Managing your sales pipeline requires a lot of attention, but it’s a vital part of achieving predictable sales. All sales and marketing teams are driven by growth. Your metrics will tell you if your marketing efforts are achieving a return on investment (ROI), and your sales pipeline visibility will work as an indicator of your company’s current and future health.
Managing your sales pipeline will help you calculate how much money you are going to make in the coming months. These revenue forecasts are known as predictable sales.
The digital marketing era is here to stay, and it has brought a huge number of metrics with it. Although all of these are useful, only a handful will tell you what you need to know, and these revolve around your sales and marketing pipeline. Managing your sales pipeline will help you break that revenue goal you set, and catapult your business to the next level.
Predictable Sales and Pipeline Visibility
You may have heard these terms being tossed around by marketers, or fellow business owners. Sales teams in every company go through the same struggle: knowing if they will hit their targets.
Achieving pipeline visibility means you can tell how far each lead is into the buying journey, at any given time. It also means you can provide an accurate timeframe in which your sales team will close a particular deal, so you will know how much money you would have available during a set period.
Predictable sales can provide a business’ projected growth based on a formulaic process. This will allow you to make adjustments to your sales process and marketing strategies, molding to the ever-changing local markets. Also, you will know how your revenues are looking for the coming months, so you can appropriately allocate your resources to meet your goals. Achieving predictable sales by managing your sales pipeline also allows you to:
Maximize Lead Flow - Because you know which leads are closing soon, and which ones are more likely to close sooner, you can actively focus on those that hold more value. Managing your sales pipeline is not only about keeping up with the numbers. Your sales team needs to be properly incentivized, given less administrative tasks and more time to sell, and get proper training to use the preliminary lead data.
Scale Your Revenue Opportunities - If you have an accurate projection of your revenue for the next months, you can scale your revenue opportunities appropriately. Also, if your sales volume is too high, and you will not be able to keep up, you can control the flow of your funnel.
Move Leads Down Your Funnel Through Lead Nurturing - Because you need to know where each lead is standing at all times, lead nurturing becomes another critical element of managing your sales pipeline. Lead nurturing will give you an indicator of where that lead is at the moment and what steps to take to move them further down the sales funnel.
Know Your Audience - Every business owner and marketer worth their salt knows how important knowing your audience is. Purchase patterns become obvious when looking into your sales funnel, so you will almost be able to predict how your leads will behave at critical points of the buyer’s journey.
Inspecting Your Key Marketing and Sales Metrics
Managing your sales pipeline is about understanding a set of 7 key metrics. These are drawn from the same data most owners and marketers already have available, but have never looked at as a whole.
Are you attracting a high volume of traffic? Are they actively looking for the information on your site? Where is the traffic coming from? You need to know all this information to interpret traffic correctly. On the surface, traffic is a poor indicator of how your website is doing. However, if you also look at the amount of time spent on each page, average new and recurring visits, the number of pages viewed, and sources of traffic, you will gain insightful information about your audience.
Once you have the right amount of relevant traffic, you need to convert that traffic into leads. Leads can be qualified as top of the funnel, middle of the funnel, and bottom of the funnel. Top of the funnel leads are those that provide basic information about themselves (name, email) in exchange for an eBook or another resource. They are just creeping into the sales funnel, and are not likely to be ready to buy from you just yet. On the other hand, the bottom of the funnel leads are those who fill out a quote form, or calls you directly for a consultation.
Being able to tell the difference between marketing qualified leads (MQLs) and sales qualified leads (SQLs) will allow you to forecast your revenues accurately for the following months. More importantly, taking different approaches to both will improve both your closing rates and average closing time. You need to have a solid nurturing campaign in place to turn MQLs to SQLs, where your sales team can have a more direct approach.
Average Closing Time
Knowing an average of how long it takes your sales reps to close a deal lets you plan ahead and visualize the amount of money and resources you will have available. Average closing time is one of the biggest factors when considering ROI and profitability. In most cases, the longer it takes to close, the more time your sales team is investing, increasing the cost per sale.
By analyzing your sales team’s closing rate, you will know how many leads they need to close a set number of sales. In turn, you will know how much revenue you’ll be receiving from new customers. You will know how effective your sales team is at closing new businesses, and if your marketing team is bringing in enough qualified leads.
