How to Use Data to Analyze Your Sales Pipeline
Key Takeaways
- Our analysis of 1,000 sellers across 55 sales teams found that more than half of salespeople don’t meet the minimum threshold for pipeline quantity
- Even worse, the Closeable opportunities in their pipeline usually aren’t actually Closeable – only 3% of all salespersons had four opportunities in their pipeline that were actually closeable
“Can my company improve its pipeline and forecasting accuracy?”
In Objective Management Group’s 35 years of experience, this is the question we hear most consistently from CEOs. We hear it from CEOs of Fortune 100 enterprises and from CEOs of 5-person businesses. We hear it from CEOs of cutting-edge technology companies and from CEOs of some of the oldest companies in operation. We hear it from CEOs whose companies are enjoying record profits and from CEOs whose companies are on the brink of bankruptcy.
Anxiety about pipeline accuracy is so pervasive because so few companies get it right all the time. And for CEOs the stakes of an inaccurate forecast are high. It’s the difference between beating expectations on a quarterly earnings call or explaining a miss on an earnings call that might be your last as a CEO.
Missed forecasts generally have two causes – not enough opportunities in the pipeline to close, or the opportunities in the pipeline have a nasty surprise—they aren’t actually closeable or close for less money than projected. One of OMG’s most popular analyses helps CEOs understand if their teams have enough opportunities in their pipeline and if those opportunities can be qualified as “closeable”. The data from this analysis contextualizes just how much of a challenge it is for sales teams to accurately forecast. More importantly, it gives CEOs a starting point to put their forecasting anxiety to rest once and for all.
Sales Pipeline Benchmarking Data
In our experience working with more than 33,000 sales organizations, most sales executives and CEOs want to gauge what kind of shape their pipeline is in and how they compare to other sales organizations. We’ve established sales pipeline benchmarking data to assess how a sales organization performs relative to typical organizations in terms of pipeline quantity and quality—a crucial part of understanding how to improve your pipeline.
Using Objective Management Group’s Sales Effectiveness and Improvement Analysis (SEIA), we analyzed the SEIAs of 55 organizations, representing 1,000 individual sellers—a sample representative of the more than 75,000 sellers that we assess each year with proprietary sales-focused assessments.
The data reveals two main problems with organizations’ sales pipelines:
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- Not having enough opportunities in the pipeline
- Not having high-quality opportunities in the pipeline
Let’s dig into the data to better understand these problems and solutions.
Not Having Enough Opportunities in the Sales Pipeline
Unfortunately, our analysis finds that not having enough opportunities to meet sales targets is a pervasive issue for sales leaders.
The Sales Effectiveness and Improvement Analysis (SEIA) asks each salesperson to answer questions for four closeable opportunities in their pipeline. Why? While four opportunities isn’t a magic number, it’s an effective minimum threshold for getting a good understanding of how healthy your sales pipeline is and diagnosing specific problems. And when you have less than four opportunities in the pipeline, you’re typically in danger of missing your revenue targets because there is no room for any opportunity to fall through.
Of the salespersons we included in this analysis, only 49% had four closeable opportunities in their pipelines, while 18% provided three closeable opportunities, 23% had two, and 10% had one. This poor performance is spread across companies and industries, with only 4% of the companies in this analysis having more than 80% of their salespeople with four closeable opportunities.
That means that when asked about four closeable opportunities in their pipeline, the average salesperson could only provide three. Put another way? More than half of salespeople are not meeting the minimum threshold for pipeline quantity.
Not Having High-Quality Opportunities in the Sales Pipeline
You may have opportunities in your pipeline, but are they actually closeable? You might be surprised. The data tells a different story.
The Sales Effectiveness and Improvement Analysis (SEIA) asks each salesperson 19 true or false qualifying questions about those closeable opportunities. Questions such as, “I’ve presented to the final decision maker” and “The buyer has confirmed their budget for this opportunity” mirror what a sales manager might ask the salesperson during a pipeline review. These questions are scored to determine if the opportunity is closeable. If it isn’t, the opportunity is categorized as ‘suspect’ (least closeable), ‘prospect,’ or ‘qualified opportunity.’
The results? Our analysis found that of the three closeable opportunities the average salesperson provided, less than one was closeable. Even worse—nearly 75% of opportunities were actually ‘suspect’ or ‘prospect’ opportunities, meaning that the salesperson hadn’t: reached a decision maker, confirmed the budget, or found a compelling reason for the buyer to make the purchase.
