn’t working, it needs to be switched in favor of one that does work.
This means you’ll need a goal. Your sales manager will need to know what the annual goal is (e.g., 15% growth in revenue or $9.5 million in new sales) divided by the number of reps on your sales team (e.g., 200 sales reps). This should translate to daily and monthly activity for each of your sales reps.
$9.5M in Revenue (Goal) / 200 Sales Reps = $47,500 in Revenue (per Sales Rep)
$47,500 in Revenue / 12 mo. = $3,959 in revenue per mo. (per Sales Rep)
How many leads do you need each month to meet quota? To figure that out, you’ll need to know…
- Your conversion rate
- Minimum number of leads
- Average order value (per lead)
Next, you’ll need to do some basic math.
Let’s say our conversion rate is 5%, our average order value is $2,500. How many leads do we need?
47,500 in Revenue (per Sales Rep) / $2,500 Average Order Value = 19 Deals Closed (per Sales Rep, per yr.)
(19 * 100) / 5 = 380 Leads (per Sales Rep)
What does this mean for the team as a whole, then?
Well, if you’ve got 200 sales reps, you’re going to need 76,000 leads per yr. Depending on your organizational structure, you may get that from marketing, sales, or a combination of marketing and sales. You’ll also need to maintain a consistent 5% conversion rate.
Improve your conversion rate, and the revenue you generate goes way up.
02. Top performers use disqualification criteria to evaluate prospects
This is a specific set of disqualification criteria that are shared company-wide. It’s a good idea to have the following in your database.
- Blacklisted customers (i.e., abusive or toxic customers)
- Problem customers (non-payment, collections, etc.)
- Customers who were fired
- Customers who have taken specific legal action against the company
- Predatory customers (e.g., knowledge vampires, tire kickers, etc.)
- Disqualified prospects (e.g., no budget, no need/desire)
If your sales team has a list of no-go scenarios and a list of people/companies who should be avoided, it’s easier to convince managers or marketing that a specific prospect belongs on your blacklist.
Here’s why this is essential.
Disqualifying customers means you spend more of your time with the right customers – people who are willing and able to buy your products and services.
But wait, there’s more.
You’ll also want to identify a list of potential deal-breakers, details that derail deals or extend sales cycles unreasonably. These could be any of the following:
- Misleading or inaccurate information
- Unprepared for a pitch (not doing your homework on a specific customer)
- Clueless about your company’s offerings (e.g., objections, risks, specifications, how-to, etc.)
- Clueless about your competitor’s offerings and how your offerings compare
- Repeated, unsolicited contact
- Poor listener, the customer can’t get a word in
- Ambiguous terms
- Neglects customers after the sale
- Slow to respond
- Takes a win/lose approach when negotiating terms
- Conflicts with price (e.g., unexpected price changes, inaccurate estimates, etc.)
Don’t take my word for it, take a look at the research for yourself.
03. Top performers require and earn commitment
How many times have you heard something along these lines?
“Send us a proposal, and we’ll be in touch. Send us a quote, and we’ll let you know if you’re interested.” Buyers typically don’t have a lot of respect for sellers.
Because they’ve never had to. Buyer’s attitude toward most sellers typically boils down to this, “I have the money, so I make the rules.“
Think about it for a second.
If you’re like most people, you instantly know when you’re dealing with a needy salesman. You can feel it, his desperation and neediness. He really needs this sale for whatever reason. You know without a shadow of a doubt, that he needs your money.
Instantly this salesman has lost your respect.
- You want/need their money
- You’re afraid you’ll lose them
This is how buyers view you as a seller. So what’s the easiest way to overcome all of this? An abundance of leads and a willingness to walk away.
Disqualification criteria (see above) and a willingness to reject leads mean buyers lose the power they have over sales teams. If they want your help, they’ll need to negotiate with your sales reps in good faith.
What does this look like?
You require and give commitment; If your sales rep makes a concession for a prospect, that prospect must give you some sort of concession in return (e.g., if you agree to provide a discount, the buyer agrees to a long(er) term sales contract. If you give buyers incentives, customers agree to add more products or services to their order.)
This is how you earn commitment.
