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Pipeline management as early warning system?

Bad times ahead? Do you want to know?

The dilemma for many sales organizations is that in good times they might just take orders and become unaccustomed to fight for their business, why should they? As times become more challenging they do not have the habit, attitude or systems to raise the activity level and focus, focus, focus!

Turn your order receiving into focused sales!

Forecasting sales is by some done by looking in the rear mirror and try to find out what is coming. At best, the orders received are used as metrics but that is all history and does not give any relevant information about the future and if this information also is used to plan our manufactoring, we can as well skip it.

The concern is why so few organizations are using the sales process and Pipeline management to manage sales more adequate and accurate. With a structured sales process and clearly defined steps, it is not only possible to coach the sales staff to move business more efficiently but also predict the upcoming sales.

Note, Forecasting and Pipeline management are not the same thing. Pipeline management is all about managing your sales projects and to coach your sales force how to close, Forecasting is how we could use information from the Pipeline to better predict sales during the next months or quarters.

Structure your sales process

A sales process should be implemented in CRM and used as a structured way of following and monitoring the development of sales. It is most important that the sales process is clearly defined and what actions are required to move a sales project from one step to the next. This is the key tool for sales management to monitor and manage sales. If you have a problem to convert your prospects into a customer, here is where you will find out wher and most likely why.

A system support like CRM is actually the easy part and can be installed rather quickly (if using a standard system). The greater challenge is in creating a disciplined sales force, an active sales management and, most important, a general management that show interest in, and follow, the pipeline. By having the pipeline as an important KPI, the organization will have a very strong tool to monitor result of sales and marketing activities and get early warnings in good time.

So, if Pipeline management is so important, why isn’t every company using it?

The short answer is that general management is not always aware of Pipeline management as a tool. There is simply a lack of knowledge.

Another simple answer is that this is putting much more efforts on sales management, a function that is under heavy stress anyway in most companies. Setting up Pipeline management is time consuming at first and demand a continuous follow up and maintenance to be trustworthy. This is probably why it is not demanded by so many sales managers.

Sometimes the objection is also that when sales is just regular running business and not in projects it is less relevant. I disagree to that. Sales opportunities over a certain value are always relevant to manage.

Sales funnel

Another term used is the Sales funnel. Some argue Pipeline and Funnel are the same and some argue that Funnel is the visualization of the Pipeline.

I would say the Pipeline management is the methodology you use and the Funnel is how you show this to staff and stakeholders, it is quite easy to get a very quick overview of individuals and it is easy to consolidate the company into one single Funnel. You will quickly see if it’s healthy or unhealthy, if you need to plan for growth or not. You will also determine if you have problems in converting your leads and prospects further in the sales process in order to close the order, i.e. where are your potential customers dropping off.

Knowing the conversion rate in your Sales process, you can now start to look at your Forecasting. Knowing volumes, closing dates and conversion rates (that will produce a weighted value), you can start to predict the future. If CRM is used correct with product opportunities in the Sales process, you will be able to offer your production (or sourcing department) interesting data about upcoming sales (forecasted sales), information that is most appreciated by them.

Conclusion: With a structured Sales process, you can start your Pipeline management and manage your sales team, this will offer you to a possibility to show the actual situation very easily and also provide detailed Forecasting information.

Stakeholders as Owners/Shareholders, General management, Finance and Manufacturing/Sourcing will be delighted to get relevant data about up- or downturns and by that having your Pipeline as the critical early warning system.

Johan Olofsson
Executive Vice President LAPP