Image Courtesy: La-Rel Easter
According to MHI Global, a sales performance improvement company, 96% of elite sales teams know why their top performers are successful. But only 46% of average sales teams can say the same. Only 40% of all sales teams don’t have a defined sales process (Salesforce.) Its like playing sports with no playbook. You can't win. Conversely, those that do, win more than 50% of the time.
For teams without a current sale process, the question you may ask is "where do you start?" Even if you've never articulated it, if you've ever made a sale, you've undergone a sales process. It can be overwhelming, but having a well-designed process, begins with documenting your current one and understanding the lowest common denominator in marketing, your lead.
Over time and through interactions with your sales team, leads are qualified by your marketing until a potential deal is on the horizon. At that point your lead matures into a sales opportunity or a sales qualified lead (SQL.) Highly effective sales managers are super keyed into clearly defined stages in the process and identify them with a deal stage. In this blog we'll explore some simple rules for how to improve sales process with custom deal stages.
Sales is more science than it is art. As such, it requires a series of tests and experiments to refine your process. The more data you collect the more you can and should be refining your process and updating your deal stages. Sales techniques like cold calling that were glorified by 90s movies, Glengary Glen Ross would be largely frowned upon as inefficient in today's inbound environment and promises to change even more with the emergence of GDPR. Having an understanding of how environmental variables affect the viscosity of your pipeline and its stages is the sign of a sophisticated sales organization.
Its not just external factors that your sales process needs to be flexible to however. Perhaps more importantly are the internal ones. The best sales organizations regularly review their sales pipeline and techniques to ensure the process is current, documented and optimized for maximum efficiency and success.
You might not realize it but from the first interaction with a potential sale, everything from what medium you use to follow up, to frequency of communication, time of day, even tone affects the probability of sale. If you're not regularly examining how you can improve that probability, you can't expect revenues to increase.
If growth is what you seek, schedule time to examine areas of concern in the process. Look at your deal stages and identify where SQLs are spending the most time. Ask your team for suggestions on how the process can be improved and test changes to see how they effect efficiency.
PRO TIP: when running experimental changes on your deal pipeline be sure to only change one variable at a time. By implementing several adjustments simultaneously, you won't be able to identify which of those changes had an impact on the process.
Depending on your industry, the sales process may be very straight-forward. However in some industries, sales processes like school enrollment, and real estate can be very involved and require many steps. The goal is not to complicate the sales process but find the right milestones in the journey that delineate progress with the sale. If you haven't decided what those milestones are, start with the basics.
From these baseline deal stages you can begin to customize your pipeline based on milestones that are unique to your process. Its important to keep it simple however, you shouldn't have more than 10 stages or you will spend more time in your CRM moving contacts through the pipeline than is necessary.
Pipeline management is like a game of hot potato. The more deals keep moving the hotter they stay. If your prospects get too acquainted with any one stage, they tend to cool down, and like hot potato, you lose. With each deal stage there are a series of activities necessary to move opportunities down the pipeline to each progressive stage. These tasks should be designed to increase engagement, promote buy-in or accelerate the deal's momentum. To keep deals moving, its important your sales reps are fluent on the tasks necessary to complete these activities.
For instance, if we're using the "qualify" stage from our canned pipeline above, you need to establish a series of tasks that will indeed fully-qualify an opportunity. Some of those tasks may include:
|Qualify Stage Tasks:||
If you're using a CRM to manage your pipeline, you should be able set rules that prevent a deal from progressing to the subsequent without meeting all the required tasks. This keeps an SQL from improperly progressing down the pipeline without being qualified to do so. This is particularly helpful as sales agents often get overzealous and prematurely advance a deal. While there may not necessarily be a nefarious intent, it will make forecasting inaccurate and could cause unnecessary resources to be dedicated to undeserving opportunities.
Speaking of forecasting, accurate sales forecasts enable companies to make informed business decisions. This is done by predicting achievable sales revenue that allows businesses to efficiently allocate resources and plan for short and long-term future growth. Accurately forecasting monthly revenue is a science and companies with accurate sales forecasts are 10% more likely to grow their revenue year-over-year (Aberdeen Group.)
Using customized deal stages in your pipeline can help you more accurately forecast. By understanding the probability that an opportunity in each particular deal stage will eventually close, you can create a revenue multiplier to forecast the total revenue from deals in that stage.
One common mistake I see sales managers make is believing the highest valued deal is most important. That's only partially true. Its a function of where that deal is in the pipeline or sales funnel. Deals at the top of your funnel have less of a chance of closing than those that are at the end. Therefore a deal pipeline should consider the deal value as a function of the chance of it closing. See the two examples below.
|Pipeline A||Pipeline B|
|Deal 1 $15,000 - Contacting (20%)||Deal 1 $15,000 - Closing (80%)|
|Deal 2 $10,000 - Engaging (40%)||Deal 2 $10,000 - Engaging (40%)|
|Deal 3 $20,000 - Contacting (20%)||Deal 3 $20,000 - Closing (80%)|
|Deal 4 $10,000 - Contacting (20%)||
Deal 4 $10,000 - Engaging (40%)
|Forecasted Revenue ($13,000)||Forecasted Revenue ($36,000)|
While both pipelines have the same amount of projected deal value, pipeline B's opportunities have a higher revenue probability because they're closer to closing and thus it can forecast higher revenue.
In addition to having a higher revenue probability, deals that are closest to closing, or are at the end of your funnel, become more important at the end of the month when you're trying to hit your budget goal. How ever you are tracking your deals, whether its in a spreadsheet or a CRM, sales teams can filter their opportunities by deal stage to prioritize sales activities. Your highest valued opportunities in your close stage become low-hanging fruit targets for your sales team to concentrate their efforts on when hitting budget is your top concern at the 11th hour.