Investing in your sales pipeline to drive business profits

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A Business Harvard Review highlighted you could increase business growth by 15% through effective sales pipeline management. This is compared with businesses with poor pipeline management practices.

The Review went onto say those businesses that mastered three specific practices could speed up business growth up to 28%. These practices are:

  1. Clarity defining your sales process
  2. Be more effective in managing pipeline reviews
  3. Train managers on pipeline management

Few would disagree with such guidance, especially coming from a Harvard Business Review. Business growth infers revenue growth, it does not state profit growth. My interest is profit growth. To better understand the relationship sales pipeline reviews and increasing business profits.

Consider successful and experienced sales leaders. They manage their sales pipeline reviews to focus on achieving a fair market value for what is being sold. If a business measures its sales teams based on achieving only sales revenue quota, the door can be opened to allow risk in. That risk is closing deals by discounting the price to achieve sales revenue quotas. Price discounting has a far greater impact on profit when compared to sales revenue.

Sales leaders use sales pipeline reviews to help the teams develop a game plan to support their team move deals forward in the sales pipeline. Delivering value in a sale that buyers are willing to pay a fair price for requires focus. Experienced sales leaders focus their teams on finding priority problems. Ones that buyers and influencers do not know they have. This focus paves the way for value-based selling to negotiating a fair market price for the value offered.

Sales leaders perform best in businesses with a clear purpose. These businesses appreciate the value they have to offer. They know what they can do better than their competitors and focus on where they are most competitive. In other words, be clear about your purpose to remain competitive. If you do not know why you do what you do, how can you bring clarity to others?

We have three dynamics at work here.

  1. Disqualification allows sales teams to focus on the right sales leads. It is these leads that become your high-value sales revenue opportunities.
  2. Sales lead velocity keeping them moving through the sale pipeline.
  3. Sales revenue forecasting to achieve your quota targets

It all starts to unravel when a sales rep believes they will not achieve their quota target. They risk cannibalising their high-value sales revenue opportunities that only serves to move pressure to the next Quarter in order to achieve their immediate sales revenue goals. This will move the business to a short-term revenue focus that pushes value-based selling aside.

The secret sauce is:

  1. having enough sales opportunities moving through the sales pipeline at different sales stages
  2. Sales and pipeline review discipline to protect high-value opportunities. To stop cannibalising these opportunities that will grow the business.

Sometimes under pressure, some may consider there is no other option or route to take. I recommend pausing at this point for a moment to consider the impact this strategy could have on your sales pipeline, forecast and the business. Here are two examples what the increase in sales revenue you will need to achieve to compensate for your discounting strategy.

  1. If your margin is 35% and you reduce your price by 10%. You will need your sales volume to increase by 40% to maintain your profit.
  2. If your margin is 50% and you discount your price by 30%, you will need to increase your sales volume by 150%!

Use this link to view the Discounting your prices and profit impact chart. It is a cold reminder risk creating from adopting a discount strategy. It will place your business under increasing profit pressure.

Many consider forecasting and pipeline management as different activities. Given the current state of many sales pipelines, I do agree, one feeds the other. Your sales pipeline and reviews feed your sales forecast. The million-dollar question is how effective are your sales pipeline reviews?

Research by Salesforce found that companies measured pipeline health across three key dimensions. Size, shape, and contents. Winning deals is through focused coaching on individual opportunities. They concluded. If you are examining your sales pipeline or coaching your reps to win a deal, you are steering the ship.

Sales pipeline reviews must focus on coaching value-based selling. You need to review the conversations taking place within each sales lead. Investing in a sales prospecting tool such as the Conversational Solution Sales Scorecard provides these conversation insights.

The scorecard presents conversation sales indicators. These can be used across your sales business to provide consistency, especially when used during sales pipeline reviews. They allow you to focus on building value-based selling that will reduce the pressure to discount on the price. Use this focus to avoid this ill-fated strategy. You will be more successful in growing your business sales revenue and profits.

Download our Guides. The Sales Pipeline Guide for Sales Teams & Business Owners. Within this guide, you can also download another Guide – Using Sales Prospecting Tools to Improve Sales Pipeline Reviews.

About the Author

Treve Wearne is the founder of Nazca Services Limited. Treve supports businesses and sales teams positioning themselves and increasing sales revenues. Improving sales forecasts, talent development and retention in the most challenging business environments.