Average Value of a Deal
For owners to understand their gross revenue projections, you need to know the amount of revenue each sale is generating. This helps owners calculate revenue, understand how many units were sold, and how much revenue each sale is producing. With this information, owners have a better idea of what their gross revenue projections will look like moving forward.
Business owners and marketers need assurance that the marketing efforts are generating positive results. There are many ways to calculate ROI, the simplest form being:
Revenues - Sales & Marketing Expenses / Sales & Marketing Expenses = ROI
There are other ways of calculating ROI using the cost per lead and cost per sale net amounts:
Revenue - Cost per Sale / Cost per Sale = ROI
These seven metrics will help you manage your sales pipeline properly, and give you accurate predictions of your sales for the following months.
Pipeline Visibility Helps You Achieve Predictable Sales
So, you’ve got all the information collected, the right stats highlighted, and your marketing and sales team are on the same page. Now you need to crunch the numbers and look at the predictions. These will tell you if you are headed in the right direction, or if you to optimize your marketing and sales processes. Sales pipeline visibility allows you to achieve predictable sales by:
Identifying Products with the Highest Revenue Potential and Closing Rate - Products with the highest revenue potential and highest closing rates should be your priorities. They are the ones that will make a big difference, so make sure your sales team is always focusing on these two first.
Defining Time Frames - Predictable sales are about average deal amounts and closing time, and sales pipeline visibility provides both. By knowing the average amount of time it takes to close a deal, you can start planning how to allocate the resources you will have available.
Determine an Acceptable Average Deal Size - By managing your sales pipeline, you can determine an acceptable average deal size. In other words, it will tell you how much revenue you need to get on average for each sale to grow your businesses.
Flooding Your Pipeline
Sales pipeline visibility is only the first step. Predictable growth is much easier to achieve, and more encouraging when you flood your pipeline. This doesn’t mean you need to get more sales reps or purchase more leads than before. It simply means you need to invest time into managing your pipeline.
Creating a High-Velocity Revenue Engine
Your sales machine should be working optimally: there should be a constant flow of leads being closed, and new leads entering the funnel. If you have managed your sales pipeline correctly, you will know how long it will take to close each sale, and how often they will enter your funnel. Give your sales team the tools and knowledge they need to keep the sales cycle and short as possible.
Gathering Your Sales and Marketing Teams Regularly
Your sales and marketing teams need to work hand-in-hand to achieve predictable sales. Hold regular meetings that involve your sales and marketing teams, answer any question, and listen to the suggestions they have.
Look for Inconsistency in the Sales Funnel and Focus on Specific Accounts
Pay special attention to accounts that are behaving inconsistently. There is much information to be gained from such cases, either because the lead is breaking a pattern (and maybe creating a new trend) or the methods used by the sales rep are not yielding the right results (which can be addressed with additional training and resources).
Flipping the Sales Funnel
Traditional sales funnels operate under the assumption that the top of the funnel is where general leads enter, and your “perfect leads” are all the way at the bottom of the funnel. However, “flipping the sales funnel” can reveal logical, yet hard-to-reach conclusions about your audience.
Flipping your funnel means starting with a single client who has a real need for your products. Understand their experience, their focus, and their unique sales journey. Analyzing each sale will give you specific traits that made that sale possible, which you can then test on other leads. Instead of focusing on gathering a lot of leads and weeding out the bad ones, just focus on collecting perfect leads that will be highly interested in your services and products.
Create a New Clients and Renewal Client Funnel
To measure the accuracy of predictable sales, we must create two different funnels: new clients and renewal or recurring clients. Like the name indicates, renewal or recurring clients are those who have already purchased your product or subscription once and are likely to purchase them each month. Having a dedicated funnel for new clients means you can build tailored nurturing campaigns, and compare the actual stats to the predictions made.
Presenting the Right Visual Interpretation
Business owners and decision makers need to be presented with the right visual interpretation of your sales funnel to easily understand the logic behind the marketing and sales efforts. It will also help your sales and marketing teams understand their missions and decision-making process that drives most purchases.
Everyone has heard the old adage of 'you can't hit a target you can't see', well it sounds cliche, but it's true - without visibility into your pipeline; how fast it moves, which variables influence its growth or decline, and how it is segmented you will not be able to optimize it. This takes work, good tools, and a deep desire by marketing and sales to collaborate.
Want help optimizing your funnel? We'd love to be a resource for you. Contact our team to talk with us about how we can optimize your sales and marketing machine.