My old hobby-horse has not had a decent outing for some time and so after much neglect I thought I would get it out… as they say… and for the uninitiated in the use of the term ‘hobby-horse’ which I’m sure there are very few…. I’m not referring to a child’s toy horse nor the May Day hobby-horses that run riot during the Padstow Obby Oss festival in Cornwall each year… no, I’m referring to my favourite topic… Pipeline Management.

I thought it was time to share my old versus new comparison. Unlike the Padstow Obby Oss festival that is steeped in tradition and has its roots back to the 14th century and has not changed much for hundreds of years the same nostalgic view of things past should not be held out for Pipeline Management.

To improve… to get better… things need to change and if there is anything in the B2B sales arena that needs a damn good change… it has to be pipeline management.

However, before I share my old versus new musings with you I would like to point out that Pipeline Management is also linked to another ancient custom… the quest for the Holy Grail. This legend or piece of mythology (not to be confused with methodology) has its origins dating back to the late 12th century when Robert de Boron, the French poet wrote Joseph d’Arimathe… all in octosyllabic verse… about how he, Joseph that is, used the Grail to catch the last drops of blood from Jesus’ body as he hung from the cross… apparently, as legend has it, the grail has magical powers. Through various routes it, the Grail that is… as legend has it… made its way to Great Britain where some careless soul lost it, or put it somewhere safe and wont tell anyone… people have been searching for the Holy Grail ever since… without luck.

The Holy Grail of the B2B sales world is accurate forecasting… sales directors and managers alike have been searching for years the secret of accurate forecasting… in the belief that once obtained they will be the custodian of ultimate power… they will be in control of their business!

Now, if sales management are looking for the holy grail of sales using the traditional pipeline management methods… then to coin another phrase… they are flogging a dead horse… no matter how hard you flog it, it isn’t going to do any more work… no matter how hard you insist people use the corporate system… they won’t… there are other stronger forces at work that prevent them from doings so… self preservation. Pipeline Management has to be for the benefit of the sales professional first and corporate second… not just for the benefit of the corporate. I’m advocating personal pipeline management rather than corporate pipeline reporting… notice the difference!

So… here are my 22 points of old versus new…yep… 22 points!

Click on the picture to make it larger… it will be easier to read, trust me.

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Here is the fourth post in this series… the final relationship unmasked.

However, before I move on and provide the last definition I thought I would explain that there is a ’so what’ that needs an answer for this series. It’s all well and good identifying the different types of business relationships, but there needs to be a purpose… we need to do something with them, they have to mean something, they need some form of application… but before I dive into the so what here are the details of the last business relationship…

Business Relationship

As I mentioned in a previous posts, I’m sure there may well be more than four, but these are my four…

• Transactional
• Dependable
• Consultative
• Partnership

Partnership

Relationship with Customer: High level excellent relationships. CxO level relationships, middle management and low level.

Relationship Status: Trusted Business Advisor.

Customer’s Knowledge of their situation and how Vendor can help: High in relation to understanding their business. Will have good understanding of the strategic relationship between own business and what the vendor can help them with.

Customer’s Risk: Considered to be high due the nature of looking to solve strategic problems. However, vendor trusted to help manage risk.

Customer’s Expectations of Vendor: To proactively identify and help solve business issues. To have good multidisciplinary relationships. To have problems quickly resolved.

How the Customer Buys: Vendor / Customer or both jointly identify business issue. Vendor submits proposal. No RFP issued.

Vendor’s Value to Customer: Understands customer and their market. Proactive at identifying strategic problems to solve in order to develop customer’s business. Delivers solutions that reduce customer’s risk.

Customer’s Value to Vendor: Will generally have large spending power that is secured in the favour of vendor due to trusted business advisor status. Major projects.

Salesperson’s Value to Customer: High due to strong personal relationships and acting as trusted business advisor. Adds value to people by helping them achieve their personal agendas. Acts as customer advocate in own organisation. Finds the right resources to deliver on promises. Facilitates peer to peer relationships.

Competitive Advantage: Relationships. Understanding of customer’s business. Ability to deliver strategic solutions. Possibly share in risk with customer.

Salesperson’s Value to Own Business: Relationships with customer leading to managing strategic client and thus maintaining predictable high volume of revenue.

Role in Customer Process: Part of the customer team that looks at the strategic development of the company.

Business Relationships… the so what

The diagram below (click on it to get a bigger and better view) shows how the four business relationships can be brought together to form an anlysis of the sales territory. I define a sales territory as a set of managed or targeted accounts from which the sales professional is expected to find, manage and close opportunities in order to meet their sales target. It is therefore about focusing on and managing those accounts that currently provide the greatest return for the resources invested. However, in addition, territory management is about the future and is therefore also about identifying and developing those accounts that will provide maximum future returns.

