One of the first things we look at when working with a new client is their sales pipeline strategy. And, we are often surprised at how inadequate their sales pipeline strategy is. All the more surprising because these are typically highly experienced sales leaders. Don’t get me wrong—their sales strategies are detailed, well-thought-out, and comprehensive. They have worked out their sales targets, territories, and have fielded each territory with experienced sales pros.
And yet, when it comes to their sales pipeline development, their plans seem inadequate. Sales pipeline strategy is critical because as the sales pipeline goes, so do sales. The whole predictability of revenue growth depends on the predictability of sales pipeline. After all, it’s the foundation on which sales is built.
In fact, the most cost-effective way to realize sales targets is to invest in sales pipeline development. It is the surest way to see high ROI on the investment made in the sales organization.
In this article, we will cover the most important building blocks of a sales pipeline strategy. Our experience is that clients who follow this approach generate the quality sales pipeline they need to deliver predictable revenue growth.
The Building Blocks of an Effective Sales Pipeline Strategy
Start Right: Invert Your Funnel
Step 1: re-orient your mental funnel concept. The traditional concept of a funnel was based on how one pours liquid into a narrow necked bottle (fig 1-A). The top of the funnel is wide, and it tapers into a narrow bottom. In this case, gravity would aid us in getting the fluid into the bottle.
However, as every sales leader knows, there is no such aid from gravity when it comes to sales. In fact, Marketing, Prospecting, and Sales teams all face tremendous resistance from prospects.
A more intellectually honest mental construct would be an inverted funnel (fig. 1-B). This more realistically shows the effort required to engage over-messaged prospects and overcome their deep skepticism. In truth, we are dragging prospects up against inertia and risk-averseness. Let’s start by being clear on what we are up against.
Another way to look at this is that you want sales to go up, not down.
Build a More Segmented Ideal Customer Profile (ICP)
The Ideal Customer Profile (ICP) is the first point of alignment for Marketing, Prospecting, and Sales to ensure they are engaging the same audience with the same message. Yes, the engagement happens on different platforms/media at different times. And yes, the messaging itself is varied so as not to bore the prospect to death. But it must be aligned and consistent across all three teams.
Which means that if you find it necessary to use different sales teams, you should focus each team on a specific ICP. Let’s say you sell regulatory compliance solutions (reg-tech) to consumer lenders. At the top tier, you sell to global lenders such as Bank of America, JP Morgan Chase, HSBC, etc through your enterprise sales reps. At the middle tier, you sell to regional (multi-state) lenders using your account execs, and to the local community banks and credit unions, you sell through your junior reps.
These must be defined as three separate ICPs, with detailed descriptions of the account (company) as well as the personas (decision makers) to be engaged. And each sales tier should be extremely knowledgeable of their market space and their targeted personas.
This is foundational to building an effective sales pipeline strategy.
Define Average Deal Size (ADS) Separately for each ICP
Depending on whom one asks, the question “What is your average deal size?” seems to elicit different answers. For instance, we may ask someone in marketing and hear, “Our ADS is around $60,000”. Then we talk to a sales rep and he says he is looking at deal sizes between $250K and $500K. That is too wide a range to reconcile.
What that tells us is that those in marketing may be literally averaging across multiple tiers of customers, leading to messaging that is overly diluted.
If you have multiple sales tiers, and you have defined multiple ICPs, you should arrive at a specific ADS for each ICP.
Measure your Average Closing Ratio Separately for each Sales Team
Similarly, measure the average closing ratio of each sales team separately.
As it is very likely that your most experienced sales reps sell at the top end, you will likely see better closing ratios (25%-35%) there. Conversely, those selling the smaller ticket items to smaller customers may be more junior, and consequently show a much lower closing average (perhaps as low as 10-15%).
It would be just as bad a mistake to take the averages of these closing ratios as it would be to use an average ADS across all tiers.
