Sales Tip of the Day: Pipeline Tracking is not Sales Forecasting

Sales Tip of the Day: Pipeline Tracking is not Sales Forecasting

By Scott Sambucci | November 1, 2012

Asking your sales team – “Where are we in the sales process?” is different than “What is the probability that this sale will close?”

Set up a field in your CRM that allows your sales team to subjectively enter a “win probability” that is different from “stage of the sale.” The sales stages simply show where you are in the sales process – early, middle, late. They are independent of “win probability.”

Example 1:

Let’s say your salesperson is in a highly competitive situation where price and ongoing support costs are the last deciding factor for the prospect. By this point, your salesperson will have taken weeks (or months!) guiding your prospect through the stages of the sale – prospecting, initial calls, needs analysis, product demo, resolving concerns, and price negotiations. Because your salesperson is reaching the end of the sales process, they’ve logged this opportunity as “In Contract – 95%.”

Meanwhile, the prospect is following this process with a competitor in parallel. Worst of all, your prospect just told your salesperson that they are in second place position and that the competitor is clearly favored by the decision committee, but they want to give you one last chance at adjusting your price and support offerings. If your sales pipeline is built so that “Contract” is 95% is the last step before “Closed” at 100%, then using your Pipeline Tracking as your Sales Forecasting tool is wrong.

Example 2:

Your salesperson has a senior executive that has been an enthusiastic client for many years who has recently changed companies. This executive is taking most of his team with him to the new company and has told your salesperson that he will absolutely, positively be a customer again at the new company. However, he wants your salesperson to go engage with his new IT Director and Marketing VP to show them your product and how it works. This will require walking through a formal sales process but purchasing and implementing your product will absolutely happen within six months. If your pipeline tracking system is used as a revenue forecast, then you’ll only see a 25% probability of close because from the pipeline perspective, the sale is still in the early stages.

(Thanks to the Inside Sales Experts Blog. Their article “Forecast Accuracy – Mission Critical or Malarkey” inspired this post…)

Looking for a sales edge? Check out: “Startup Selling: How to sell if you really, really have to and don’t know how

The Kindle version is on Amazon.com!

Download the FREE PDF version here

Leave a Reply 0 comments

Leave a Reply: