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The Ideal Sales Pipeline Value – solution selling expert’s view

admin — Tue, 28 Jul 2009 14:40:19 +0000

What is the ideal number of opportunities that we should have in our sales pipeline? If there are too many, we run the risk of not having enough time to devote to them all, and if we have too few, we may not achieve achieve our sales targets.

CJ Warstler, Director – Sr. Consultant, Sales Performance International Inc. helps answer this question very effectively in his post titled: “What does an ideal sales pipeline look like?” on their Solution Selling™ Blog.

He identifies the following three factors that determine the ideal pipeline:

Sales Cycle Complexity (Quality)
Complex sales cycles have more number of milestones in the sales cycle. When calculating the ideal pipeline, one needs to know the ideal number of opportunities at each stage or milestone in the sales cycle.
Days in Stage (Speed)
The longer it takes to close opportunities, the more the number of opportunities you need in your pipeline to achieve the target sales in a given period. The estimated average time taken at each milestone in the sales cycle is used to calculate the ideal pipeline.
Yield Probability (Volume)
As an opportunity moves from one milestone to another, the probability of closure keeps improving. The probability at each stage is used to calculate the ideal pipeline.

The following table illustrates the sample buyer’s process and the corresponding sales process, along with the two process parameters – the time required, and the probability of closure at each milestone:

Buyer’s Milestone	Seller’s Milestone	Average time required (days)	Probability of closure
Develop Business Strategy	Create Opportunity	0 (start)	0%
Determine Needs	Qualify Sponsor	15 days	25%
Evaluate Alternatives	Develop Power Sponsor	25 days	50%
Select Solution / Evaluate Risk	Prove Capabilities	45 days	75%
Negotiate and Close	Negotiate and Close	35 days	100%
	Average Sales Cycle:	120 days

The sum of the time required at each milestone then gives us the average sales cycle time, which in the above example is 120 days.

In addition to the sales process, the following information is used in the calculation:

The sales target or Goal – for example, suppose this is 1.8 million
The time remaining to achieve the goal – for example, suppose we are at the beginning of the year, so we have 365 days left

Then the ideal pipeline value at each stage is calculated using the following formula:

(Goal x (Average Sales Cycle / Time Remaining to Goal) x (Average Days in Stage / Total Days in Average Cycle)) / %Yield in Stage = Ideal Amount for Stage

So for the above example, we would get the following ideal pipeline:

Buyer’s Milestone	Seller’s Milestone	Average time required (days)	Probability of closure	Ideal Pipeline
Develop Business Strategy	Create Opportunity	0 (start)	0%	-
Determine Needs	Qualify Sponsor	15 days	25%	2,95,890
Evaluate Alternatives	Develop Power Sponsor	25 days	50%	2,46,575
Select Solution / Evaluate Risk	Prove Capabilities	45 days	75%	2,95,890
Negotiate and Close	Negotiate and Close	35 days	100%	1,72,603
	Average Sales Cycle:	120 days	Total Pipeline Value:	10,10,959

The total pipeline value here is less than the total goal, because this is the pipeline at the beginning of the year. Assuming that new opportunities keep entering the pipeline as older opportunities flow out of the pipeline at the same rate, the pipeline over the entire year will achieve the required goal.

See the excellent explanation of this provided by Tim Sullivan in the comments on the blog.

All in all, a very well explained and simple way to ensure that the pipeline is kept at the optimal size.

Managing Business by Remote Control

admin — Wed, 04 Feb 2009 17:44:12 +0000

Business owners and managers usually spend most of their time managing their operations to make their businesses work. Business scalability is compromised to maintain cash flow. The most difficult challenge of the business owner or manager is to create free time – to work on strategies to scale the business, or to just enjoy the fruits of labour.

Rahul Jain, a highly successful business coach who has worked with several CEOs to help them effectively scale their businesses, asks some tough questions that helps a business owner evaluate their effectiveness in achieving business results:

Is your business growing at the rate you wish it to grow?
Are you and your business making the kind of money that you wish to make from the business?
Do you still find time to do things you enjoy doing or your business is taking away all your time, leaving no free time?
Do you spend most of your time working IN your business or are you working ON your business. (Are you spending most of your time solving the same every-day problems or are you investing your time uncovering new ways to grow your business.)
Do you spend most of your time dealing with emergencies and fire fighting?
Are you enjoying and having fun running your business or is it a cause for constant stress
Are your employees working for you or are you working for them?
Are you in control of your business, taking your business where you want it to go, or is the business driving you?
Do you have self-sustaining systems in place that manage your business even in your absence?

