It’s time to review your 2021 sales performance and make plans to achieve those ambitious goals for 2022. Too often, we see organizations solely looking at sales results performance but not analyzing the process. By breaking down your sales pipeline into a granular view, you can gain valuable insights into your team’s performance and pinpoint exactly where the weak points are.
This blog will break down the different stages, provide some examples that we consistently see from our prospects and customers (that you may also be experiencing), and offer a few best practices to help you achieve your revenue targets.
Breaking Down the Stages to Assess Your Sales Pipeline
Each sales organization’s pipeline looks a little bit different. There are typically eight stages that you can break down to pinpoint exactly where your team needs to improve the handoff to the next stage in the customer journey experience. However, ServiceSource operates by a six–stage sales pipeline:
Stage 1-2: Prospecting and Qualifying Leads
In Stage 1, the goal is to attract prospects and engage with them, educate them on their pain points and possible solutions, and persuade them to buy.
Challenges that we consistently see in these stages are:
- Not having enough marketing qualified leads (MQLs) to fill the top of the funnel.
- Having too many MQLs for your team to properly qualify and convert every lead into a sales-qualified lead (SQLs).
- Not having a lead qualification methodology.
Challenge #1: Not Enough Leads to Fill the Funnel
Not having enough leads to fill the top of your pipeline is a common problem. Most companies combine marketing efforts and cold calling/outreach to fill the top of the funnel. If your marketing team is doing their job well, your prospects will discover your business through ads, promotional activities, public relations, and your website presence. If the messaging is not resonating with your target prospects, it may be time to reevaluate.
How often does your sales team communicate and work with your marketing team? Your reps are in the trenches every day with your customers and prospects, listening to their pain points and the language they’re using to describe their challenges. This information is invaluable to your marketing team. It ensures your campaigns and brand’s messaging resonate with your audience. Bottom line, the better your message, the more inbound leads you’ll attain.
Have regular (weekly/bi-weekly) meetings with your marketing team to go over new prospects, new marketing campaigns, and updates to messaging to ensure your product or service speaks directly to your customer’s pain points.
Challenge #2: Too Many MQLs to Qualify
The opposite end of the spectrum is to have too many leads that your team can’t properly qualify. Although this is an excellent problem to have, it can quickly add to your customer acquisition cost and the overall effectiveness of your sales team if the pipeline is not appropriately handled.
Best Practice: If your business sells products or services that are more transactional in nature, we suggest hiring an inside sales team to qualify and close the deal. If your contracts take anywhere from 6-14 months to complete and implement, you should have a team do your prospecting and pass it to an Account Executive (AE) to close the deal.
One way to streamline the prospecting and lead qualification process is to have at least one or a combination of inside sales, business development (BDRs), or sales development (SDRs) teams for prospecting.
Below are the differences between an inside sales rep, BDR, and SDR:
- BDR Defined: A BDR typically has an intermediary focus on prospecting outbound leads to pass to the sales team. A BDR typically uses cold calls, cold emails, social selling, and networking to generate leads. We usually see companies use lead scoring to qualify a lead and push it through the top of the funnel before it gets handed to an Account Executive (AE) or Account Manager to close the deal.
- SDR Defined: A SDR is typically an entry-level sales position that focuses on prospecting inbound leads to pass to the sales team. There is little to no lead qualification in this role, more of a setting an appointment between a sales rep and prospect and moving on to the next lead.
- Inside Sales Defined: An Inside Sales Representative typically sells remotely using phone, email, and social selling to prospect and nurture prospects into the acquisition phase. This lead qualification and sales method are the most popular across B2B, tech, and B2C organizations.
Although there is debate whether Inside Sales should focus on growing accounts with current customers, we typically see and recommend that businesses utilize their Inside Sales teams to focus on driving new business.
Having a group devoted to the top of your funnel will ensure that the rest remains filled with highly qualified leads, helping you minimize your customer acquisition costs.
Challenge #3: Not understanding your lead qualification methodology
The strictness of your lead qualification methodology typically depends on the size of your sales team. If you have a team of SDRs, you are experiencing a proliferation of underqualified leads, leading to a higher cost of acquisition. We consistently see businesses operating by the “BANT and Pass” methodology.
What is BANT?
BANT is an acronym for budget, authority, needs, and timeline. It is a sales lead qualification process designed to identify leads worth pursuing.
Best Practice: Make sure leads are BANT qualified
If the lead satisfies the four criteria, you can proceed to the next phase. If they don’t satisfy the Authority criteria, they’re not an actual lead. You will need to either connect with someone else in the organization (if they meet all the other criteria) or remove them from your sales pipeline. Check out this infographic to learn how to streamline your MQL to SQL conversions.
Step 3-4: Defining an Exact Scope and Solution to Build a Proposal
Once you have qualified your lead, you’ll be in the discovery phase of the sales pipeline. Your sales team will meet with the prospect’s champion (or point person within the prospect’s organization) to align on the type of product/service you’ll be providing. You will also focus on the scope of the deliverable (headcount, number of licenses required, geographic need, etc.), results to aspire to, and pricing of the solution.
The challenges we see in these stages are:
- Not having a solid business case.
- A lack of personalization on a proposal.
