Understanding Your Sales Pipeline

Do you remember that old television commercial—the one that said, “And then she’ll tell three people, and they’ll all tell three people,” on and on? Wouldn’t it be nice if actual sales really worked like that? The fact is the commercial never says all those people who got told would actually turn around and buy the product.

That’s the problem really: there’s a vast amount of difference between the hundreds of people who need to find out about your business before a few of those people will actually buy. Think about the number of people you had to tell about your business just to get it up and running. Now that you’re established, your focus has changed to both maintaining and increasing the sales levels you currently enjoy. Although your company was probably originally built up by your prospecting efforts, as a businesses matures the level of prospecting seems to fall by wayside. In today’s changing economy, you need to find the most efficient ways to keep qualified prospects entering your pipeline, nurture those already in process, and provide your salespeople with the candidates who are most willing to buy at the end of the pipeline.

A sales pipeline is a funneling process for sifting through every potential customer in order to find those who will actually buy. As you do this you will typically hear four responses:

“Not interested.”

“I’ll buy – but I’m waiting for budget approval.”

“As soon as the new warehouse is done, I’ll order.”

“I’m ready to buy right now.”

Of course, what we all want to hear is “I’m ready to buy right now.” This is where the first money is made for your business and your salespeople. But, with the funneling perspective of a sales pipeline you will understand that even when your pipeline is filled with highly qualified prospects only 25% of those potential deals will actually follow through to close. What happens to the other 75%? That’s the big question your sales pipeline needs to address.

The important thing to remember about sales pipelines is the “X” percentage factor I talked about in an earlier blog. Even if they didn’t buy from you this year, they might be in line for next year, or the next.

You want to fill your pipeline with the most qualified prospects available so that the highest majority of sales possible can come out the other side. But, you also don’t want to forget about the people still stuck at the beginning and middle of your pipeline. If you nurture those relationships, outside of the pressure of closing, then the majority of them will transition from point to point in your pipeline rather than going somewhere else when their “X” percentage factor for buying comes into effect.

Today’s compensation packages encourage salespeople to put most of their efforts into the end of the sales pipeline. It takes a little retraining to help everyone understand how best to nurture those “not yet” relationships.

Ekstrom & Associates specializes in helping you understand how to fill your pipeline with the most highly qualified prospects and creating nurturing relationship with the prospects already in your sales pipeline. When a prospect is ready to make his purchase, he is released to the salespeople. Until then, the prospect is nurtured without closing pressure.

Separating Sales and Prospecting

Prospecting and selling are certainly related, but they require different mind and skill sets. They are two different and distinct activities. You will only be effective in your prospecting efforts if you successfully differentiate the two activities. With the right training salespeople can make excellent prospectors, but they need to take their sales hat off and put their prospecting hat on when they are prospecting for Wanters (qualified prospects who are ready and willing to buy).

Although there are notable exceptions, without the right training most salespeople are not efficient or effective at prospecting.

Why is that you ask. There are two reasons. The majority of salespeople receive some type of base pay, plus benefits, sales commission, and often a bonus for achieving their sales quotas. The net result is salespeople naturally focus their energies and efforts on closing sales deals, because that’s where the money is. That’s highly motivating and a great process for driving sales, but it has an unintended and seriously negative impact on both prospecting and establishing relationships with prospects that are not ready to close—especially when industry research and experience shows that there’s only a 25 to 33% chance of closing those deals anyway.

The second reason is that salespeople have been falsely taught that the primary purpose of prospecting is to generate an appointment. Sorry, that is simply not true. The primary purpose of prospecting is to qualify a “suspect” company. Do they or do they not use the products and services you provide. After that the second prospecting objective is to gather relevant marketing and sales information prospect (business or needs). The third step is determine their Willingness To Buy. There is usually a big difference between a prospect’s use of your products and services and the immediacy of his need for more of them, now. In another blog I’ll have much more to say about generating appointments. Here is a teaser in the meantime. Prospectors have virtually no control over whether a prospect is in the market for his products and services.

Salespeople, even those who are very good at what they do, typically don’t work at anywhere near their maximum effectiveness. Five years ago, the average sales professional spent over 30% of her time in a face-to-face selling situation. Today, that number is 19%. (CSO Insights 2008 Survey Results and Analysis) It may not be the only way, but better prospecting is certainly one way of increasing face-to-face selling time.

There’s never been a greater need for effective prospecting than there is today. High quality prospecting programs make it possible for salespeople to do what they do best. Your prospecting program should be designed to work symbiotically with your sales process, not disrupt it any way. Its main goal is to produce more sales, but prospecting is not selling. Prospecting is making connections, gathering information, and building trust that in turn results in to high quality sales opportunities.

Why Prospecting Always Works

Ekstrom & Associates was founded on the recognition that closing sales starts with buyers who are in the market and ready to buy. If you want to increase your sales, you need to maximize your opportunities with the best qualified prospects. It’s only common sense, but the difficulty comes in finding qualified prospects. At Ekstrom & Associates, we call qualified prospects that are in ready to buy, Wanters. A Wanter is simply that: special prospect that is ready and willing to buy. They want something. They are going to buy that something from someone. Getting in front of qualified prospects with a high degree of willingness to buy is what prospecting is all about.

Think of it this way. For every 100 sales that close, deduct the number you closed and subtract that from 100. The resulting number is the number that your competition got. How many do you want them too get, because every one you don‘t get, they get? At Ekstrom & Associates our motto is simple and straight forward, “Prospecting Always Works.”

Prospecting always works because:

It gets you in front of the right prospects. It provides a steady stream of qualified prospects And, it maximizes the chances of connecting with the right prospects at the right times.

It is important to distinguish prospecting from sales. They are two separate and distinct activities. In prospecting you are searching for different kinds of information, the more accurate the information you gather, the richer your resulting sales stream will be. Sales is about closing deals. Therefore, prospecting is the dynamic process of streamlining your efforts to find those Wanters who are actually ready and willing to buy exactly what you have to offer. It’s a series of related activities that result in both sales leads and valuable marketing information. This marketing information can then be used to generate additional sales opportunities for your sales staff and profit for you business.

Prospecting isn’t like mans nylon stocking where one size fits all. If you want prospecting to work for your company, you must design a system that unique to your company’s circumstances, a system that is efficient and effective, and a way to ensure it stays that way.

Regardless of the economy or world events, a reasonable percentage of qualified prospects, or Wanters, are always in the market. And once you have a client you can cross sell to him. Done right prospecting is the gift that just keeps giving.

There is no mystery to prospecting; when done correctly it always works.