Meet Sales Manager Mike. He’s in charge of sales operations at a fledgling but successful startup. He manages a small team of only 3 sales reps, but has a bloated pipeline that contains more than 500 opportunities, all of which have rapidly-approaching close dates within this quarter. How can Mike determine which of those 500 opportunities his reps should be working on as part of his sales pipeline management strategy?
Every sales organization is limited in terms of how much effort and resources they can pour into closing each opportunity. Sales managers only have so many reps to work with, and reps only have so much time in a given day, week, month or quarter. It is therefore essential for managers to delineate an effective execution plan for tackling opportunities as part of their optimal sales pipeline management strategy, and a great part of this execution plan should focus on the prioritization of opportunities. The best sales managers rely on objective analysis to prioritize their sales pipeline opportunities and guide reps toward focusing on the most important or urgent ones.
The key to prioritizing sales pipeline opportunities is to find the right balance between level of engagement or effort and likelihood to close, considering risk factors. Obviously, opportunities can’t close unless they are being actively worked on by your team of sales reps. Engagement could entail any number of different activities – calls, emails, voice mails, productive connections. Opportunities that display a low level of effort on the part of reps and haven’t been engaged with in some time are less likely to close and should either be heavily focused on in a last-ditch effort to save the deal or purged from the pipeline as a dead opportunity altogether.
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The likelihood to close is not as black-and-white as the level of engagement on the opportunity. Closing probability takes into account a variety of risk factors. Each organization operates under its own unique set of risk factors, depending on what industry they are in, their selling process, the company makeup, the structure of their selling team and a whole host of other attributes. Some key risk factors that contribute to the probability of an opportunity closing include:
Close date moves
Has this opportunity moved too frequently in recent times? Constantly shifting the close date back could be an indication from the opportunity that they are not ready for your product now or that they are merely jerking your rep around, with no serious intent to purchase.
Is this opportunity worth significantly more (3x or greater) than your typical deal size? This should be a red flag – typically, deals that are worth more tend to have smaller win rates and longer sales cycles, making deal size a critical component of your sales pipeline. These outliers should be carefully considered, not only when delegating opportunities – more experienced or successful reps should probably tackle these valuable opportunities – but also in forecasting sales.
Age in stage
How long has this particular opportunity been in this specific stage? Is this far longer than winning opportunities typically spend? For example, if winning opportunities spend an average of 14 days in the trial phase, an opportunity that has been in there for 40 days is less likely to convert into a deal. Use this information by diverting your reps’ attention toward the long-gestating opportunity in a bid to salvage it before it is purged from the pipeline altogether.
Prioritize your sales pipeline based on how well the opportunities fit your objective measures, not your reps’ (or your) subjective ones. These objective measures can be configured to your company’s unique specifications to determine the ideal thresholds for each of the aforementioned risk factors, as well as any others that might impact your company. Looking at a sales pipeline report, such as the Pipeline Today report from InsightSquared, lets you ascertain the level of effort and the riskiness or probability of closing for each opportunity, allowing managers to make smarter priority decisions.
Manage the efforts of your sales reps so that they focus not only opportunities that are most likely to close, but also on valuable opportunities with negative velocity that are worth saving or opportunities that, with a little bit of engagement, could gain positive momentum toward a closed-won deal. Look at your “coin flip” opportunities, profile them and find those that best fit the profile of your successful deals, shifting your reps’ priorities toward those. When executed effectively, prioritizing opportunities for optimal sales pipeline management can save your reps a great deal of time, lead to more accurate sales forecasts and grow your company’s revenue significantly.