One of the successful methods of forward-thinking companies is the isolation of the exact steps of their sales process, so that everyone involved in sales is “on the same page.” Sales reps know the next step of each sale, and managers can track the progress of sales as they go. The sales process is also known as “the sales pipeline”—and as sales opportunities move through that sales pipeline, from prospect all the way to close, each stage is clearly seen. This is a practice known as “pipeline management.”
Within such methodology, each opportunity along each step of the sales pipeline also receives its own rating, reflecting such factors as how profitable that sale will be, how easy it will be to close, how many future sales could be made from that customer, and many others.
There is another vital use of pipeline management: the proper utilization of sales resources.
Pipeline Management- The Closing Ratio
One of the tools within pipeline management is the closing ratio—that is, the number of leads versus the number of closes from those leads. Many companies have established what they consider an average closing ratio, which would be an agreed-upon benchmark for closing sales on a particular product or service, usually established by observation of proven salespeople over time. Such benchmarks can be used to forecast future sales as well as evaluate the performance of salespeople.
Sales Resource Utilization: Personnel
In observing closing ratios, it may be seen that there can be two broad categories of salespeople: those that are great at drumming up new prospects, and others who are fantastic at closes. While many companies and executives tend to focus strictly on the latter category, the former also has considerable value.
One leading sales expert calls those that are great at getting leads, “farmers” as they excel in picking the crops and getting them in to be processed, so to speak. They are the type of person who goes out for a drink, ends up making four friends in a bar, and makes prospects out of three of them. While such a person may not be a great closer, they are great at getting prospective sales in the door.
Interestingly, there may be others on the sales team who aren’t as great at instantly making friends and bringing in the prospects—but they’re outstanding closers. This would be the guy or girl you want sitting (virtually or actually) in front of your prospect when it’s time to seal the deal. They specialize in quickly sizing up a person and understanding them—and most importantly getting the person to feel they are being understood.
Either category can be isolated through the observation of individual closing ratios over time. The next step taken, though, can be an interesting one. Either you can leave your “farmers” where they are, continuing to perform well in obtaining prospects and not doing so well as closers; and your closers where they are, excelling at closing sales and perhaps suffering in the prospecting department. Or, you can do what some companies do, and actually place these personnel where they will do the most good.
It might take some reorganization of your commission system, but why not put the “farmer” where he’ll do the most good? Simply farming. On the other side, you can save your closers for actual closing—for when the rubber really needs to meet the road. Utilizing personnel in such a way, you’ll probably find you have improved results in both areas, and happier personnel to boot as they’re doing what they’re great at.
You can also create a sales training program in which all new salespeople start as “farmers” and move up the line as they gain more experience. This would of course depend on the product or service being sold and many other factors.
The utilization of personnel is yet another factor in successful sales pipeline management.