First, you earn your prospect’s respect, then you expect commitment as a requirement (to complete the deal). This is how you create deals that are win/win, profitable, and don’t erode margins.
04. Top performers document prospect interactions
Maybe leaders in your company believe your salespeople throw good leads away.
Can you prove them wrong?
Is it even possible to do that? Your sales pipeline should be housed in your CRM system. Cloud CRMs give you a centralized platform you can use to document your day-to-day interactions with your prospects. As I mentioned earlier, good documentation gives you the evidence and ammunition you need to make a convincing case to decision-makers, stakeholders, and other departments regarding the quality and effectiveness of your leads.
So what should be documented?
In a few short words, you should keep an ongoing record of:
- Customer/prospect responses (or lack of responses) to sales rep engagement
- Customer/prospect data (e.g., budget, proposal requested, terms, decision-makers, influencers, etc.)
- Customer/prospect documentation
- Customer/prospect fit (e.g., Not a fit, Great fit, etc.)
- Customer/prospect risk factors (objections, fears, risks, concerns, etc.)
- Reasons the deal was won/lost
The better you are at documenting the circumstances and events during the sales process, the easier it is to rally the kind of internal support you need to improve your performance.
05. Top performers use data to close consistently
Top performers know they’ve done their homework.
They understand the demographics, psychographics, firmographics, and ethnographics of their customers. They’re able to quickly disqualify poor prospects, and they know they have a compelling offer their prospects want and need.
They have an abundance of leads from people who are both willing and able to buy their offering.
This gives prospects confidence.
They have the ability to walk away if their prospect is not a great fit. Not surprisingly, this also gives them the confidence they need to pursue the sale and close more deals with confidence.
How does their sales pipeline factor into closing?
Top performers know:
- Who the decision-makers are
- Their customer’s budget
- What their customer’s desires, goals, fears, and frustrations are
- How to defuse customer objections and risks
- How to handle their customer’s fuzzy, implicit, unrealistic, and reasonable expectations
- How to create an irresistible offer
- The action steps they’ll need to take on a daily, monthly, or weekly basis to achieve quota
The best part about all of this? If your team relies on a CRM system, your manager also has a clear understanding of the actions each salesperson needs to take to close more deals.
This could be monitoring:
- Win/lose rates
- Conversion rates (tracking changes)
- Average order/deal values
- Number (and quality) of leads
- Number of quotes/proposals sent
- Number prospects lost (by deal stage)
- Sales rep engagement (i.e., how salespeople spend their time)
- Prospect engagement (i.e., how people respond)
- Revenue per salesperson
- Profit per salesperson
- Revenue leaks to fix (e.g., sending proposals to unqualified prospects)
- Products and services that produce the most/least profit
Why are these KPIs so important, though?
Well, for starters, they’re easy ways to segment your sales team. Consistently tracking these KPIs means you can (a.) identify your A-players and underperformers, (b.) determine which sales reps need to be retrained, supported, or let go, and (c.) identify the quality and performance of your lead sources over time.
This improves performance.
Let’s say your sales team closes more deals via leads from Google Ads vs. video advertising on YouTube or ads on popular podcasts.
How will this affect sales rep confidence and productivity?
Research shows that data-driven sales teams can increase sales by as much as 23x. With the right data, your sales team will know who to close, when to close, and how to close.
What does this mean?
The more data you have in your sales pipeline, the more likely you are to increase your sales revenue.
What’s holding your sales team back?
The majority of sales reps struggle to hit their quotas. As we’ve seen, top-performing salespeople meet 125% (or more) of quota. How are they doing that? Is it just because they’re that good, or do they have a process in place they’re using?
Is it the sales team or the sales pipeline that’s holding you back?
Behave as if it’s both.
Top performers blend their sales habits and sales pipeline; they use their sales pipeline to maintain productivity and performance in their day-to-day activities. They focus on prospecting and disqualifying, earning and requiring commitment, and consistent documentation.
It’s the exact things data-driven sales teams do.
Top performers, the rainmakers in your industry, use their sales pipeline to boost productivity and performance. Their sales pipeline isn’t simply a series of steps, it’s an essential part of their day-to-day sales process. Apply these concepts consistently and you’ll find your sales team and your sales pipeline work hand-in-hand.