Most business owners and manager may easily identify their situation with the above. But being caught in the trap of micromanagement, the solutions seems far from easy.

Nahid Casazza, another business coach who effectively combines her background in psychology and business expertise explains the root cause of micromanagement:

…micromanaging behavior is driven by the positive characteristics of conscientiousness, diligence, and responsibility; it’s just that they have been taken to an extreme. People often confuse themselves with the quality of the work they produce. As long as they can control the quality of their work, they are ok, but as soon as they have to depend on others for results, they are faced with the fear of representing sloppy or substandard output. Since putting out less than excellent work is SO personally humiliating, they need constant reassurance that the team is performing.

One way to escape this trap of micromanagement is to create a process documentation system that captures everything that is going on in your business and allows you to keep track of it from the outside.

Like Rahul says:

Documenting and setting up the required systems, -moving the business from people dependency to systems dependency. (It also ensures that when an employee leaves the organization, another person can quickly fit into the place, because of the systems.) A step by step program to take any function in your business and turn it into a scalable, replicable, reliable process, complete with checklists and full documentation so that anyone in your company can do it just as well, by following directions. (Putting it on Auto Pilot) having the business ‘work’…even when you’re not there, resulting in the biggest freedom which you have always dreamed of- the freedom of time.

Sounds simple. But implementing systems is by no means easy. As any business owner or manager who has tried to implement any business tracking software can verify, the biggest problem in maintaining a system is to get people to enter data in it.

The difficulty lies in the decision of how much data to capture. If you ask a manager to decide what to capture, you will tend to get an answer close to “everything”. From a manager’s perspective, the more data the better. And most software systems aim to please the manager by providing more features meaning more data to enter. This inevitably leads to a situation where over 90% of software implementation projects fail.

The approach that works is to provide systems that capture the progress of the business process automatically, without requiring people to separately enter any data. This can be achieved by providing a customized template that acts as a checklist for all tasks that are to be performed, and the person who finishes the task merely has to check off the tasks completed. The system should then automatically register the person who completed the task, the time spent, the next steps required etc. based on a pre-determined logic.

Process template - a simple checklist to track the progress of a business case

The adjoining sample screenshot is part of a process template designed for a subscription based software business. The template shared on the web and is available to all persons working on the specific business case, project or order. The process is broken down into milestones, where each milestone could have an associated set of questions that need to be answered or sub-tasks that need to be performed. The person responsible has to merely check off the tasks completed.

The system then automatically tracks the progress of all business cases, projects or orders and provides a summary to the manager. The following are two sample reports that the manager can see:

Live feed of ongoing business activity

The first screenshot is of a live feed of all ongoing business activity. This report picks up all live business cases, and lists all ongoing activity including milestones completed, messages exchanged, documents prepared or tasks completed.

This report is available for viewing from anywhere via the web, and is useful for the business owner to remotely track the business process. All activities are directly linked to the corresponding business case or project, allowing the manager to view the complete context of the specific activity.

Process Pipeline Report

The second screenshot is a performance summary report. This shows the pipeline of all business cases or orders, and tracks the velocity of movement of cases through the list of milestones in the process template.

This report provides a valuable feedback to the business owner or manager to identify possible bottlenecks or stumbling blocks. Any order that is not moving ahead in the milestones is highlighted, allowing the manager to investigate by simply clicking on the inactive projects and drilling down from the report to the list of projects and then to the individual project.

This simple strategy promises to provide the business owner or manager an effective tool to help manage the business by remote control, thereby creating more time to work on strategy to grow the business.

