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Chapter 15: Proactively Managing Sales Pipelines and Funnels


Many college students are procrastinators. The days before papers come due and exams arrive are stressful indeed as they scramble to catch up. And while this is far from optimal, in terms of a learning experience, most procrastinators somehow manage to squeak by and complete their courses successfully.

Farmers can't work this way. The farm owner has to plan for the coming growing season. On a predetermined schedule, adjusted as necessary to reflect the prevailing weather conditions, the farmer has to turn over the soil, plant, fertilize, weed, and harvest. There is no way to stall, or to compress the steps needed to bring a crop to harvest.

Unfortunately, most salespeople act more like college students than like farmers. They approach their year-end quota in much the same way procrastinating students approach semesters: confident that they can cram as needed if they fall behind their year-to-date (YTD) target. Is there a more optimistic person in the world than a salesperson sitting at 37 percent of quota going into the last quarter? (We have yet to meet such a person.) Most lagging salespeople convince themselves that somehow, the elusive numbers will be hit by the end of the year. The surge of hope stays alive until the last week or two, when they finally admit to themselves that this year is a lost cause, and that it's time to "sandbag" orders so that they can hit the ground running the following year.

Salespeople simulate electricity: They follow the path of least resistance. Procrastination is an easy trap to fall into. And procrastination with respect to YTD quota position is reinforced by a salesperson's desire to have as many opportunities in the funnel as possible. Yes, if you add up all the items listed, the resulting figure may approach the gross domestic product of a small Central American country. But a closer look reveals that many of the "opportunities" listed in most pipelines have little chance of closing. This underscores the need for managers to grade funnels with an eye toward (1) setting appropriate activity levels and (2) disqualifying low-probability items.

As noted in a previous chapter, we distinguish between pipeline and funnel management. Pipeline milestones are graded and used by sales management for the purpose of forecasting, while sales funnel milestones are graded and used by sales management to assess the quantity of selling activity and the quality of selling skills at the individual salesperson level.

Left to their own devices, many salespeople compete to stay busy. In our view, the role of sales managers is to help them compete to win. But the prospect of putting a salesperson on an improvement plan—or, worse, firing an underperformer and recruiting and training a replacement—is enough to make a sales manager procrastinate like a college student.

The goal of managing pipeline is predicting what will close—forecasting—but these predictions are driven as much by personal agendas as by reality. A salesperson who is below quota has a specific agenda when forecasting: get my manager to believe that there is sufficient activity so that I can keep my job.

One major challenge in forecasting is that companies lack consistent qualification elements. Managers with experience at different companies bring along their own approach to grading opportunities. Even when companies attempt to impose standard milestones, an "80 percent probability" actually varies from salesperson to salesperson, and from district to district. The problem is that these milestones rely on a subjective judgment: Has the opportunity progressed to that level, or not? Well, tell a traditional salesperson who is behind quota that by the end of next week, she must have five opportunities at a certain milestone. By the end of next week, she will have six (thus allowing a margin for error, if one is successfully challenged by the manager). You can set your watch by it, but would you want to forecast these opportunities?

Predicting the date that an opportunity will close is a challenge for even the best salespeople. It's simply not their call. Forecasting can be as meaningless as pushing a few dates back by 30 days and tweaking a few numbers (especially when there is little or nothing that has been added in a given month). And these summaries tend to blow away in the first wind, in any case. If a salesperson forecasts a transaction to close in September, then forecasts it in October, and it finally happens in November, the accuracy is 33 percent—but what's remembered is that the salesperson got the business.

Salespeople despise forecasting because, in most cases, they are being asked to lie in writing. They know all too well that the exercise of forecasting is likely to bear little or no resemblance to reality. In fact, the major value of forecasting is that it has the potential to give salespeople with inadequate pipelines a wake-up call 12 times a year—that is, a message from on high that there are inadequate opportunities in their pipeline, and that they must increase their business-development activities.

So let's look at ways to get to better forecasting, in part by removing salespeople from the process.

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