Operational risk in Sales is a primary source of corporate financial risk — a result of inadequate sales process or pipeline opportunity inaccuracies. When Sales Management can increase the accuracy of the sales pipeline, risk is reduced.
Here are three ways to reduce risk in your pipeline:
1. Risk goes down by increasing the efficiency of the sales process and the productivity of the sales team.
Part of this effort is nurturing the entrepreneurial spirit of the sales professional, while at the same time insuring their ability to act in a way that makes the sales pipeline data and forecasting more accurate.
There are several aspects to this. First, sales reps should not be so constricted in terms of pitches and actions that they cannot make their own decisions. They are the ones “on the ground” and with prospects right in front of them, and should be granted enough freedom that they can, to a greater or lesser degree, utilize the instincts and skills that made them salespeople in the first place. Such freedom can include allowable discounts, address of a prospect’s actual issues (instead of sticking strictly to campaign verbiage) and exceptions to the sales process where they might apply—without having to obtain permission from sales management in each case.
Second, a salesperson should be provided with tools that are actually empowering, as opposed to those simply for monitoring and controlling. When a CRM solution is intuitive and is actually useful, sales reps can track their own sales and greatly improve their efficiency, sales velocity and thereby closing rates.
Lastly, a salesperson can go a long way to improving quality of pipeline data. He or she can ensure that the data entered is indeed accurate and honest. Mistakes can happen—and a police state patrolling for small errors never helped any sales team anywhere—but overall when sales reps pay attention to accuracy of information, it only comes back to help themselves and their teammates as sales move through the pipeline.
Since salespeople are the ones on the front lines, they can also make sure that data they are required to enter really matters–i.e. it’s really going to contribute to helping close sales. When it doesn’t, they should speak up and get the matter corrected. This is also true when they observe that data that should be being entered is not.
2. Risk goes down when you understand your prospects’ behaviors, and tailor your pipeline to that buyer.
Once you have a “deal structure” (stages mapped out from lead to close) in place, you can more easily see key metrics such as: the length of time buyers spend in a stage, the triggers that move them from one stage to the next, the average length of the complete sale from inception to conversion, where deals get stuck, and more. Your team can tailor interactions at each stage to the way prospects buy. Here is a screenshot of this process in Pipeliner CRM:
By studying your buyers’ journey, you can then study both successful sales and failed ones (e.g., in the Pipeliner Archive screenshot below) and identify bottlenecks and adjust course. The entire team can see and participate in this research, and are likely to be more open to adjusting their sales process based on the results.
This doesn’t mean that sales reps’ ideas and intuition will be discounted — it means that they will be provable. The advantage of studying risk based on historical data is that your risk management is based on actual numbers, not guesswork.
3. Act on the resulting accuracy of sales forecasts.
As the sales processes become more efficient and sales reps more successful, forecasts will improve and support the effort to lower risk. Your sales professionals can devote energy to the most promising opportunities.
For example, a company sells a contact management software product. Sales have always been hit-or-miss, because initially the sales process didn’t allow for real prospect qualification—if the prospect company would be a good fit, if they had the necessary funding, if the contact management product would solve their real business issues. But as the sales process becomes more efficient, these points are corrected. Now, sales can be rated as to their closing potential, profit margin, future business prospects and other important factors. This improvement allows the sales force to stay on top of opportunities that truly matter and have the best chance of closing.
Tackling all three of these activities head on will lower risk. An added benefit of lower risk is that sales management has more time to devote to more strategic activities like training, coaching, and celebrating goals met!
Editor’s Postscript: Monitoring the health of your pipeline couldn’t be more crucial. Here are some more articles from the blog that will help you with the fundamentals of sales pipeline management. We also have a terrific ebook that you might find helpful.
You might also be interested in:
- 4 Greatest Risks for Sales Management
- 5 Dos and Don’ts for Pipeline Management
- What Is the Sales Pipeline?
- Five KPIs Every Business Must Consider