There are two things to consider if you wish to maximize your return on resources deployed… the first is how much money can the customer spend, if you like… the size of their wallet for your type of products / services - Potential - and what is your Influence. The potential should be measured over a 12 month period and the grading Poor, Reasonable, Good and Excellent will differ from account set to account set. The influence I will cover in a minute, but first I want to explain how this matrix is used.

Territory Analysis - an analogy.

Territory analysis is like going deep sea fishing. You don’t just go out on a boat on to the vast ocean and throw your line over the side hoping to catch something. An experienced skipper of a boat will know where to go fishing… it will depend on the time of year, the weather and the tides and then once you know where you are going you need to use the right bait. The matrix above is about helping you to know where to go fishing… and depending on which quadrant you want to go fishing in… will also depend on what bait you use. Transactional selling is very different to Partnership selling.

Knowing Where to Fish… the proactive part of selling

If you have a number of accounts, broken down into a number of different Decision Making Units (DMU) then you need to know where to go fishing for the biggest returns. Go out to catch more transactional business will not provide the best return for time employed… low influence , low spend… not the best combination. So the first use of the matrix is a quick analysis of where to going fishing. The amount of time it takes you to complete the matrix should be no more than 30 mins… and if you get it wrong it doesn’t matter all you are doing is giving some indication of where to fish… if you find out more info, then make changes.

There is a lot more to using this diagram and how it helps with understanding and managing the territory, however, in the hope of trying to keep this post to a reasonable length… not massively too long… then I will have to leave the further explanation to another day and therefore finish this post on a final thought… business relationships and pipeline management.

Business Relationships and Pipeline Management

Hopefully a number of you reading this will have read my past musings on pipeline management and may well have got the impression that it’s a passion of mine… well, you would be right if you did. Have a look at the diagram below… a diagrammatic view of Firstborder’s pipeline methodology… and see where new deals enter the pipeline depending on the business relationship for that deal. Have a look at the competitive advantage and the primary sales discussion… again, like the diagram above, click on it to get a better view.

I don’t know about you, but if you are involved in a high value business to business opportunity then I know where i would want to enter the pipeline… too far to the right and I have no control and the opportunity will have to sit in the ‘upside’. Come in at the left… right at the beginning of exploring the need… and the opportunity will flow along the bottom… in the ‘commit’… and in your control.

There is a lot more to be said about both subjects… Territory Management and Pipeline Management, but I’ve got you started with two key diagrams… and hopefully started to answer some of the ’so what’ about business relationships.

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It sounds rude, but an oxymoron as I’m sure you all know, is defined as a phrase in which two words of contradictory meaning are used together for special effect… well I reckon Pipeline Management at a corporate level is indeed an oxymoron. In fact, pipeline management at any level other than a personal level is an oxymoron.

There are two words to prove my point… ‘So What?’

Go and see the CEO or the VP of global sales and get them to explain what they do with their rolled up pipeline report… ask so what… so what decisions do they make on the back of that report… and I can tell you whatever decision they make it’s going to be wrong.

First of all, they have limited information. They think they are looking at the whole pipeline, but they are not. A lot of the early pipeline is not in the corporate system… it’s still with the sales professionals who don’t want to show everything too early.

Secondly, most corporate pipelines use factoring to come up with a forecast, which is about as useful as a chocolate teapot. Individuals will manipulate their percentages or deal values to make sure their individual forecast is not too low or too high and therefore make a mockery of the whole process.

Lastly, although they have limited and not entirely correct information they will still have a lot of it. If an individual has 20 deals, his manager will have at least 200 and his director over a thousand and the VP over 5,000 deals…. So where to add value?

The pipeline can’t be managed at this level, or any management level as there is on the one hand not enough information and on the other too much information and far too much of that is incorrect… hence the oxymoron. Therefore, it’s not pipeline management, but pipeline reporting. People are going to report what management want to see… keeps management off their backs!

The actual value to the corporation for the list of deals is for comfort. As long as management can see enough volume in the pipeline they are happy… it’s the corporate equivalent of comfort food…. and you know what comfort eating does for you… makes you bloated, fat and unhealthy!

