Jess is headed off on a much needed and deserved vacation and wonders how she’ll go a week without listening to Doug’s soundboard. Of course while she’s gone Doug isn’t allowed to talk to anyone so he’ll be spending time picking music for a trivia game during our offsite visit.
All jokes aside the focus of this episode is on the three core sales pipelines of any business. To be clear, this episode is more about why there are three pipelines. Doug will be covering the structural problem from a go-to-market standpoint in terms of managing the functions.
[RevOps Show] Episode 59: Developing & Building Sales Pipelines for Revenue Acceleration
[RevOps Show] Episode 31: Creating a Strong Sales Pipeline to Drive Sales Outcomes & Results
[Blog] What Is A Strong Pipeline?
[Blog] 5 Keys to a Balanced B2B Sales Pipeline
[Blog] 5 Steps to Design Your Pipeline to Shorten the Sales Cycle and Align Sales & Marketing
What’s the problem we’re trying to solve with pipelines?
When you don’t have a process or methodology, you fall into the middle. The way that sales get approached when this happens is there’s a bunch of sitting opportunities. The way pipelines are managed is usually in a linear process, driven by activity. The buyer’s journey isn’t a linear process though. It’s like a pinball machine. Sales organizations tend to treat all their opportunities the same. The approach is the same.
The scarcest resource for a sales rep is time. Looking deeper it’s energy. The one thing that kills energy is spending a lot of time in the wrong place at the wrong time and taking the wrong action.
The trouble is, all opportunities are in one place and in one pipeline. They’re not grouped according to the structure or the motion that is being managed. Now the rep is in a position where they have to think about their structures and processes. That eats up a lot of energy.
The more this happens, the more the average norms down over time. This leads to a lowest common denominator, and then you can’t get a signal. Rather than a signal, you get noise.
Let’s talk through the problem for the reps.
One thing Doug hears often is how reps won’t like something; reps aren’t used to x; reps will get confused with y. It’s actually the reverse. There’s an invisible weight and friction that a rep experiences every time they have to stop and think. Another piece of friction is mind shifting. A rep goes from thinking about the structure of their selling process to having a conversation as opposed to letting the system sort out everything so that it’s queued up for the rep.
Why multiple pipelines?
Pipelines are what we’re bringing to a theory called constraint theory. We narrow the span. It’s like putting the harness on the horse. You have the power and control. If you don’t have the harness, you don’t have power and are all over the place. It’s a value creation process.
The way to think about every motion is:
- What is the underlying motion at play?
- What’s the job that we’re doing here that should be the pipe?
- What’s the objective when there are different objectives?
A pipeline is a motion; it’s a play. By isolating those, you’re breaking it up and are able to fine-tune your analytics so you can close the loop and make better decisions. You get to optimize the allocation and expenditure of your resources towards the achievement of objectives.
What are the three pipelines?
Two of the pipelines are what we tend to think of as traditional sales pipelines, but they’re two different sales approaches. One is a Transaction Pipeline and the other is a Strategic Pipeline. The third pipeline is a pre-sales pipeline which we refer to as the Development Pipeline.
The Development Pipeline is the middle. Why did we at Lift get into RevOps? Because the middle is a mess. The lift is always in the middle because that’s the place where intent happens. If you want to lower your cost of acquisition and scale growth, you have to generate relevance and pre-intent.
What a Development Pipeline does is it pulls out the people instead of the rep having to go into the database to look at who they should call and follow up on. This pipeline lets you manage the visibility and makes it very easy to see what you’re doing, how you’re doing, and where you’re going. It’s about identifying what causes sales.
If you don’t have a Development Pipeline you miss out on building a structure to drive better behavior and better performance.
What’s the purpose of the Transaction Pipeline?
Both the transaction and strategic pipelines have the same purpose. They both manage your active sales process. The buyer falls into one of two categories for how they perceive value:
- Fundamental value
- Total value
There are some places where you would be of fundamental value. There are other places where you would be total value. Fundamental value means that the value is in whatever's being bought. There are two reasons that someone's going to be in a fundamental value segment.
- They have the knowledge and expertise
- There’s some stuff people don’t value
For example, if I were buying bleach that would be a fundamental value purchase because it's a commodity. This goes back to our episode on RFPs. RFPs were built for the specifications to be very clear. You meet the specifications or you don't meet the specifications.
There are some things that people just don't value. A lot of times they don't value it because they lack knowledge. You can't value what you don't know, but if you don't value it, then you don't value it. You can't make someone value something that they don't value.
Transaction pipelines are geared to fundamental value where cost is the driver. Does that mean you have to be the lowest price all the time? No. Though, if you’re not continually lowering the cost, you’re going to have troubles.
What are the things you should think about as you put pipelines together?
To some degree, if what you’re putting together doesn’t meet the definitions of strategic, then you can classify it as transactional. But a transaction pipeline needs defined demand. Doug’s saying here that every company should have three pipelines.
Don’t treat a market where you’re the new entrant and there’s a strong incumbent as a transaction area. That might not be a good place to go. There’s very low t moderate value or impact that a seller can provide. If intent is there, everything should be straightforward. Your ultimate aim here should be to make the sale self-serve. The objective is to minimize touch and friction.
Why do you want to reduce the dependence on salespeople?
Why have costs if you don’t need costs? The bigger reason is because we need them and there aren’t enough of them for the strategic opportunities. They’re spending too much time on lower value transactional opportunities that we’re not playing our game to win. The strategic pipeline is a high impact place with a different value creation.
With a Strategic Pipeline, you’re looking at a larger average sale value. Profit matters here. If you’re looking to win quality sales, you want to maintain y our margin.
When you look at your core business, what are the things that connect to your value proposition? What are the elements? Remember, you might win one strategic sale. That sale may create revenue and it may not. It may create and unlock a thousand transactional sales over the course of a lifetime. But if you’re making transactional sales after transactional sales, you’ll never have customer lock-in.
- The point around multiple pipelines is that it gets you in the right mindset for the motion that’s required. It isn’t about fragmenting; it’s about identifying the motions you need to take in a particular opportunity at a particular time.
- You need a Development Pipeline whether you have a development function or not.
- Everyone should have three pipelines.
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