Sales pipeline management goes to the core of proper organizational skills, sales process effectiveness, and closing skills. The goal is to continually improve your sales close rate as it's tracked on the pipeline.
- When all is said and done with presentations made, sales meetings attended, and updates completed in our CRMs it will all come down to this question. How many sales did you close? We can all be so dedicated, but at the end of the day, our success and rewards are tied to how many sales we are able to bring in for our company. That's why we need to be so diligent and focused on ensuring our sales pipeline is working at full efficiency. If not it can slow down our entire sales process and inhibit our ability to cultivate and maximize our opportunities so that revenue goals can be achieved.
The sales pipeline is a simple concept to visualize. You're tracking each stage of the sales process from finding leads, qualifying prospects, assigning revenue to opportunities, and then summarizing the amount of deals closed. Another way of looking at it is by showing it with a funnel. You start with a lot of leads what then shrinks down to a smaller number of prospects, followed by opportunities and finally the end result of closed sales at the bottom of the funnel.
There are many key performance indicators, KPIs that track your business along the sales pipeline. However the ones that are focused on closed sales and revenue garner the most attention for obvious reasons. Here are the three KPIs that I focus on. Sales leads to close ratio calculates how many leads are converted into sales. If you have 200 leads and 20 of those result in a closed sale, then that's a 10% ratio.
20 divided by 200. This is a valuable indicator since it focuses on the importance of always generating new leads. For a salesperson, the hope is that your ratio percentage increases since that means you're closing more sales. Sales win rate means the number of opportunities that were closed successfully. Remember, an opportunity is when you've assigned a dollar projection and have weighted it for the potential of closing at some point. 50 opportunities with 20 closed equals a win rate of 40%.
20 divided by 50. This KPI is a good way to see which sales people are more successful closing than others. You can be a strong closer with a high win rate, but the objective is revenue too. That's why it's important to examine the deal size which is the average volume for all of your deals closed. For example, 20 deals totaling $500 thousand dollars equals 25 thousand per sale. 500 thousand divided by 20.
Pipeline management is an important responsibility for everyone in sales. The objective is to close business so tracking and improving rations, win rates, and the size of deals are critical tasks. It's essential that all sales professionals be focused on fine tuning every step of the pipeline from leads to prospects and developing opportunities that will then lead to more closed sales and revenue growth.