So if you are a manager, director, VP or some other VITO… go and do some exercise on the bits that you can control… get each professional below you to show you how they are going to be making their number. You will only have two types of subordinate to deal with. Those that will be showing a miss and those that will be showing a hit. For those that show a miss get them to tell you what they are doing to bridge the gap. Find out which of their subordinates are forecasting a miss and how they are helping them bridge the gap. For those that forecast a hit… make sure they are right. You need to manage the gaps, not the pipeline.

Cascade down the management chain until you can go no further… and you should come across the sales professional… the people who keep everyone else in a job. These guys manage the pipeline… they have to manage their own pipeline to show how they are going to make their number. Again, sales management is simple… focus on the ones who are showing a miss… help them address the gap. Make sure the ones who are showing a hit are right to do so.

Managers manage the gaps, sales professionals manage the pipeline. It keeps everyone fit and healthy.

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It’s often claimed to be the biggest competitor that everyone faces in sales… do nothing. Selling against a real competitor is often seen as easier than competing against the ‘do nothing’ decision. If ‘do nothing’ wins it means that the deal was not real or the need not there or, and more appropriately, there was no business imperative.

In theory no one in sales should lose to ‘do nothing’ because if the qualification and management of the opportunity was being conducted properly then you would see that the biggest competitor was ‘do nothing’ and you could qualify out early and save your resources for use on those deals that will be closing… however, we do not live in the ideal world and so even the best will lose at some point to ‘do nothing’. The question is how to bring the customer back on track to do something.

One of the biggest reasons for the ‘do nothing’ decision is cost… the customer has a need, but did not budget enough to adequately address the need. One way to bring the customer back on track is to make the business imperative so compelling that they have to do something. I have put up earlier posts about the business imperative and you can also download an eBook from this site to help you through the process… however the point of this post is to highlight that there is always a cost to the customer of doing nothing.

In my business the cost to a potential customer of not investing in improving their sales effectiveness is high. It costs money to find a sales lead. It costs money to qualify them. It costs money to pursue them. It costs money to close them. If the qualification is wrong then the wrong deals could be pursued (wrong because they will not close) at the cost of those that could have been closed. If good leads are found, but poor salesman are given them, then too many of them will be lost to the competition… it costs money to find the lead and that money has been wasted. However, the cost of not winning a closable opportunity is not the cost of finding the lead and it’s not the cost of pursuing it, but the lost opportunity cost… the lost profit on a deal that should have been won. Giving leads to poor closers costs much more than one might think.

Avoid getting to the ‘no decision’ by bringing to the attention of your prospect the real cost of doing nothing and you will be surprised at how much it helps to solidify their business imperative!

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Sales reviews, the bane of everyone’s lives. The sales manager has so many to do. The sales professional has to answer so many intrusive questions… and it all takes so long!

As the old adage goes… ‘time is money’… and as so eloquently expressed by the Romans all those years ago… ‘tempus fugit’… so time flies and the problem that causes is amply summed up by another old adage… ’so much to do, so little time’.

So, in the spirit of time is money, time flies and so much to do… then the shorter you can keep your sales reviews the happier everyone is going to be. Therefore, here are the only 3 questions that you need to ask…

1. Show me how you are going to make your number.
Following our pipeline methodology makes asking this question really easy. The sales exec is either going to show you how the number is going to be made, in which case move on to question 2, or not. If not, find out what they are doing to close the gap.

2. Show me how you are going to close your committed deals.
The committed deals make up the forecast and follow the binary method of forecasting – these are the deals the sales exec says will close. So, make sure the close plan is robust for these deals, everything else is incidentally because if these deals close the target is achieved… don’t waste time on incidentals!

3. Show me how you are filling your pipeline.
Lastly, s sustainable pipeline requires a full sales funnel. What is the sales exec doing to proactively fill the funnel? An empty funnel will lead to problems later.

There you are, 3 simple questions to help manage your team… I could have written a lot more, but kept this post short as time is money!

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As I have mentioned before… from time to time I answer questions that are posted up on the Q&A section of LinkedIn. I recently responded to a question by Flyn Penoyer the Inside sales Guru. His question was around qualifying deals as part of the critical aspect of selling.

He asked…

1. What is your definition of qualifying?

2. What or who should be qualified?

3. When, in the sales process, should the above qualifications take place?

4. Finally, give the readers your best tip or two on qualifying?

I answered…

1. What is your definition of qualifying?

Qualifying has four primary purposes…

a) To uncover what you don’t know about the deal – for example, budgets, people, pain, opportunity, etc, etc, as determined by your qualification criteria.

b) To help determine if the deal is real, if you can win it and if you are going to win it.

c) To help determine your sales activities – for example, to put plans in place to find out what you don’t know.

d) To determine the level of risk you are carrying on the deal – for example, are you prepared to continue with the deal if you can’t get to the decision maker – it’s a risk to continue putting your resources into the deal when you can’t influence the main person… are you prepared to take the risk?

