The Science Behind Managing a Sales Pipeline

Key indicator #1: Focus

A pipeline tells you and your team where and how to focus your development energy based on where prospects are in their decision-making process. Keep your pipeline stages simple (four stages is plenty), define and train your team what each stages means and capture key intel and progress for each opportunity in your CRM.

Track these areas to inform your focus:

1. Movement – the length of time at each stage and over entire sales cycle;
2. Volume – the number of prospects at each stage; and
3. The bottom of the pipeline – those prospects you need to close to convert to clients.

Time kills sales. The more time someone is in your pipeline or at a specific stage, the more likely they will not progress and become a client. The goal of managing your pipeline is simple: Keep opportunities moving through the funnel as quickly as possible.

One effective way to manage movement is to use alerts or reminders. For example, create thresholds, such as if anyone is at a specific stage and hasn’t been engaged in a certain time period (i.e., two weeks), or hasn’t completed a specific milestone (i.e., sent statements in for evaluation), it’s on you and your team to check in. Systematically quarterbacking the process takes the responsibly from the prospect and puts it on you. People like to be led, especially in areas where they are seeking help.

Volume informs the overall health of your pipeline, where you may need to shift energy to keep your funnel full.

The opportunities at the bottom of your pipeline have the greatest impact to your business. These prospects are the most likely to drive growth. If you manage your pipeline, it won’t be a matter of “if” but “when” you close these potential clients.

Key indicator #2: Feedback

A pipeline provides critical feedback on the effectiveness of your sales and marketing processes.

Questions to consider include the following:

• At the top of the funnel, ask yourself, “Are my marketing efforts working to identify the right prospects: those that fit your ideal client profile (ICP)? Do I need to put in additional effort to fill my funnel?”

• How are my internal processes working? Are there stages where prospects are getting stuck? Are certain people able to move buyers more quickly than others, why is that? Use the overall length of sales cycle and time at each stage to help answer these questions

• Consider conversion – How effective are you at closing? What’s working and what’s not? Conversion rate varies, largely depending on the source of the prospect. A referral is more likely to close than a marketing-based lead. What matters is you understand your conversion rate and you work to improve it over time.

Key indicator #3: Forecasting

Many growing firms question: when is the right time to invest in people, technology and marketing? By capturing the size of opportunities and their expected close dates, you inform the timing of your strategic business decisions and investments. If you know (or expect) a certain amount of revenue growth from new business is going to hit in Q3, you can prepare for that investment. Maybe you start interviewing for a new role or researching a new technology in Q2 with the expectation that you’ll make the purchase once your revenue reaches a certain amount.

Forecasting new assets and clients also informs how you will divide and manage the new business across your team.

Build your pipeline process with the end in mind

Now that you understand why a pipeline matters to your business, what are the key metrics to track?

These are the data points to capture for focus, feedback and to forecast:

• Start date

• Close date
• Entry date by stage
• Size of opportunity
• Source of opportunity
• Opportunity owner
• If lost, reasons why

In a previous article, Stop Focusing on AUM, Track These Two Metrics for Growth, I explored how to use metrics to inform your business. Pipeline analysis is an important leading indicator of sales. I’d be watching these four metrics as part of your monthly or quarterly business review:

• # of opportunities by stage
• Overall pipeline opportunity ($) by month looking 12 months out
• Length of sales cycle
• Percentage won (conversion rate)

We know the best diets are intentional and consistent. The same concept applies to business growth. Making a sizable shift in your practice requires a plan and tool to manage and track progress – pipeline is that tool.

I partner with RIAs and financial professionals looking to unlock their potential. Outsourced CMO, sales and marketing strategist, accountability partner, change maker – those are some of the names I’ve been called over the past 15 years. If you are looking to take your business to the next level, I’d love to help. Learn more resources at www.shaunamace.com or contact me at [email protected].

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