Grow Your Sales Pipeline to Fix Missed Revenue Targets
How can you grow your sales pipeline and consequently fix missed revenue targets? If you think of your total revenue operations, it is likely fed by four major revenue streams:
- New orders from totally new logos
- Reorders or renewals from current customers
- Upgrades, up-sales, and add-ons from existing customers
- New orders from entry into brand new markets.
In all but one (reorders/renewals), the key challenge is how to grow a sales pipeline of sufficient size and quality. It is also finding one that consists of informed decision makers who are actively searching for a solution within budget.
The fundamental thesis of this blog is that missed revenue targets happen primarily as a result of missed pipeline targets.
If you are skeptical about this, consider the following research findings:
- New customer acquisition cost is increasing by an average of 10% or more each year.
- Over 100 million new businesses are started each year, worldwide.
- Partly as a consequence of that, nearly 80% of B2B companies change vendors within 24 months.
- Nearly half of sales reps (49%) fail to meet their quota—a trend that has been consistent for some 10 years now.
If we put the stats together, the story looks like this: competition is intensifying and competitors are stealing customers. So, we have to find opportunities for new customers just to grow at the same rate. This is forcing us to spend more marketing and sales dollars to acquire new customers, creating a spiraling cost loop.
Furthermore, we continue to design, invest, and build our sales pipeline management the same way we did in the 20th Century—and our sales reps struggle to meet their sales quotas.
Things were definitely different then. Buyers more or less welcomed sales calls because salespeople were a source of valuable information about what competitors were doing and so on. Then internet boom allowed for buyers to research this data for themselves, so sales teams became more a nuisance than an asset and were mostly shut out.
Fast forward to the 2010s, content and social media became king as B2B companies began to invest in their marketing efforts. And then the global pandemic hit and sealed the deal of a new sales process. Now, marketing is everything: ABM, demand gen, growth marketing, etc.
So, B2B companies created a bottleneck, an operational bow-tie with large Marketing spend and large Sales spend. They gave practically no spend or thought to what connects the two big operations, namely Sales Development.
Here is one way to think about this. Your marketing department is tight on time and resources on sales performance (as much as you spend there). So, marketing campaigns end up going after the Total Addressable Market (TAM) instead of a more focused Serviceable Addressable Market (SAM). You end up getting leads that are too small, too big, or in geographies you can’t really sell for whatever reason.
None of these will ever go on your sales pipelines, and yet these “leads” pass on to your sales reps. They become overwhelmed by all these leads just to find the ones that they can actually work with.
The Problem with your Sales Pipeline
So, you hire Sales Development Reps (SDRs) to help with that. Only, you hire junior people, provide them with basic training and lots of technology, and let them loose on these new prospects.
The problem now is different. You have someone who was just a few months ago working at Starbucks calling on a senior decision maker who has been doing this for 10, 15 years. It’s like a high schooler saying to an NBA player, “Let me show you some slick moves…”. It’s not going to work out well.
So, all the money you spent on your marketing gets throttled down in the middle. Good lead generation slips away because those tasked with following up and setting appointments simply don’t know how to execute social selling or talk to these people.
As a result, your sales organization has to do its own prospecting. They spend less time moving those in the sales pipeline towards a close. The end result is missed quotas and missed sales opportunities.
The solution is to design your company’s revenue operations in such a way that you avoid the bottleneck. This allows revenues to smoothly flow from Marketing all the way to Sales, facilitated by SDRs who grow the sales pipeline for the sales organization.
Sales Development is a strategic revenue operations partner—equal to Marketing and Sales. It needs to be headed by a senior strategic thinking leader, and its members must be capable of talking at the level of senior decision makers in global companies.
Most importantly, your Sales Development organization has to grow the sales pipeline (not meetings) and should be compensated the same way your sales organization is—by how much it contributes to revenues. It’s time to really rethink our revenue chain, and redesign it from the ground up to meet 21st Century sales needs.