We’ve all been in meetings where the sales leader asks, “When do you think this opportunity will close?” Most salespeople dread this question – especially if the opportunity in question has been in the late stages of the sales pipeline for an extended period of time.
Our research demonstrates that 72% of all new sales opportunities stall in the middle to late stages of the B2B sales pipeline process. We define “stalled” as a new prospect in a single stage of the sales pipeline process without customer action for more than 60 days.
Test this for yourself. Look at those sales opportunities in the middle to late stages of your sales pipeline and ask yourself (or ask your sales representative, if you’re a manager): “What action has this customer taken that demonstrates their desire to partner with us?” I think you might find that your sales pipeline is overflowing with stalled deals!
Why is this number so high? Why do 72% of new prospects stall in the pipeline? Well, there are several reasons, but the most common culprit is the lack of a well-defined sales pipeline process. Too often companies implement a sales pipeline process into their organization to match their shiny new CRM system without any regard to the core strategic sales activities that sales reps should be completing throughout the entire process.
Most sales pipelines use terms such as Stage 1, Stage 2, Stage 3, and Stage 4, or the even more vague headings of Early Cycle, Mid-Cycle, and Late Cycle. We have seen five-stage models. We have even seen 12-stage models. It doesn’t matter how many stages the process has (though our experience has shown that typically fewer than seven stages is more manageable). The problems arise not from the number of stages there are, but rather murkiness around each stage’s definition. If you’re defining a stage simply with a few adjectives such as “targeting,” “prospecting,” “qualifying,” or “demonstrating,” you’re leaving it up to the salesperson to define the strategic actions that must take place to determine if this stage has been completed. Our client success comes from helping our clients clearly define each stage of the sales pipeline process with four or five strategic milestones. We define a strategic milestone as a strategic action that, if not taken, puts the opportunity at risk. Early-stage milestones may include: identifying the customer’s top three business drivers for this year; validating the key influencers involved in the decision process; and confirming budget has been established. Middle-stage milestones may include: leveraging client advocates to neutralize adversaries; confirming the customer’s decision criteria and aligning our capabilities; and the customer agreeing about the quantifiable impact of our solution.
These are just a few generic examples of strategic milestones. As you can imagine, if each stage of your sales pipeline is defined by three to five strategic milestones that align to your customer’s decision process, your salespeople will know exactly what needs to be done. More importantly, with a clear set of milestones, you will find you can reduce the number of stalled opportunities in your sales pipeline by more than 60% in just 90 days! In fact, Ignite Selling’s research shows that, when salespeople are held accountable to accomplishing each of the milestones, sales opportunities move through the sales pipeline 37% faster! What’s more impressive is that a customer’s contracted 12-month revenue is 17% higher!
So, you might be asking how simply better defining the stages of the pipeline process can bring about such dramatic changes and success. Well, the answer lies in how the strategic milestones are developed. When developed properly, it’s like watching the fog lift over the valley and the trees and hills become clearer. One sales leader described it this way: “I thought my eyesight was fine, but, once the optometrist put a pair of glasses on me, I quickly realized how much I was missing.”
The biggest discovery is that salespeople are skipping critical sales activities because they are making dangerous assumptions.
Again, test this for yourself. Look at any sales opportunity where you or your sales representative has provided their prospect with a proposal or pricing, and ask yourself these questions:
If you or your sales representative provided the prospect with pricing or a proposal and they are not able to honestly give a validated response to these questions, you must ask yourself: Is this opportunity at risk of being lost – or, at best, stalled in the pipeline?
If you’d like to learn more about how to better define and leverage your sales pipeline process, download our latest research here. You might discover your challenges are not as unique or as big as you may think!
Steve Gielda is the co-founder of Ignite Selling and author of the new book; Ignite Your Sales Strategy, A Field Guide to Accelerating Your Pipeline. Steve has spent more than 20 years supporting companies in pharma, biotech, medical device, finance, tech, and manufacturing industries to improve the business outcomes of his clients.