- Misunderstanding of your prospect’s unique situation.
Challenge #1: Not Having a Solid Business Case:
Sometimes, it doesn’t make sense to do business with a company, and that’s okay! Usually, you will determine if you have a strong business case before you reach this stage. If your team has done a solid job at understanding your prospect’s unique issues and needs, and if your product or service fits nicely into that use case, this step should be easy to accomplish.
Best Practice: Demonstrate qualitative and quantitative ROI
To differentiate your proposal from your competition, your team should state your company’s competitive advantage and demonstrate both a qualitative ROI and a quantitative ROI. Qualitative shows an improvement to your prospect’s organization’s operation, while quantitative focuses on the financial ROI. By highlighting both and a timeline for when they should quickly realize the value of your product/service, it will be difficult for leadership to dispute the value your product or service can offer your prospect.
Challenge #2: Generic Proposals are the WORST
There’s nothing more disheartening to a prospect than seeing another company’s logo on a proposal, but this happens more than you would think. We consistently see generic proposals that focus solely on your product or service and not on the unique factors that made your prospect reach out to you in the first place.
Best Practice: Personalize Your Proposals
Leading with personalized proposals should be a no-brainer. Generally, the fine details get noticed the most, so make your bids pop with personalization. Although using a sales PPT template is standard practice, make sure that your teams double-check the presentation to ensure that the presentation is clean. Add unique identifiers, like a company logo, the name and correct title of the people you’re meeting with, their image, and historical information that you were able to glean from your research.
Challenge #3: Misunderstanding of Prospect Needs
Two key traits of a successful sales rep are their ability to listen, and problem solve. Whenever there is a misalignment of deliverables, a representative focuses on selling a product and not providing value to the customer. This misalignment can be a breakdown in data transfer from the rep that qualified for the opportunity to the AE handling contracts and negotiations. This misalignment could also be a breakdown in your rep’s training.
Best Practice: Focus on Your Customer’s Success – Not the Sale
Focusing on the prospect’s unique needs signals that their success is top of mind, not the sale. Constant communication with your prospect’s point person and disciplined tracking of the prospect’s voice will ensure that every member of your team (including delivery and customer success) understands your prospect’s unique situation thoroughly. This consistency will ensure that your future customer has a personalized and consistent experience in every interaction with your company. Remember, the proposal stage should naturally progress from the previous communication.
Stage 5-6: Negotiation and Closing the Deal
During Stage 5, you will generally present the proposal to the client, red-lining specifics around the scope of work or pricing and negotiating everything addressed in the proposal.
The challenges we see in these stages are:
- Deals fall through due to a lack of negotiating power.
- Your team may also be losing contracts due to a misalignment of deliverables and outcomes.
- There is a lack of built-in incentives to offer their prospects to sweeten the deal and sign the agreement.
Challenge #1: Can’t Agree on a Finalized Proposal
This issue happens when a prospect discovers problems or inconsistencies that they did not discuss earlier in the process, whether service-related or cost-related. These inconsistencies are a part of the due diligence stage. It is essential that during this stage, your team is up-front and willing to negotiate with your prospects to reach an agreement on the final proposal.
Best Practice: Giving Your Team the Power to Negotiate:
One common contract negotiation reason is around the budget. Having clear parameters for negotiation and setting up processes for price negotiations (which may need approval from VP or executive level) will help keep this process streamlined.
Challenge #2: Misalignment of Deliverables and Outcomes
Your team should have ironed out any disagreements on deliverables and outcomes by this stage. Unrealistic expectations from the client are often a result of not being informed enough about your product/service or the realities around timelines and results.
Best Practice: Consistently Communicate Throughout the Pipeline to Ensure Alignment:
If there is misalignment on goals and deliverables, it is best to revert your prospect to the qualification stage to reassess their BANT, where their needs can be assessed again or drop them as a prospect entirely. Providing detailed sales and marketing collateral, like case studies from customers in similar industries and ROI calculators, should help temper expectations on outcomes.
Challenge #3: No Incentive to Get the Deal Across the Finish Line
Often, prospects will be looking for ways to cut down on their cost or get the most out of their spending. If your business is not willing to work with a client to offer concessions, the buyer can walk away with a feeling that their party is the only one making sacrifices. This feeling can lead to pride or frustration, driving the buyer away.
Best Practice: Sweeten the Deal!
Incentives could be a differentiator between you and your competitors. Instead of walking away from a deal whenever there is a sticker shock, ensure you demonstrate your willingness to work with your buyer by offering incentives. These incentives can be anything from 10% off the final price, rebates, deals on replacement parts, or other incentives, like free education or certification programs.
An Honest Assessment of Each Sales Stage is Key to Long-Term Growth
Whether you are knocking your numbers out of the park or experiencing missteps in your outcomes, you should be evaluating your sales pipeline’s performance at least once a year (we prefer to assess every quarter). If you are experiencing a breakdown at the front of the funnel, look at your approach to lead qualification, the number of BDRs, SDRs, or inside sales reps you have on your team, and, adjust accordingly. ServiceSource has been utilizing these best practices for over 20 years. To learn more about best practices for improving your sales pipeline, schedule a call to speak with a ServiceSource expert today!