How Leaky is Your Sales Pipeline?
by Greg Chapman
Published on this site: July 14th, 2005 - See
more articles from this month...
Does your Sales Pipeline leak? If you answered no, you don’t
even understand the question. Every business’ Sales Pipeline
leaks to some extent. The question is: Have you done everything
you can to ensure that it does not leak excessively? Do you
even know what your Sales Pipeline looks like?
Very simply, a Sales Pipeline starts with an initial enquiry
and ends with a sale. While the Sales Pipeline looks different
in each business, there are still some similarities between
them. In all businesses, there is a need to generate enquiries.
This can be done through advertising, cold calling, public
relations or word of mouth. This enquiry may be a phone call
in response to an ad. Or, in retail, a customer may walk in
your front door attracted by your shopfront marketing. This
is the first step of the Sales Pipeline for any business.
However, there are usually a number of steps from receiving
an enquiry to generating a sale.
The next step might be getting an appointment with the prospect
to establish their needs. In a retail situation, the sales
staff will ask: Can I help you? Once need is established,
a second appointment may be made to present a proposal, or
a quote may be provided. The final step in this generic Sales
Pipeline would be to close the sale.
It is essential that every business owner understands their
Sales Pipeline and where it leaks. Using the generic pipeline
above, what percentage of enquirers agrees to an initial appointment?
How many of those agree to receive a formal proposal or ask
for a quote? And finally, how many who receive a formal proposal
or quote, are converted to sales? By understanding each step
in your Sales Pipeline, you can measure the success in moving
prospects along the pipeline, and spot where your sales process
needs to be improved.
No Sales Pipeline is leak proof. In fact, there are some
people who you don’t wish to become your customers. They
may be the bargain hunters, the time wasters or people who
are poor credit risks. So there should be a screening process
to remove people who are not qualified to become your customers.
To be effective, this screening process should remove unqualified
prospects early in the pipeline, before you have invested
too much time with them. But if you are turning away a high
number of unqualified prospects, you should be looking at
your enquiry generation strategy. If you sell luxury cruises,
advertising in a tabloid newspaper will probably produce mostly
unqualified enquiries.
All other prospects, however, are by definition, qualified.
And their loss is one that you wish to minimise. If there
is a large loss in getting that initial appointment, perhaps
a script needs to be developed for staff to turn that initial
enquiry into an appointment. If the losses are large in getting
a request for a proposal or quotation, sales training on establishing
rapport and need, creating desire and building value should
be considered. If proposals (or quotations) have a low rate
of acceptance, there could be a problem with the offer, or
the way the sales person tried to close.
Put in place monitoring systems to measure the movements
of prospects through your Sales Pipeline. Analyse the losses
at each stage. By understanding your Sales Pipeline, you will
understand what you are doing well, and where your pipeline
leaks. Only then can you start plugging those leaks!
Dr Greg Chapman assists small to medium sized
businesses with business planning, business systems and marketing
strategy. To find out how you can Multiply Your Profits &
Make Your Business Run without You, and to find out How Good
Your Business Really Is with a Free Online Business Medical,
go to Empower Business Solutions website at: http://www.empowersolutions.com.au
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