We find that many sales reps spend too much time and effort working opportunities that are not likely to convert or close. To make sales teams much more efficient, sales managers should be proactive about analyzing how likely it is for each opportunity in the sales pipeline to close-win.
It is all about finding a balance between the level of engagement and effort that goes into an opportunity, and the likelihood that opportunity will close-win. For example, opportunities that show a low level of effort from reps and haven’t been engaged with in a while are less likely to become won deals. Your reps should either remove those opportunities from the pipeline or engage with them in a last-ditch effort.
Think of opportunity risk like a strike zone
To narrow down which opportunities your reps should focus their efforts on, they need to find that sweet spot – that range of opportunity age and value where opportunities are most likely close-win.
And how do you find the sweet spot? By comparing current opportunities to historical ones, and then predicting the win rate of your current opportunities based on historical win rate of similar opportunities.
The 2 key sales metrics in defining your team’s optimal sales strike zone are: value and age of opportunities.
Value of opportunity – Have a $100k deal in the pipeline that you’ve forecasted to win this month? If your average historical deal size is $8k, then it is time to reassess whether your rep should prioritize this deal – an opportunity that big may be out of your strike zone.
Age of opportunity – If your average sales cycle for closed-won opportunities is 30 days, and one of your reps is working a 100-day opportunity, then chances are that opportunity will not end up converting into a deal.
In the example below, opportunities in the current pipeline are categorized by value and age. Opportunities in the green zones have a high likelihood to win based on historical data, yellow is average, and red is low likelihood to win.
If I were the sales manager responsible for this team, I could identify the optimal strike zone as the green zone: opportunities worth $1k to $10k that are between 0 and about 25 days old.
My reps should go after winnable opportunities first, and then look at the ones that are less likely to win. In this case, I would take a closer look at every opportunity in the green strike zone and coach my reps to hit those opportunities. For this company, the longer opportunities stay in the pipeline after 25 or so days, the less likely they are to close-win.
Once my reps have gone after those likely-to-win opportunities, they can take a look at opportunities in the yellow. And when they’re done with those, they can move on to opportunities in the red, which are least likely to close-win.
Here, I would need to make a decision to either purge these opportunities from the pipeline and focus on new pipeline generation, or task my reps to hit them once more before giving up. When I look at an opportunity worth over 2x my average deal value and over 100 days older than my average sales cycle, I know I need to talk with my rep about why this opportunity is still in the pipeline.
The more data you collect on your winning and losing opportunities, the more accurate your sales strike zone will be. An accurate sales strike zone means more time in your reps’ days to work winnable opportunities, and more accurate sales forecasts.