It is essential for accurate sales forecasting to clearly define each stage in the sales pipeline process and establish related milestones.
Originally written for and published in LTEN’s Focus on Training Magazine
By Steve Gielda
Ever wonder how to make sales forecasting more accurate? It’s a common question among sales leaders. The answer seems simple, but in reality, it’s quite complex.
So, what’s the problem? The dots aren’t connected. Sales managers struggle with accurate forecasts because the sales pipeline process isn’t integrated with the sales process itself. Companies often implement a sales pipeline without considering the essential activities that happen during the sales process.
What does aligning the sales process with the pipeline process mean? Most sales pipeline processes use terms like Stage 1, Stage 2, and Stage 3, but these terms aren’t universally defined. For one salesperson, Stage 1 might mean identifying potential customers, while for another, it means understanding the customer’s needs. This lack of common understanding leads to poor forecasting and underutilized sales management support.
Defining Each Stage in the Sales Pipeline Process
Some top companies in medical devices and pharmaceuticals are getting it right. These companies define each stage in the pipeline process and establish key milestones for each stage. For example, a leading medical device company has a five-stage pipeline process:
- Opportunity qualification
- Need development
- Solution identification
- Implementation resolution
- Contract confirmation
Most sales organizations have similar stages. But, once these stages are defined, the next step is to link the sales process to the sales pipeline process. It’s crucial to define each stage clearly.
For example, in Stage 1, steps might include identifying key stakeholders, understanding the customer’s buying process, or understanding the customer’s key goals and challenges to attaining those goals.
Establishing clearly defined milestones for each stage helps salespeople and their managers communicate clearly about where they are in the pipeline. The challenge is identifying the right milestones for each stage. For example, it’s essential to identify who the key players are and their roles early on in the sales process to develop an effective strategy going forward.
Integration of the Sales Pipeline Process
Integrating the sales process into the pipeline process has several advantages:
Clarity
It creates absolute clarity about where the opportunity is in the pipeline. If a salesperson says the customer is in Stage 3 but hasn’t met all the milestones in Stage 2, it’s clear the opportunity is still in Stage 2.
A Sales Coaching Tool
It provides a strategic coaching tool for sales managers. Managers can quickly identify where the sales rep needs help and discuss specific steps to move the opportunity forward.
Sales Call Objectives
It allows for clear sales call objectives. Top sales reps always have a clear objective before every sales call. With a clear set of milestones for each stage, reps can develop a sales call plan to achieve their objectives.
Shortening the Sales Cycle
Top salespeople drive the customer’s buying process rather than reacting to it. Establishing key strategic milestones at each stage can help customers make decisions quickly.
Sales Forecast Metrics
It creates reliable sales forecast metrics. When each stage of the pipeline is managed rigorously, companies can better measure success rates and improve sales forecasting accuracy.
Provide the Process
The medical device company mentioned earlier established a rigorous process to forecast opportunities based on pipeline milestones. They found that when an opportunity entered Stage 3, there was a 78% chance at that point of winning the business. When it moved to Stage 4, the odds increased to 86%. This greatly improved their sales forecasting and helped manage product manufacturing levels more accurately, reducing inventory and shipping costs.
In today’s fast-paced sales world, providing your team with an effective sales pipeline process is crucial for success.
To learn more about creating and optimizing a sales pipeline process that will drive more predictable pipeline and sales forecasting accuracy, email Steve Gielda at [email protected] or follow him on LinkedIn.