Build your Sales Funnel Math Separately for Each Sales Tier
Armed with a well-defined ICP, ADS, and closing ratios, it is now possible to build a highly effective sales pipeline strategy for each tier.
The chart above shows the SOMAmetrics approach to funnel math. Here is a quick example:
- Average deal size $100,000
- Average closing ratio = 25%
- Incremental revenue target for this tier = $10 million.
- This means, on average, we need 100 closed deals to reach our sales target.
- Which means that, at the 25% average closing ratio, we need 400 sales qualified opportunities (SQOs).
- If our SQO to SQL (sales qualified lead) ratio is 80%—which, by the way is pretty good—then we need about 500 SQLs from the prospecting/marketing teams.
- If it takes on average three quality conversations (QC) to set a qualified meeting (SQL), then we will need about 1500 QCs to meet our Incremental revenue target, and so on.
Remember that these are cumulative numbers. Someone who wasn’t reachable last quarter, maybe reachable now. Someone who wasn’t interested 4 months ago, maybe interested now, and so on. Therefore, It is not necessary to have very large numbers at the bottom of the funnel stack. What is more important is the quality.
If the ICP is well-thought out and your value prop is compelling, then sooner or later, many in the ICP will be interested at least to explore your solution (pipeline development).
You will find a much more in-depth and thorough discussion on the best practices in prospecting at the high level in the seminal book, “The Radical Pipeline Strategy: How to Grow Pipeline and Revenue by Optimizing Sales Development”.
Integrate into One Cohesive Plan
Let’s assume that what we worked on in the previous section was for your middle sales tier. You would do the same for your top and bottom sales tiers. Once you have separately built your funnel math, and you have the separate numbers, then you can integrate them to arrive at your holistic revenue plan.
Taking a somewhat simplistic example, let’s say your overall incremental revenue target was $25 million. You think you can get $10 million at the top; $10 million at the middle; and $5 million at the bottom sales tier. You would build each funnel separately to support your target for that funnel.
SIP: The Solution for Executing your Sales Pipeline Strategy
So far, we discussed in some detail the building blocks of an effective sales pipeline strategy. Next we will see the building blocks of a highly effective solution for building a high quality sales pipeline.
For this discussion, we will focus solely on the the prospecting (SDR/BDR) team for two important reasons:
- While there are numerous high quality tools for aiding the work of marketers and sales professionals, that doesn’t seem to be the case for those tasked with prospecting.
- Companies make lots of investments on marketing and sales. However, if an adequate amount of quality pipeline doesn’t materialize, then all that was accomplished was to increase costs.
Yes, there are a number of tools that boost the efficiency of Sales Development Reps (SDRs). With these tools, SDRs can easily make 100 dials a day. However, we haven’t seen tools that boost the effectiveness of SDRs—their ability to engage high-level decision makers and book qualified meetings.
Therefore, we would like to recommend a tool that significantly improves the effectiveness of SDRs, enabling them to build high quality sales pipelines, cost-effectively. We call this solution SIP (SOMAmetrics Intelligent Prospecting). The key components are listed below.
Now that you have developed your specific sales pipeline strategies for each sales tier, you are ready to execute.
Going back to our earlier reg-tech example, let’s say you have two SDR teams:
- The more senior SDR team prospects for the enterprise sales team
- The junior SDR team prospects for the regional accounts sales team
Let’s say you have one manager for each team.
You give each SDR manager his/her numbers—their incremental pipeline amount and average deal size. From these, they can figure out their quarterly targets including the quarterly number of meetings needed.
They then divide the overall number by the number of SDRs on their team to arrive at each SDR’s quarterly target.
This is where GOSPA comes in. GOSPA stands for Goals, Objectives, Strategies, Plan, and Activities. It is a proven model for aligning the needs and wants of the individual SDR with that of the company. By the way, it’s a good idea for the SDR manager to also build his/her GOSPA as well.