2. What or who should be qualified?

I’ll start with the who… we define four major roles Stopper, Leader, Insider and Persuader. If you take the first letter from each role you get SLIP… which is what will happen to your deal if you don’t qualify properly!

Most people go after the decision makers, we qualify the Stoppers. A Stopper can stop the deal from happening and some of them can also make the deal happen. Decision makers are generally high up the organisation and few of them, whereas, Stoppers can be all over the organisation, at any level and also outside the organisation. For example, if you are selling IT, then some expert in the computer room could stop the deal from happening by saying your technology does not fit, but they couldn’t make it happen. An outside consultant could stop a deal, but couldn’t make it happen.

The Leader is you day to day contact.

The Insider is your coach… without a coach your qualification may well be suspect.

Persuaders are the informal and formal influencers.

What should be qualified?… not enough room here to cover it all, but the three main criteria we use I’ve already mentioned in 1b above. I will be covering the full list of qualification criteria in a later post, or you could download an early copy of the Qualification Analysis, which is a good start, but I will be updating it in the coming weeks.

3. When, in the sales process, should the above qualifications take place?

Always be qualifying… always. It’s never finished until you have the order. You will never know a 100% what is happening on the customer’s side. Relax and you may be caught out. However, there is a sequence to qualification and it links to the buying process. The primary sequence is as mentioned in 1b. The detailed sequence is in the eBook you can download for free from our site.

4. Finally, give the readers your best tip or two on qualifying?

For me there is one great qualification question to ask the customer… “When will the deal close?”… ask that question however you wish, but ask it. If the customer can’t or won’t commit to a timescale then you know immediately that something is wrong… you may not know what is wrong, but something is. The deal may not be real, they may not have the authority, you may not be in the running… whatever is wrong, you are not getting commitment from them and without commitment you may not be in the running for a deal.

If you get your date, great, work backwards and start working out other commitment dates and you now have something to help move the customer forward and timescales for when they have to make further commitments.

When is the deal going to close?… such a simple question to gain so much from the answer!

The reason for this post is that it is a good introduction to the qualification analysis that I will be posting under the ‘how to recession proof your business’ series.

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How many opportunities can you mange in your pipeline at any one time?… I think this is a very good question and the operative word is… manage.

The Walking Talking Brochures
If your sales team operate as walking talking brochures (WTB) doing product pitch after product pitch then you will need quite a few opportunities in the pipeline as you will be playing the numbers game. The good news is that you won’t be doing any serious management and so you can cope with the volume. The industry averages are for the WTBs… nothing wrong with this approach if you can make your number and can constantly fill your pipeline… it’s the volume approach and many CRM systems aid and abet this approach through the application of their pipeline modules which focus on catelogs, product codes, factoring and percentage probability… just right for the numbers game.

The Solution Sellers
However, if product numbers and catelogs are not in your sales bag and you are more solution biased around the complex sale, then running the numbers game philosophy will cause numerous problems particularly if you behave like a WTB. Therefore, your approach has to be more considered, your time on each opportunity increases as you need to spend more time with each client. You now need to go for quality and not quantity. Qualification goes beyond just qualifying the deal commercially, you also have to qualify the business imperative, your value (rather than price) and your relationships. On this basis you will not be able to manage that many opportunities and your win rate needs to increase to 1:1.8 rather than the WTB’s 1:4. Less is definitely more. However it is in this arena that CRM gets a bad name because CRM is for the volume business and not that suited to the quality business. The factored pipeline is a distraction – you need to operate the two outcome forecasting method – win or lose – and you need to show how you will be making your number… name the deals that will be closing and give them priority.

Clarification
Finally, some clarification on Pipeline. In the volume type of business the concept of a pipeline is sufficient, but in the quality type of business you also need to introduce the concept of a funnel – the pipeline contains qualified opportunities, the funnel has unqualified opportunities – or leads… these are your future opportunities. The funnel needs to be full in order to drive the right quality into the pipeline. The reason for the funnel is that in the quality side you need to be proactive and identify potential before possibly the client has identified they have an issue – you get in early and develop the lead into an opportunity and during this process you are developing relationships and hopefully trusted business advisor status… and there are only so many of these you can do!

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I don’t know how you currently do it. You may have probability in your pipeline and produce a factored forecast. You may then roll this up from each of your sales reps and produce a consolidated forecast. You might compare the factored revenue with the un-factored and using past experience come up with the minimum you think you may get and then do some adjustments and get a ‘best can do’. You may then highlight a half dozen ‘must win’ deals across the team that you and the management team are going to focus on. You have done this for years and it sort of works. Well, you can do better.

