Get yourself a cup of coffee and a snack and let’s jump right in! Doug and Jess are trying something new - recording first thing on Monday morning! If you’re a fan, let me know and I’ll pass it along to Doug and Jess.
In other news, it’s officially summer, kids are off and at camp, the writer strike is still happening which is causing a lot of questions for Deadpool, and there’s a lot of talk about Ryan Reynolds. BUT that’s not what we’re here to discuss. Today Jess wants to dig into developing and building a sales pipeline.
Audio:
Video:
Additional Resources:
[RevOps Show] Episode 33: The JOLT Effect - Interview with Matt Dixon, The Impact of Indecision on Your Sales Efforts
[RevOps Show] Episode 12: Build a Better Forecast
[Blog] The Problem with Forecasting: Why Sales Isn’t Working Today
[Blog] 2 Simple Things To Do To Dramatically Increase Your Sales Forecasting Accuracy
[RevOps Show] Episode 31: Creating a Strong Sales Pipeline to Drive Sales Outcomes & Results
[Blog] The 5 Major Mistakes that Stall Sales Pipelines
[Blog] What Is A Strong Pipeline?
[Blog] 10 Questions to Ask When Assessing Your Pipeline
Show Notes:
What is the purpose of a pipeline?
When you talk about your pipeline, you have to realize that about 30% of implementations we’ve done include companies that aren’t even thinking about their pipeline. This supports one of the challenges we deal with.
A pipeline is designed to be able to manage and track the progression of your sales journey. Think about the customer acquisition journey. When you look at your funnel, you’re looking at it from a number elements perspective - you’re able to track specific things that are happening. It’s to enable the tracking and effective management of the progression of opportunities from beginning to end and to be able to use that in a manner that enables you to gain greater insights and predictability.
When are two pipelines better than one? (The first time this is talked about.)
When two pipelines provide greater insights and predictability than one does.
(It’s not a very useful answer - more on this later!)
How do you go about picking the stages for your pipeline?
This is where system design and process management is crucial. It’s the area where Doug sees the majority of mistakes being made.
Take a look at the journey you’re tracking. What is the sale that you’re making? Look at your pipeline as a production line. What’s the beginning and end of the production line? When is that production line’s job done?
It’s like with sailing - you aren’t going to sail straight from Annapolis to Barcelona. You’re going to identify waypoints. Each waypoint is a stage in the pipeline. What you’re looking at are key milestone elements that have exit criteria.
If you missed the episode where we interviewed Matt Dixon, co-author of JOLT and The Challenger Sale, go listen to that episode because it connects here. The purpose of a sales process is to reduce decision reluctance and to facilitate a mutually beneficial long-term decision. To do that, the best thing you can do is reduce decision reluctance.
Why do people have decision reluctance? It’s because you take them too far too fast. There are three meta decisions that have to get made in a high consideration purchase: Why change? Why change now? Why change with you? We have a tendency to push all of those things to the end as opposed to building each piece and building on each piece.
Why does Doug bring this up? Because when everything is in your pipeline, and when every stage is weighed to the buy, you don’t generate lift in your sales process.
Going back to a previous question - when are two pipelines better than one? How do you know that you need to break up the process into multiple pipelines?
1. When you start losing the signal, a good pipeline has a very high signal to noise ratio. If the signal to noise ratio starts decreasing, that’s a sign that you want an additional pipeline.
If you’re selling to higher complex, larger sale value, the job of the development team is to generate sales qualified accounts. You’d have a development pipeline and a new sales pipeline. That’s one deviation because there are different beginnings, middles, and ends. Doug has seen some people combine that into one pipeline. You just have to get the naming down.
If you do have a development pipeline that has four stages and a sales pipeline that has five stages, what’s wrong with making that one pipeline with nine stages?
Technically there’s nothing wrong with it. It makes it a little bit harder for you to get the analytics you’d be looking for, but it’s manageable. By breaking it down, though, it helps the sales rep stop from skipping stages and selling too fast.
2. When you’ve got distinctly different motions.
In addition to our development pipeline and sales pipeline, we also have a pipeline for project business and a pipeline for recurring business. The reason is they’re distinct motions that have meaningfully different stages and different exit criteria. Think about the behavior you’re looking for and the things you’re trying to accomplish.
3. Staying away from average.
If you have different people working through different stages and have a handoff included, this is a place where you should look to break up those pipelines. By having two pipelines, you can see what’s happening much more easily.
As you're putting your stages together, how do you make sure that it's set up to get the right reporting?
The names of the stages and exit criteria are the most important things in pipeline design.
Pipelines are talked about as being key to forecasting and that’s some of the worst advice that Doug has heard because it’s not true.
What drives probability are profile criteria. Forecasting is very deal specific.
How many stages are too many? How many stages are too few?
A good pipeline has 5-7 stages.
Doug could go down to four stages. If you have two or three, you’re probably not looking at it meaningfully enough to get the signal and insight you want. If you go above seven you may be better off with two pipelines.
How do you launch it?
You don’t launch a new pipeline; you may launch a new process. Look at the sales and buying journey. See where things are inflection points; where do they connect?
Going back to stages, if a stage doesn’t indicate that there’s a different objective or a different point, then that’s not a stage.
Jess’s Takeaways:
- Think about pipeline stages like a production line.
- The three most important things are the stages, the names of the stages, and the exit criteria.
- You don’t launch a new pipeline, you launch a new process.
Next Steps:
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Follow Jess, Doug & Imagine on socials for updates on the show or other insights:
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Doug Davidoff: Twitter - @dougdavidoff | LinkedIn
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Jess Cardenas: Twitter - @JessDCardenas | LinkedIn
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Imagine Business Development: Twitter - @DemandCreator | LinkedIn
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Check out Let's Play RevOps on Twitch for more commentary on this topic
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Listen to Episode 60: Why Data Architecture & Structure is the Key to CRM Success (And Why it Goes Wrong)