Want to grow revenue faster? Increase your pipeline velocity by reducing the friction between stages. How do you measure this? Here are two sales pipeline metrics to look at that can make a huge impact on your top line on the P&L:
- Conversion Rate– The % of clients that move from one stage of your pipeline to the next
- Time Spent in Stage– The amount of time that prospects spend in each stage of the pipeline
Stage Conversion Rate
The first thing to measure is the conversion rate between each stage in your pipeline. Simply calculated, what % of clients that come into any stage of the pipeline move to the next stage.
Here is a simple sales pipeline as an example:
- Qualify- 50% of qualify calls result in assessments
- Assess- 75% of assessments lead to proposals
- Propose- 25% of proposals lead to a signed contract and move to implementation
- Implement- 90% of clients finish the implementation and become clients
Most CRMs track these metrics as a default feature, but most sales teams do not closely consider how they can impact Stage Conversion Rate. Let’s look at how a 5% improvement on each stage can impact a business that has 50 Opportunities per month move into a pipeline with an average transaction value of $50,000:
Using those example metrics, only a 5% improvement in each stage results in a 49% impact on Annual Revenue.
Time Spent in Stage
This is not a new metric either, nor is it hard to track. But, few sales organizations consider this metric as a way to impact performance. The time spent in each stage impacts:
- Business cash flow
- Sales productivity
- Cost per transaction
Let’s look at this metric a bit closer using the same simple pipeline example:
- Qualify: 3 days
- Assess: 2 weeks
- Propose (includes Proof-of-concept and negotiation): 2 Weeks
- Implement: 2 Weeks
Fair to say that these 2 metrics have a huge impact not only on your sales team but on your business as a whole. Easy to say, but how to you do it?
How To Reduce Pipeline Friction
Prospects encounter what we call friction as they move through the various stages of their buying process. Friction comes in the form of their own mental blocks that might be typical of each stage, or can unintentionally stem from your sales process. Here is an example of each:
- Mental Blocks: The natural tendency to resist change
- Your Sales Process: A proposal that does not clearly communicate ROI.
There are 2 approaches to minimizing friction to realize the results that you saw when you calculated the impact on your business using the calculator above:
- Align and improve the Client Experience
- Leverage content that helps your prospects navigate your pipeline
1. Align and Improve the Client Experience
The first step is to Create an “Ideal Client” Experience by broadening your sales process in both directions to include both your top-funnel lead generation and your client stage of your pipeline. Ensuring that sales, marketing, and even operations are aligned with this experience is the first step in impacting the 2 metrics.
The second step is to have a process in place to continually optimize each stage in your Experience to minimize friction to improve conversion rates and minimize the time spent in each stage. This approach will also help improve your actual “client” stage.
2. Leverage Content to Answer Questions
Ensuring your prospects and clients have their questions answered as they navigate your experience is critical to reducing friction. A simple 2 step process can put this into motion:
1. Implement a process for content creation that answers your clients’ questions as they navigate their experience with your organization- This process needs to be implemented into the culture of the organization with input from sales, marketing, and operations.
2. Put a plan in place to ensure the content gets in front of your Ideal Clients and Ideal Prospects. This plan involves leveraging this content in the following areas:
- Social touchpoints
- Phone prospecting messaging
- Email prospecting messaging
When all are on board with the Client Experience and the content plan around it, your clients have a more positive experience with your business. Maybe just as impactful, yoru sales team has 1 consistent framework to support clients through their experience as opposed to having 20 different approaches for 20 different reps.
Great News!: The top-funnel leads come as a product of your executing the above plan.
What metrics are you tracking to improve your hit rate and accelerate your sales cycles?
As we have previously written, Buyers Don’t Buy Products, They Buy Outcomes. I see a perfect example of this as I look out my window into my driveway. I bought a car to get to the places I need to get to support the outcomes that I need:
- Enjoying our home in the mountains to bike and ski
- Get to the airport to fly somewhere to visit a client or an occasional trip for fun
- Sustain day-to-day life at home
I don’t drive very often, but the car I drive is reliable, it allows me to transport my gear and delivers the outcomes I need. Quite frankly, it is less than impressive for anyone that would consider themselves a car junkie. Sounds like I may be cheap but trust me that the outcomes I need require plenty of investment over and above a car.