In fact, only 3% of all salespersons had four opportunities in their pipeline that were actually closeable.
Having poor quality opportunities in your sales pipeline presents numerous challenges for each salesperson and across your team. When your pipeline is full of low-quality opportunities:
- The opportunities you expect to close will not
- Opportunities might take longer to close, throwing off your forecasts
- You could end up in a competitive situation that lowers your gross margin
- Your salespeople will waste valuable time on opportunities that should never have been in the pipeline to begin with
You’ve likely encountered at least one of these issues – let’s take a look at what you can do to tackle these issues.
Five Solutions to Get Your Pipeline Back in Business
If you know you have an ineffective pipeline, the first thing you need to do is figure out where the problems are. Here are the most effective strategies for targeting your sales pipeline issues so you can properly diagnose problems, employ the right solution, and get back to closing deals.
Conduct a Weekly Pipeline Review
Does your sales team hold weekly pipeline review meetings? If not, you should open your calendar and schedule a weekly recurring meeting now. Effective sales teams know that without a regular review of all pipeline activity, deals can fizzle out, salespeople can waste time, and revenue targets can come and go without you hitting the mark. You can integrate the next strategies into your weekly pipeline review to strategize and troubleshoot the opportunities at hand.
Utilize a Sales Deal Scorecard
Your salespeople need to answer the same questions for each opportunity to assess its stage and likelihood of closing. Ideally, they’ll answer each question with a simple scale (e.g., 0-10 points or True / False). For example, if they can’t confirm that they’ve spoken with a decision-maker and have discussed the budget, those questions receive 0 points. At each stage, an opportunity’s total score shows how viable it is and where any deficiencies are. A scorecard helps you hold each opportunity to the same, objective standard. This will set realistic expectations about where an opportunity stands and enable you to decide how to move it along—or whether it’s even worth further pursuit.
Cull Dead or Unqualified Opportunities
The most successful sales teams aren’t afraid to relentlessly cull dead or unqualified opportunities from their pipeline. It can be hard letting go of anything you’ve invested time into, but the truth is, those zombie opportunities aren’t suddenly going to become active and relevant. Protect your team’s time and bandwidth by taking a good look at which deals are realistically closeable and let go of anything that won’t convert.
Focus on Top of Funnel Volume as Much as on Bottom of Funnel Quality
Since the most common problems with sales teams’ pipelines are two-fold—not enough volume and low-quality opportunities—the best way to set your pipeline up for success is by confronting these issues with two-fold solutions. Focus on both ends of the funnel and their respective issues. At the top of the funnel, you’ll want to target the number of leads flowing into your pipeline. Lower in the funnel, your focus should be on assessing the quality of opportunities (and culling any that are dead or unqualified, of course). When the volume of leads goes up at the top, you’ll have more to work with later on, and more of those should be well-qualified.
Use Sales Team Assessments to Understand How Each Team Member Can Improve Their Sales Skills
If there’s one key theme we want to drive home with regards to your sales pipeline, it’s that data analysis is essential for understanding issues and targeting them with solutions. That’s why a sales team assessment is a robust tool in your sales leader toolbox, helping you address weak and ineffective pipeline problems from opportunity quantity and quality, all the way down to how each salesperson on your team performs in key areas. These assessments are given to each team member and assess 21 core selling competencies so you can strengthen the skills that matter most to closing deals.
One such tool is the Sales Effectiveness and Improvement Analysis (SEIA)—the very same that we employed in our sales pipeline benchmarking. The SEIA offers an in-depth look at the people, systems, and strategies of your sales organization and focused on problem areas with targeted solutions. This analysis answers critical questions about your sales organization:
- How much more effective can we be?
- What will it take to accomplish that?
- Do we have the right people in the right roles?
- How effective are our sales managers at recruiting, coaching, motivating, and holding their direct reports accountable?
- How can we improve our pipeline and forecasting accuracy?
Jeff Radichel ME, MBA , President of The Next Step, Inc. sums it up this way: “Our clients that have the most success with pipeline forecasting 1) hold weekly pipeline reviews, 2) use the OMG evaluations to understand what ways team members can get better in the sale 3) a deal scorecard for each opportunity. That way each rep knows that they have to answer the same questions for each opportunity before it advances to the next stage.”
The Bottom Line
With the right data and effective pipeline analysis, you can troubleshoot pipeline problems that go well beyond increasing your leads— improving your opportunity quality and each team member’s sales skills. You can fix the pipeline you have—and you can build the pipeline you need to meet and exceed your revenue goals.