September 4, 2018

Balance Your Sales Pipeline

By Dave Kurlan

Here’s an exercise that will help you fill your sales pipeline – the lifeblood of sales – with just the right balance of potential sales from existing or prospective accounts.

Question:
How should sales executives determine the ideal pipeline balance?

Answer:
Assume a four-stage pipeline consisting of suspects, prospects, qualified opportunities, and closable opportunities.

Before you can determine the number and value of opportunities that must be in each stage, you need to determine how many sales or accounts you need to close. Take your quota and divide by your average sale or account size. Then divide by 12. This is the number you need to close each month.

See, that was simple.

Next you must determine what it takes to close one sale from your pipeline.

  • How many closable, proposal-ready opportunities are required to close one?
    Note: To make those ratios uniquely yours, you’ll need to know your closing percentage.
  • How many qualified opportunities are required to generate one proposal?
  • How many prospects does it take for you to fully qualify an opportunity?
  • How many suspects does it take for you to have a prospect?

Your numbers might look something like these – and you could assign A, B, C, or D to each one just as a quick reference.

  • Two closable opportunities
  • Four qualified opportunities
  • Eight prospects
  • 12 suspects

Multiply your actual numbers by the number of sales or accounts you need to close each month. Now you know what your pipeline must contain at all times in order to hit your quota. This represents a balanced pipeline. Without that specific information, you’re really groping in the dark each month.

You need to check that your pipeline has the value required to hit your quota. Take your quota and divide by your closing percentage. For example, if your quota is $1 million and your closing percentage is 33 percent, you’ll need to have a $3 million pipeline. Divide $3 million by your average sale and that, too, will reveal how many opportunities must be in your pipeline.

Hint:
Use the larger of the two opportunity numbers!

Very few salespeople always have a full, balanced pipeline because most salespeople are not obsessed with their pipeline balance. Many salespeople tend to take a relaxed, even casual approach to the pipeline.

When salespeople take the path of least resistance and do as little as possible to fill and balance the pipeline, they risk not only failing to make quota, but finding that their closing ratio falls over time.

All sales have a built-in attrition quotient. Whatever’s in your pipeline must be constantly refreshed. It’s like the energy you get from eating every day. If you stop eating for a few days, you weaken – and, when that happens, you can’t perform effectively.

If you want to achieve consistent success and reach or exceed your sales quota every quarter, balance and feed your pipeline as if it were your lifeline. Because it is.

Dave Kurlan is the Founder and CEO of Objective Management Group and Kurlan & Associates. He has written two books, including the bestseller Baseline Selling.