The outcomes that your business delivers should be woven throughout the operational as well as the sales and marketing aspects of your business. Let’s focus on sales and marketing given this is your focus if you landed on this blog.
Outcomes are in play at each stage of the process that you have in place to help your ideal prospect to become an ideal client:
- Marketing/Prospecting: Your marketing plan should be targeted to attract businesses that are looking for outcomes that your company can deliver. Remember, Buyers Don’t Buy Products, They Buy Outcomes, so product-centric messaging makes it challenging or impossible for the target to understand what outcomes they might get from your product.
- Qualifying: The goal of the qualifying stage of a sales cycle is to determine if the buyer is a good fit for the outcomes that your company can generate and if they have resources to pay for your product or service.
- Discovery: The idea with the discovery stage of the sales cycle is to explore areas of need that your prospects have. Needs for all potential outcomes that you can deliver should be explored.
- Proposing/Recommending: Your proposal should be communicated in terms of the outcomes that your clients will receive if they invest in you.
- Enjoying your services: Your operational team should be focused on maximizing outcomes for your clients. From a sales perspective, you need to gather outcomes — actual, quantifiable metrics — from happy clients when you conduct periodic business reviews. Those metrics should then be used in the other stages of the buying process to help communicate your value.
Having a resource, let’s call it an Outcomes Framework, shared by the sales and marketing team that is updated regularly, and shared centrally between sales and marketing provides many benefits:
- Alignment: Historically, sales and marketing teams are at odds with each other. Sales teams need marketing to communicate properly to prospects in a language they understand (outcomes and value, not product specs). On the other hand, marketing relies on sales to gather outcomes to help them create messaging. Both need each other to be on the same page, and an outcomes framework is a great place to start!
- Effectiveness: Outcomes-based messaging resonates with prospects, so win rates go up when communicating in terms of outcomes.
- Efficiency: Having a centrally-shared resource in place for an entire sales team makes it significantly easier for sales teams to prepare for all calls. Better yet, it can take fewer calls to achieve the same result. How happy would your sales team be if you were able to cut in half the time that sales reps spend preparing for meetings and helping them win more deals?
Leveraging an Outcomes Framework with real-world client success stories can be a game-changer for your revenue generation team.
4.7 million people work from home in the United States [source]. The need for collaboration and meeting with co-workers does not go away when people transition to working from home, so it is no surprise that products like Zoom Meeting have realized huge growth.
The recent Coronavirus spread is creating challenges for sales teams that did not need to make this transition to meeting virtually until now. My anticipation is that the number of people that work from home will be drastically increased for the long-term once we get back to normal.
Virtual or not, We have all been in our share of meetings that were good, productive meetings and others that were a waste of time for all involved. So, ensuring that you can effectively conduct a meeting is critical in business continuity during these times.
The 3 keys to having quality virtual meetings are:
- Use of tools and technologies
- Engagement techniques
Failing to plan is planning to fail. The nature of virtual meetings makes planning even more important. Here are some specific things you can do to plan for a fantastic meeting:
- Prepare an agenda, and stick to it: Your agenda should include items that you would be able to cover given the time allotted. Send the agenda out to all participants prior. One good practice is to present each topic as a question. If the topic does not answer a question, then you may want to consider the relevance of the topic.
- Prepare questions: More on engagement later, but the last thing virtual meeting participants want is a lecture. Asking the right questions in a meeting promotes healthy thinking. Asking the low-value questions compromises the integrity of the message. Prepare high-value questions that generate thought and support the intended message.
- Prepare your environment: Prepare your background. Ensure it is professional, yet has a bit of character in it as well. Arrive early so that you are able to test out all technology and be there when participants arrive to set the tone and ensure they use a camera if at all possible. Ensure you are dressed appropriately and positioned properly in front of your camera such that you are close enough to be seen.
