One common complaint heard from CEOs time and again is centered around the pipeline (or lack thereof) and the shortfall that occurs every quarter.  The pipeline never seems to live up to its promises.  I’ve sat in enough sales meetings now to quickly figure out if a company has a real pipeline or a pipe-dream.  The four most common mistakes I see are listed below:

1.  Lack of a common sales methodology:

There are a lot of great sales methodologies out there and many are equally effective.  Whether you adopt Spin Selling, Sandler, or something else it is important that you make sure everyone is following the same one.  The strength of any process comes in everyone speaking the same language and following the same methodology.  That way every opportunity is being managed in a similar fashion and the entire sales team is moving in unison.

2.  Lack of common descriptions for stages of the sale:

As with adopting a common methodology, you want everyone on the sales team to use the same definitions and stages for the sales cycle.  It doesn’t have to be complicated.  Here is a five stage system we often set up for our clients:

Stage 1 – This is a “suspect.”  You have not begun the qualification process.  You got this contact from a networking event, participation in a webinar, an online inquiry, etc.  You “suspect” this company/person may need your services and want to start a dialog.

Stage 2 – The first level of a prospect.  You’ve had at least one conversation, you are starting to understand the prospect’s “pain” and how you might provide a solution.  The prospect is interested in learning more about what you have to offer.

Stage 3 – The second level of a prospect.  You are having specific conversations with the person(s) involved in making a decision to purchase your product or services.  You are gathering the information you need in order to submit a proposal.  You have information on the budget, time line for decision, your competition and you are formulating your solution.

Stage 4 – Proposal stage.  You’ve submitted the proposal.  Ideally, you presented your proposal in person or the phone and got an initial reaction from the buyer.  You have been told when a decision will be reached and you can “guesstimate” your chances of winning.

Stage 5 – Pending Contract.  You’ve won your proposal and you are now getting the signed contract, the deposit check, and setting up the first stages of implementation.  This is one of the most critical stages of the sales process.  Many things can go wrong even after you’ve received a verbal award or a signed letter of intent.  It is important to monitor your sale until the equipment has been shipped, or the first meeting has taken place and the initial check is in the bank.

Lost – If you lost the bid, you still want to track this prospect.  The company that won the award might not deliver.  Or you may have an opportunity to get back in the door with a different solution.  Your sales management should define how you recycle a lost prospect back into the sales process.

Using a common sales process and description for where a prospect is in the sales cycle can eliminate about 50% of pipeline confusion.  Once you’ve defined the stages in your sales cycle, make sure you also have defined criteria for each stage.  The criteria should be more than what we’ve listed above.  It should include information on the prospect (company size, number of employees, SIC code, etc.)  in addition to specific criteria such as “you can’t move to stage 4 unless you can tell your sales manager when the customer plans to make a buying decision and who will be involved in that decision.”

3.  Not tracking the numbers

Sales is a numbers game.  You need X amount of suspects to get X amount of prospects to get X amount of meetings which will result in X amount of proposals which will result in ONE new customer.  The task of marketing and sales management is to shorten the sales cycle by reducing these ratios.  But if you aren’t tracking the numbers you have no idea what you’re reducing (or increasing!).

It takes 6-12 months to get a good “read” on the ratios that apply to your company sales cycle.  Once you have these ratios you can quickly look at a pipeline report and determine how realistic your quarterly revenue projections are going to be.  If the ratios in the pipeline don’t match your pre-determined sales cycle then you have a problem.

4.  Not using a centralized sales tracking system

It doesn’t matter if you choose ACT!, GoldMine, Salesforce.com, or any of the other sales tracking tools on the market today.  You want all the data in a centralized location.  We highly recommend using something that is web-based so that you and your management team can access the data from any location.  For many sales people, their rolodex is a valuable asset.  It isn’t uncommon to leave a company and turn in a laptop that has been wiped of all contact information.  Then management has to go in and try to recreate everything.

With a sales tracking system, you can enforce the stages of your sales cycle, you can assess your metrics, and determine (on an individual basis) who within the sales team is driving their sales forward and who is filling their pipeline with dreams.

I can’t guarantee that eliminating these four mistakes within your organization will ensure you hit your revenue targets.  However, I can guarantee that if you implement a standard sales methodology, adopt common sales stages and enforce criteria for each step of the sales cycle, measure your metrics and use a company-wide online sales tracking tool that your pipeline reports and revenue projections will be realistic, credible and far more accurate.