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.

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.

“X” Percentage: The Foundation Element of Prospecting

There are many ingredients that go into producing a successful prospecting system. Perhaps the most fundamental is an element that The Prospecting People at Ekstrom & Associates have dubbed, “X” Percentage. Understanding this one concept can give you the motivation to do the few simple things to increase sales revenues and drive greater profits to your bottom line. When you understand the “X” Percentage you can begin to realize the full potential of your business.

“X” Percentage is a simple and basic thought process:

Whatever product or service you represent some percentage of your prospects, or “X” Percentage, will buy this year. It doesn’t matter what you sell, it doesn’t matter the times or the economy, the fact is there will always be some percentage (“X Percentage”) of prospects ready to buy, or in the market place at any given time. It might be insurance, software, houses, cars, envelopes, furniture, tractors, whatever. “X” Percentage of the prospects within your sales territory will buy this year. It is a wonderful concept, one that will make you rich if you truly understand and use it. As the late Paul Harvey used to say, “Here is the rest of the story!”

“X” Percentage will also buy next year and the year after, and the year after that. “X” Percentage is perpetual and self-renewing. It’s just a fact. In times of expanding economies prospect buy more. In times of contracting economies prospects buy less, but on average “X” Percentage will always be ready to buy.

Armed with that knowledge you can get rich. Here’s how.

What portion of the X Percentage would you like to sell? Grab a piece of paper and write down answers to the following questions.

1. Whatever product or service you represent, how many units were sold last year? You don’t have to 100% accurate for this to be a valuable exercise. You can refine your answer to whatever degree of accuracy you want later. For now, just go ahead and jot down your answer and label it number 1.

2. Of the amount you wrote down and labeled number 1, how many unites did you or your organization sell? Write down that number and label it number 2. By performing a little simple arithmetic can calculate your market share.

3. Subtract number 2 from number 1. The resulting number represents the number of units your competition sold. Write that number down and label it number 3.

Now, what was your closing ratio? If you got in front of 100 prospects and sold 25, you have a 25% closing ratio. Write the amount of your closing ratio down and label that as number 4.

4. Divide the number of units your organization sold (number 2) by your closing ratio (number 3). The resulting number represents the number of prospects you got in front of last year. Write that number down and label it number 5.

5 Subtract number 5 from number 1. The result represents the number of deals you did not get in front of last year. Write that number down and label it number 6.

6 Multiple number 6, the number of deals you did not get in front of last year by number 4. The result represents the number of additional unites you would have sold had you gotten in front of the prospects you didn’t get in front of.

Prospecting is the key to getting in front of the prospects you didn’t get in front of last year.

More sales are lost because of failure to prospect than through the failure of any other step in the sales process. By failing to optimize prospecting … businesses and the salespeople that work for them deny themselves the sales opportunities … sales revenues and profits that would have otherwise resulted. We unconditionally guarantee that a failure to optimize prospecting needs never be an obstacle to you in growing your business and increasing market share again.

“X” Percentage, and what you can do with it, can begin to answer a lot of prioritizing and prospecting questions for you. Decide what your final number is worth to your organization and set your sites accordingly.