Monday, December 15, 2008

'Tis The Season To Build Pipeline...

As sales professionals around the world finish out this historic year... and continue to receive pressure from 'above' to focus on closing every last business opportunity possible, we cannot forget where those potential sales come from... Pipeline.

Without pipeline we have no prospects... Without pipeline we have no meetings or proposals... Without pipeline we have nothing to Close.

How much pipeline is enough? The amount of pipeline that every sales professional and organization must have is different, but it can be easily determined by following these simple steps:
  1. Out of every 10 'qualified' leads you have, take the average number that result in a closed sale. Divide that number by 10 to get your Average Close Rate. (Example: 2 divided by 10 = .20 or a 20% Close Rate.)

  2. Divide 100 by your Average Close Rate to get your Budget Multiplier (Example: 100 divided by 20 = 5)

  3. Multiply your Revenue Target by your Budget Multiplier to get the amount of pipeline you need in order to have a chance at achieving your goal (Example: $500K revenue target x 5 = $2.5 million of necessary pipeline)

(Note: This can also be used to calculate necessary Pipeline to generate new members, new jobs offers, etc.)

Whether or not you know your Average Close Rate... is what it is... Therefore, you basically have three options: 1) Improve your Close Rate, 2) Grow your Pipeline and/or 3) Continue to guess whether or not you'll hit your numbers this period.

Pipeline is the fuel that must constantly be put into our Sales Engine to drive revenue growth. Regardless of how fast we are going now, without fuel we will come to a grinding halt.

1 comment:

Dilip said...

You are right. In this environment, company's fate is determined by how much they can sell and how much they sell is dependent on how big the pipeline is.