Show Me How You Are Going To Make Your Number
First of all get every member of the sales team with a target to show how they are going to make their number. They have to show what has been sold to date, plus what they believe they will get in run –rate (sales attributed to their target for which they have no direct input – transactional business) and then add all the deals that they will be closing. Forecasts developed this way use the two outcome method – win or lose. Incidentally, lose means anything not won, which includes deals lost to competition, slipped deals and gone way deals. Generally what you will find is that out of a possible pipeline of 20 or so potential deals only 4 or 5 will be forecast. These will often be enough to show that you are making or exceeding target. The sheer fact that the sales rep has named those deals for closing means they are going to focus on them. By focusing on them, means they have a better chance of closing.

So, rather than roll up your pipeline, look at each individual’s forecast. First help those that are forecasting less than target. Understand why they are not confident forecasting some of their deals and help them get closer to the deal. For those that are forecasting their number, make sure the deals they are committing can be closed –review the deal plans. If you follow this advice you are focusing on exactly where the problems are in the team and the pressure for forecasting is where it belongs – with the sales rep and this is the most imporatnt thing to do.

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What does the ‘no decision’ tell you about your sales process? I raise the question because it was a question that I answered recently on one of the sales forums that I occasionally participate. For clarity, the ‘no decision’ means the customer did not buy from anyone.

However the question was not quite as I have phrased it… the questioner actually asked “what would you ask the prospect that was engaged in your sales process but then eventually just disappeared?”
I had real trouble in answering the question… I accept many businesses do get a ‘no decision’ and in some ways it is right to query the problem it’s just that the question is addressing the symptoms of the pain, when you really need to address the cause of the pain. Getting a ‘no decision’ means the qualification process is not working – you should have qualified out before you get to the ‘no decision’. The questions that you might want to ask the prospect should have been asked a long time before the ‘no decision’ is given.

In this case the cause is qualification… and it covers many areas but there are 3 principle reasons why the customer does not buy. The first is money… there isn’t any. The second is product fit… there are no products / solutions that the customer perceives will address their need. The third and often the biggest reason for the ‘no decision’ is a lack of Business Imperative.

Having a business need is not good enough – the customer also has to have a very strong emotional reason for addressing the need now – the imperative. So, two hurdles to address – there has to be a very good business reason for buying and an even better reason for buying now – the Business Imperative covers both.

The business need can be seen from outside the customer’s business, the imperative can only be truly felt from inside the customer’s business – without an imperative you are likely to get a no decision. So, the role of sales is to make sure the imperative is highlighted, developed and left to fester inside the customer.

Therefore, part of the sales strategy is to develop the Business Imperative, but you can only deploy a strategy if you have the relationships… if you can’t influence the right people then your strategy by definition is ineffective – you end up product pitching in the hope the customer will buy… and you end up with several no decisions.

The job of an external sales person is to create many relationships; however, this is not so easy to do for internal sales people. The more people you deal with the better the qualification, the better chance you have of winning. The smaller the number of people the lower the chance of winning. You end up relying on the skill of an individual within your customer’s organisation selling on your behalf. These people are not sales people and will often not be able to put the case across to upper management who control the purse strings. Therefore, help develop their business case which will cover both the business need and the imperative.

So the reason for the post?… if you are looking to improve your sales effectiveness then make sure you are addressing the causes of the problem, not the symptoms. In this example of a ‘no decision’ the cause is poor qualification and in particular the lack of understanding of the business imperative by the decision makers.

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Most, if not all sales methodologies talk about getting to the decision makers. It’s a good thing to do, but not necessarily wholly the right thing. In simple psychological terms it is far easier to stop a deal happening then make a deal happen. If you are only covering the decision makers then you may be losing out.

So, for all your must win deals, get the sales reps to develop relationship maps showing all the people who can stop a deal from happening for each of their deals. For example the CEO and CFO may not be making the decision for a certain purchase, but they sure can stop it from happening. Equally, you may find people lower in the organisation that can stop a deal from happening, for example, a technical expert. These people can’t make a deal happen, but they can sure stop it!

Action… make sure you show all the stoppers on the relationship map.

Now for each of the stoppers show how well you know them and / or how they can be influenced. If you have no influence over them, then the deal is at risk. I’m not saying you can’t win it, just that you are at risk because you don’t know how they are thinking. This is all part of qualification and qualification is about managing risk.

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