One of the critical components to create a sustainable business is managing potential opportunities.
How do you manage your sales pipeline?
Your pipeline, or funnel, will display all the opportunities that have presented some interest or scheduled in an appointment. Typically, the top of funnel is much larger than the bottom as opportunities can be lost at a higher rate as they go down the funnel.
Here are three advantages and reasons why small businesses should also be sure that they are managing a pipeline to help grow sales.
1. Understand where clients are in the sales process
The first question to ask is, what is your sales process? What is the ideal customer journey starting from the first interaction to the last where a deal is made?
Many business owners will label prospects as cold, warm, or hot. Expanding on this to build a better sales funnel, ask yourself what would make a prospect go into one of those three buckets? Furthermore, what are the checkpoints in your process? Maybe an initial discovery conversation to uncover pain points, sending over a proposal, possibly a negotiation stage, and eventually a decision or closing stage.
Building out a simple, yet understandable funnel will help you focus on all your clients to make sure none slip through the cracks.
2. Forecast sales
Having a report that shows you who you have marked as a potential close for a given week or month allows you to do a few things.
First, it helps you understand if you can hit your overarching sales target. Adding projected revenue for your opportunities and updating the accuracy as you go further in discovery helps improve forecasting.
Second, many companies average around a 20% close rate and by using this as a benchmark if your CRM does not calculate close rate. You can better understand how many opportunities you need within a given period to give yourself the best chance to hit your target.
Third, knowing your close rate and how many opportunities you need to generate, you can run a report on how many activities you generated per month. Also how many deals you created in that same month to find out how many activities it typically takes you to generate a new deal. Now, you have improved sales math and reason behind why you should be making 30, 50, or 100 activities to communicate with clients a day.
3. Where do clients get stuck? Improve your sales process
A funnel is wider at the top than the bottom for a reason. Again, as clients go down the funnel, typically many get removed out.
A Client Relations Management system (CRM) enables you to run “Lost” reports of opportunities that were in your pipeline. Examining where these opportunities were in the process and why they are no longer being pursued can help improve the process.
Lastly, if you have built out custom fields in your CRM to make your data entry specific to your discovery conversations, you can run reports on your Won deals. This will help you see what type of client you have partnered with to strengthen your ideal customer profile.
It’s important to have a simple process to make sure you are keeping opportunities warm. Is this something you could do better?
If so, take a look at our tips below – there is always room for improvement:
- Consider your weekly schedule – business owners tend to work in the business rather than on it, scheduling time to look at sales pipeline is a no brainer!
- Design an effective sales process – as we have already mentioned it’s important you have a clearly defined sales process and that you and the team are aware and fully understand how this works.
- Establish how you will capture sales leads – whether you pay for it or it’s free there is a tool or CRM to capture your leads based on your needs.
- Document your process to manage the sales process – to clarify how things are done and determine how successful the outcomes will be.
It’s important that great businesses have a strategy for managing their sales pipeline. By utilising the tips above you will be able to see the following benefits:
- You will have the time in your schedule to manage pipeline
- Sales will increase
- By focusing on the entire pipeline instead of taking a short-term focus on closing sales, or getting a single high-value contract over the line, demand for your services will be smoother and your cash flow more reliable.
- You will be able to start to see why your leads leak from the pipeline which will pinpoint specific areas for improvement
- Keep track of which leads leak from your sales pipeline, and which don’t. Reason being you can construct a client profile of leads who are more likely to buy and leads who are less likely to buy. This knowledge will help you to focus your marketing material and allow you to qualify your leads more accurately, leading to a more streamlined, more efficient and less costly sales process.