The Secret behind Effective Sales Management

admin — Mon, 05 Jan 2009 12:17:41 +0000

Emily FITZGERALD has an interesting post on the secret behind effective sales management:

The secret behind effective sales management is simple: manage activities and measure results. Sounds simple but the misunderstanding lies in the fact that the link between activities and results is very short in demand fulfillment functions (entering customer orders today means shipping more orders today and tomorrow). However, that link for demand creation is much longer and tedious. It involves strategic selling, building relationship equity and the creation of tier level penetration strategies (relationships take months or longer to deliver revenue). In demand creation , attempting to manage results is like watering a plant after it has died from dehydration because the current results were determined by activities performed months in the past. The only way to create an effective sales program is to define the activities that will drive results and then manage those activities. This concept will also create discipline on the part of sales management on the back side of the performance loop.

On2Biz is a great tool to manage sales activity. Click here to sign up for a free account and find out how.

Complex Sales Challenges

admin — Wed, 09 Apr 2008 01:29:14 +0000

Complex sales is where the process of mapping the customer’s need or problem to the product or service requires considerable time and effort. Typically, complex sales involves long sales cycles, involves multiple decision makers, is highly unpredictable and therefore very risky.

In this presentation, we cover the challenges involved in complex sales from the view point of various stake holders, and uncover the needs to address these challenges

Feature Changes: Workspace dashboard menu with Activity List and Pipeline

admin — Tue, 16 Jan 2007 07:36:21 +0000

On2Biz facilities have been divided into two sections:

Workspace – where the user manages and reports activities and processes
Reports – where the user analyzes performance through various types of reports

Each of these sections have the corresponding menu, which acts like a dashboard for quick access to the facilities in the section.

We review here, the Workspace dashboard menu, and the changes we have implemented based on feedback from users.

The workspace menu consists of the following facilities:

1. Activity List

a. Scheduled Appointments – lists the appointments that are due today or overdue
b. Pending Tasks – lists the tasks that are due today or pending from before
c. Unread Notes – lists notes that have been added in projects where the user is an project manager or project team member
d. Active Projects
- by Milestone – lists projects that have shown progress in milestones in the last 1 week
- by Activity – lists projects that have shown some activity (calls/tasks/notes) in the last 1 week
e. Inactive Projects
- by Milestone – lists projects that have shown NO progress in milestones in the last 1 week
- by Activity – lists projects that have shown NO activity (calls/tasks/notes) in the last 1 week

2. Projects Pipeline

The projects pipeline shows the number of projects that are currently at various milestones. Previously we used to show all projects where the current user has permissions to view. Hence, a user will see all projects where:
a. The user is a project manager
b. The user is a project team member
c. The user is a category manager for a product category which is being sold
d. The user is a member of top management (and will see ALL projects for all users)

So for individual users who are not category managers or members of top management, the pipeline shows projects where that user is a project manager or a project team member.

While for managers, it would show all projects where they have permissions to view, which include projects that they are themselves project managers/project team members, as well as other users’ projects.

Some of the managers who are using On2Biz have brought to our notice that it is difficult for them to view their own projects from the workspace pipeline. If they want to view projects belonging to their subordinates, they can use the reports, where one can choose the user and see the sales pipeline in detail.

This made sense to us, so we have now created an option in the user preferences, to indicate whether the workspace pipeline should show subordinates pipeline or only the user’s own pipeline.

Hence if you are a manager, and you set your preference “show subordinates pipeline in workspace” to no, then your workspace pipeline will show only projects where:
a. The user is a project manager
b. The user is a project team member

This will affect the number of projects that appear in your pipeline if you are a category manager or a member of the top management.

By default, the workspace pipeline will include your subordinates projects. To see only your individual projects in the workspace pipeline, change your preferences “show subordinates pipeline in workspace” to yes.

Lead Management: What is a lead and how to qualify leads?

admin — Fri, 08 Dec 2006 01:02:42 +0000

Brian Carroll, CEO of InTouch, Inc. and author of Lead Generation for the Complex Sale (McGraw-Hill 2006) maintains a blog for B2B Lead Generation. He is an expert in B2B marketing, lead generation and complex sales. He wrote an interesting article in the Target Magazine which talks about “What’s a Lead?”. In a post on his widely read blog, Jim Berkowitz, another leading CRM expert explains the salient points of Brian’s article:

The number one issue for most CEOs and marketers is lead generation – getting more leads to their sales team. The number one desire for salespeople, however, is more selling time with sales-ready opportunities
Numerous lead qualification programs have shown that as little as 5 percent to 15 percent of all inquiries are truly sales-ready opportunities
The biggest mistake made by marketers is to give mere inquiries to a salesperson
There is a systematic process for successful qualification that includes specific steps
1. Define and Agree On What the Word “Lead” Means
2. Consolidate and Centralize Your Prospect Information
3. Pick Up the Phone and Qualify Prospective Leads
4. Handing Off Leads to Sales
5. Closing the Loop
More Is Not Better – Instead of concentrating on generating more leads, companies need to do a better job managing and qualifying the leads (or more likely the inquiries) they already have
Effective lead qualification is key to building a reliable sales pipeline

On2Biz is an ideal tool for helping you keep track of your leads. It provides a consolidated view of all leads in your pipeline. You can create a standard form for lead qualification consisting of various questions that your tele-sales team can ask before forwarding the lead to the field sales staff. It helps you to measure the leads pipeline through various stages of the sales cycle, and measure the effectiveness of lead conversion.

For hands-on trial of how On2Biz can help you to manage your lead processing, apply for an evaluation account now.

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Why do you need a CRM or Sales Force Management System?

admin — Mon, 04 Dec 2006 05:26:34 +0000

As individual sales persons, we are quite adept at managing our sales process. We have been doing pretty well without any “systems”. So why do we need one?
The simple answer: To grow your sales! You can drastically improve your sales performance. Not just tweak it, but take it to the next level!

Managing customer relationships is like managing any relationship. The work you need to do to manage your relationship with your spouse takes time, effort and constant attention. Without these, the relationship goes sour. Customers are no less demanding than a spouse. The only difference is, there are many more of them (unless you have a harem… wonder whether one can use CRM for managing your harem). And we want even more customers. But the available time, effort and attention get diluted when divided among several customers. The inevitable result is compromise in customer relationships.

To handle a growing number of customers, businesses hire more sales persons. This increases the available time and resources. And in India where salaries are affordable, this is the easiest way to facilitate growth. So most small businesses have a much larger sales force compared to their sales revenues. However, you cannot continue this strategy beyond a certain point, because good sales persons are not easy to find. To make average sales persons work with the same efficiency, you need to work as a team. And as the team size increases, managing the team becomes expensive and cumbersome, leading to loss of sales effectiveness. Hence sales effectiveness is not scalable

I recently read an article on Roy Gough’s blog about this issue. Roy is a successful CRM professional who has implemented CRM systems for companies in the US. He lists the following problems commonly faced by sales teams that try to grow without a system.

Promised return phone calls not made, and information not sent

Not being informed of possible delays or problems

That call to tell you when your order is ready – promised but not made.

One department in the company having no idea what another department said to you in the last call or letter.

No one bothering to call to make sure the goods arrived, or are satisfactory. Probably no calls at all – until of course they want to sell you something else

No one knowing what they last sold to you – or when

No one knowing enough about you to offer you items or services that would enhance or compliment your purchase. Frequently only one person in the company seems to know anything about you! And if they’re not available…?

The answer is a CRM or sales management system like On2Biz gives you scalable sales effectiveness. The system works

by enhancing the efficiency of every individual sales person
as well as improving team management capabilities.

For an individual sales person, the system works like a personal secretary who never forgets, and who allows the individual to handle more customers within the same available time and resources. For a team, the system becomes the communication platform that allows a large team to work together without communication gaps, forgotten tasks, and incomplete briefs. So adding a CRM or sales management system is almost like doubling your sales force, but without the high cost and loss of effectiveness.

But the challenge in using a CRM or sales management system is in getting your sales force to adapt their working style to a more structured process, where information is recorded systematically and accurately. This additional responsibility is often viewed as an unnecessary overhead by individual sales persons. Sales persons initially tend to view the system as a way for managers to keep tabs on their activity. They consider it as a burden that hampers them rather than serving to enhance their productivity.

That is where On2Biz differs from other such systems available. On2Biz has been designed to minimize the pain involved in adopting a system that requires individuals to work in a structured process. Based on the years of experience in implementation of workflow management systems in India, Reach1to1 has created a business management system specifically for ensuring successful user adoption of sales management systems.

Contact the On2Biz team for creating an evaluation account for your sales team today!