- Plan meeting key points and takeaways: For all topics, ensure you are ready to summarize the main points and any follow up items from the meeting. You will likely add to the list during the meeting as well if you succeed in creating an engaging environment.
Use of tools and technology
Improper use of tools and technology can derail any meeting regardless of how prepared you are with your message. Specifically:
- Use a video conferencing platform like Zoom: We have conducted meetings virtually with screen-sharing tools for some time, but our transition to using Zoom a couple of years ago was a complete game-changer for our meetings. Zoom makes balancing video conferencing and content sharing easy and, unlike previous applications that we used, does so reliably
- Use webcams: Most people have a webcam integrated into their computers. Use it! If a picture tells a thousand words, video conferencing tells a million. Seeing the faces of participants eliminates the biggest challenge with remote meetings
- Presentation Software: Many use PowerPoint, we use the Google Apps suite. Highly designed animation can actually be a bit distracting, so this shouldn’t take too much time. Regardless of what you use, ensure you have bullets and visuals as needed to support your message. When you use text, use short snippets of big ideas, and don’t use too much text as you want to deliver the message with your voice.
When I was in college, my Astronomy class (we had to take a lab science!) was a lecture with a couple of hundred students. My literature classes were a lot smaller, which made it a lot easier to create an engaging environment.
There are many ways that you can create an engaging meeting to increase its effectiveness:
- Proper use of questions: Leveraging different types of questions can be very effective in increasing engagement. Here is a blog that talks to different types of questions. Overhead questions are put out there for anyone to answer and can be challenging to control the group when it is a question that a lot have opinions on. It is also not great when you hear crickets after you ask an overhead question. Direct questions, relay questions, and reverse questions are great in getting your participants to engage.
- As participants to share ideas or even present a module: Sending out the agenda prior and asking participants to do some homework prior is a great way to get folks prepared to share ideas. If appropriate, delegate topics to others to lead.
- Use chat, polls, or other tools in your video conferencing platform: Using different tools effectively keeps people engaged. If you can find a good use for a poll in your content, use it! Chat is a great way to gather insight from participants as an alternative to asking overhead questions. The # of participants in the meeting helps you evaluate which might be most effective. Larger meetings may require you to use a “Listen Only” feature and enable users to interact with chat.
Ensuring you are able to facilitate virtual meetings effectively can minimize the impact of our new reality. Put these things into practice to minimize the disruption to your business.
Consistent prospecting is essential for sales success. Without a steady stream of prospects, the funnel dries up. Then you end up taking desperation deals and flipping your base.
Effective prospecting requires a positive attitude. The challenge is that if there is one thing that can chip away at your attitude, it’s the rejection you get while prospecting. As a sales professional, you need a proactive plan to keep a positive attitude.
In today’s negative world, a positive attitude stands out. A positive attitude is contagious.
Don Hutson offers inspiration on the importance of a positive attitude in the first chapter of Selling Value:
“High performers are motivated and ready to make great things happen! If they get some motivation from their boss or significant other, or another source, that’s fine, but they understand that their PRIMARY source of motivation comes from within.”
Our responsibility as sales professionals, sales leaders, and business owners (all of us are in sales) is to maintain a positive attitude.
How can you cultivate a positive attitude to fuel your prospecting? Here are a few ideas! (more…)
This week I enjoyed talking with a group of sales leaders as we prepared for a Value Alignment Workshop. When we asked the group of sales managers about the challenges they faced, the overwhelming response was, “We struggle with getting our reps to generate net-new business.”
Net-new business is the lifeblood of a business and the energizing force behind a sales team. Without net-new, the sales team becomes order takers. Over time, the team becomes rusty and complacent.
What Is Net-New Business?
I define net-new business as “any new sources of revenue”. New revenue can come from two areas:
- New logos
- New categories of products, services, or solutions sold to current clients
There are only three sources of net-new business:
- Strategic Prospecting to build a relationship funnel with buyers that are not currently looking
- Digital Marketing to engage buyers who are actively looking online
- Cross-Selling current customers who could benefit from additional products and services
Today, let’s focus on #3: earning more business from your current clients. How do you do this? You must earn the right. (more…)