Each SDR will build his or her own GOSPA–how they plan to hit their numbers. They will submit their GOSPA to their manager, who will review with them and make suggestions as needed. SDRs have to hit their assigned numbers, but they can commit to a higher number if they wish to make more money.
Now that each SDR has both the assigned and committed numbers, he/she can set these as targets and work towards hitting them.
We have found that when SDR teams use GOSPA, the average quota attainment rate increases by as much as 40% or more. Here is an article that discusses GOSPAs and how to use them.
Think of your most experienced sales reps or SDRs. What makes them good at what they do is that they know their prospects very well. They know the industry or market space. They know what that prospect does–what her responsibilities, headaches, priorities, and goals are.
Which means they know how to talk the prospect’s language. As a result, they don’t waste their prospect’s time. Which is why they tend to sooner or later catch their prospects, and why prospects agree to talk to them when they connect.
Now, what if all your SDRs were like that? By how much could your sales pipeline grow? And how much would that increase your sales?
Sure, training is important. But the data shows that people tend to forget what they have learned unless they apply it immediately and consistently. However, today’s environment is different. It takes a lot of effort to reach a high-level decision maker. New or junior SDRs don’t get a lot of chances to practice what they were taught. Which increases their likelihood of forgetting much of what they were trained on.
A better approach is to give them briefs—on the industry, personas, and competitors. These briefs are short but powerful. They show them only what they need to know. They point out the trends and challenges in that space. They illuminate how their prospects think, what their priorities are—how to talk to them.
Best of all, these briefs are always there for the SDRs to take a quick glance as a refresher. Unlike training which is an event that occurs at a specific time, and then is over, these briefs are always available to the SDRs.
Prospect Engagement Tools
Depending on the industry and personas you target, it could take twenty (20) or more touches before your SDRs connect with the right person. That’s dials, voicemails, emails, and LinkedIn messages.
The more compelling the emails, voicemails, and LinkedIn messages, the higher the connect rate. Prospects become intrigued and more willing to take a call.
If you agree with this logic, then you don’t want your SDRs writing their own emails—especially your junior SDRs. What we have seen happen too often is junior SDRs Googling to find templates, make small changes, and send these off. Templates by nature are generic, which is the opposite of compelling.
Get these emails, voicemails, and LinkedIn messages professional crafted. It’s well worth the small additional cost.
After making hundreds of dials with the help of a power dialer, your junior SDR is finally talking to the COO of a bank. Now what? How does he open the call? How does he intrigue the COO to want to hear more? How does he qualify to make sure there is need?
And having done all that, how does he get a meeting?
One thing you and I know is that the qualifying questions your SDR asks are in themselves telling. Prospects know by the questions they are getting whether they are talking to someone who will waste their time or not.
What if the SDR got some simple objection such as “I don’t have time right now” or “Why don’t you send me some information I can take a look at?” What if the prospect asks how much it costs? How does your SDR neatly navigate these, finish qualifying, and get the meeting?
As the name implies, a Call Navigator walks your SDR through the prospecting call. How to open it, what example stories to tell, how to handle objections and questions, and more.
Marketing teams spend a lot of money on multiple lead generation campaigns every year. Some are event-based such as conferences or webinars. Others may be promotional such as ads. SDRs play pivotal roles in the achievement of campaign objectives.
For instance, if you are sponsoring an expensive conference, you want to drive as many prospects to your booth as possible. Making sure your SDRs are well aware of the campaign, remember to mention it, and know what to say can make or break the campaign ROI.
A Campaign Manager ensures that a specific campaign relevant to the ICP that the SDR is calling into is front and center on that SDR’s view. It constantly reminds the SDR to be sure to invite the prospect before ending the call.
At SOMAmetrics, this is how we help our clients build their sales pipeline strategy, and then provide them with the solution they need to effectively execute their strategies.
Clients who use the SOMAmetrics Intelligent Prospecting Solution (SIP) see as much as 50% increase in sales pipeline development within 90 days.
Let’s schedule a quick call to discuss your needs and how we may be able to help you.