Flipping The Pipeline Value Pyramid


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Pipeline reviews and reporting are constant sources of contention between management and sales people. Most often the value of this activity is portrayed as the inverted triangle in this diagram. Managerial Value Pyramid 2 Managers are getting all the value! From a sales person’s perspective, they get no value from it, but managers need it to make sure the business in control. At it’s worst, sales people view it as a “Big Brother Is Watching Exercise.” Unfortunately, too many managers view it in the same way, reveling in the concept of being able to watch and micromanage.

In reality, however, the pipeline and metrics associated with the pipeline represent one of the most powerful tools for sales people in managing their time, focusing on critical opportunities, assuring they make their numbers, and constantly improving personal performance.

Sales Value PyramidSo what would happen if we changed our view of the Pipeline Value Pyramid? What if we inverted it, creating huge value at the bottom of the pyramid–huge value for the sales person, rather than focusing on the value to management?

So what’s the WIIFM for sales people for strong pipeline metrics and high pipeline integrity? Why is it important for sales people to analyze the pipeline to improve performance?

Basically, the pipeline is a key diagnostic tool the sales person can use to answer 4 questions about their own performance and territory management:

  1. Will I Achieve My Goals: Here pipeline shape, velocity/flow, composition, and balance become key determinants in addressing this issue. We can start looking at how we spend our time, where we need to spend our time, and what we should be doing to maximize our ability to hit our numbers.
  2. How Do I Increase My Win Rate: The pipeline shows aggregate trends in your win rates (and stage conversions). It’s a hugely powerful tool to start recognizing patterns. For example, “We tend to win more with these types of customers and less with these,” “When we do these things, our ability to win goes up,” “These competitors cause us the greatest problems/challenges.” In recognizing these patterns, we can start developing strategies that enable us to improve our win rate. For the examples just cited, “We can refine/redefine our sweet spot, focusing on the right customers,” “We can refine our sales process, perhaps identifying trigger activities that improve our win rate,” “Here’s the strategies these competitors take here’s the counter-strategies that position us more favorably?” Our pipeline’s help us understand skills challenges, do we have problems qualifying (clustering in the qualifying stages, declining win rates, deals falling out of the pipeline.)? Do we have problems closing (late cycle losses)?
  3. How Do We Compress Our Sales Cycle: As with the previous point, the pipeline gives us a macro view of what’ happening with our sales cycles. So we can start identifying patterns that slow us down, figuring strategies to overcome them, or things that we do to reduce the sales cycle. For example, with one client, Proofs Of Concepts were very critical in the sales cycle. Typically, these were done very late in the sales cycle. We found by moving them up (tail end of the Discovery phase), we could both dramatically decrease the sales/buying cycle, but also improve the odds of winning.
  4. How Do We Increase Average Deal Size, Deal Profitability: Again, the pipeline is all about recognizing patterns, then diagnosing and improving. Are we chasing the right customers, are we doing the right things in our sales process? What things do we notice about those deals that have higher margins or deal values? How can we start finding more of those types of deals?

Every high performing sales person looks at their pipelines/funnels asking themselves these questions to improve their capabilities and to make sure they hit or overachieve their goals. They see huge value to maintaining a high integrity pipeline, analyzing it, improving their performance.

Managerial Value PyramidIf every sales person starts leveraging the pipeline as a tool to monitor, assess, and improve their personal performance, we actually create a new value pyramid, pictured here. (OK, I know it’s actually a value trapezoid, but give me a little literary license.) Each sales person leverages the pipeline as a powerful tool to improve their own productivity. Managers, leverage that same information to be more effective in coaching and supporting each individual sales person. In addition, they get an overall organizational perspective. Posing the same questions about patterns they see across the organization. They can start looking at things to improve organizational performance, ultimately helping each sales person.

There’s another piece of magic that happens. If both the sales person and the manager get value from the pipeline–the quality of the pipeline is much better. Think about it, in a world where managers only get value, the quality of the pipeline is probably dismal—sales people see no value, they don’t update it, they don’t care about accuracy. Then managers have to spend endless hours talking to sales people, updating the information and fixing it.

The “shared value” pyramid gets rid of all of that. Each person get’s value, together, they each get greater value. It’s a real win win!

How does your organization look at the pipeline value pyramid?

Do sales people know how to leverage the pipeline to help improve personal performance?

Do managers know how to coach sales people, leveraging pipeline data to improve the performance of each sales person on the team?

Do managers know how to look at overall organizational issues to improve organizational performance?

Thanks to the “MAD” Mike’s for the inspiration for this post, Mike M, Mike A, Mike D—you know who you are! Thanks so much!

Republished with author's permission from original post.

Dave Brock
Dave has spent his career developing high performance organizations. He worked in sales, marketing, and executive management capacities with IBM, Tektronix and Keithley Instruments. His consulting clients include companies in the semiconductor, aerospace, electronics, consumer products, computer, telecommunications, retailing, internet, software, professional and financial services industries.


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