First, I have to credit my friend John Cousineau with this title. It came up in a call we had recently. It seemed an appropriate, is slightly salacious, title for this subject.
I must review hundreds of pipelines and funnels every year. A majority of the funnels and pipelines are overinflated–by a large amount! Lots are the result of “wishful thinking” or simply pursuing unrealistic deals, yet sales people will carry them in their funnels, even reporting on them, for months. “You know this isn’t going to happen, ” I ask, “Why do you still carry this in your funnel?”
Responses are all over the place, in lots of cases, it is truly wishful thinking on the part of sales people, they think that if a customer returns a call, it’s immediately a real opportunity and they put it in the funnel. There are lots of other excuses people give.
There is a category of answers that disturbs me, it’s the response, “My manager insists that I have a full funnel. I’ve been doing everything I can, but I just don’t have the opportunities I need in the funnel. So, there are these deals, I know they probably will never close, but at least I get my manager off my back.” While it’s wrong, I really have a lot of empathy for these sales people. They know what they are doing, but they don’t know what else to do, and they aren’t getting help. In many cases, they fear if they don’t have a full funnel, they will be fired.
I talk to managers about this problem, not surprisingly, they often cite the same reason, they’re managers insist on full funnels, but they and their people can’t find enough good, highly qualified opportunities. And the problem keeps going all the way up to the top of the business.
No one likes an empty funnel, but a funnel full of deals that will never close is even more dangerous. It fools everyone about the state of the business. We see an apparently “robust” funnel and think the business may be on track for meeting it’s plan. A number of years ago, I reviewed a business that was struggling. The Board had invited me in. Revenues were plummeting, but management kept showing them pipelines that were robust, filled with opportunities. It begged the questions, “‘What’s happening to our revenues then? Why aren’t we closing the business?” Their original attempts to solve the problem were all misdirected, they looked at symptoms, did things like reducing prices, parachuted executives into sales situations, did all sorts of things. Nothing was working. They started casting wider nets, looking for business, adding even more stuff to the funnel, but stuff where they had little experience. Still nothing was happening, they started making the cutbacks across the company. Cutting everything, because they really didn’t know where the problems were.
When I was asked to look at the situation, at first I was perplexed, “What’s wrong? They seem to have lot of opportunities, they aren’t closing them, this is really confusing.” Then, sitting down with the sale people and managers, we started going through their pipelines. We focused on finding the right deals in their sweet spot. At the end of an arduous and slightly painful process, we whittled th pipeline down–at the end, only 12% of the original deals remained–but they were rock solid in the sense they were deals they should close if they executed their sales process well. None of us were happy with what we found, but we now could start looking at understanding the real problems and developing the real solutions to grow the business. We learned a lot. In one area, we learned the need for my client’s solutions in a specific market had virtually collapsed–not great news, but important for in making decisions in the investments the company was making in this market segment. In some areas, we found the previous cutbacks had severely impacted their ability to deliver in areas that had been very strong. In another, we found we had great solutions, but virtually no visibility to customers looking for those solutions. We needed to invest in marketing programs in this segment—much to the relief of the VP of Marketing who had been struggling with an underinvestment in marketing programs in general. We went on, systematically looking at the issues, determining what we needed to stop, where we needed to invest and how we could regain growth. It was a long process, but over time, we built the plan, and folks executed sharply.
There is and should be pressure on sales people to keep their funnels full. We want sales people pursuing enough opportunities to achieve their business plans. At the same time, that pressure shouldn’t cause us to relax the standards of carrying strongly qualified, real opportunities in the pipeline. We’re only deceiving ourselves. It masks problems with the business or causes us to find the right solutions to the wrong problems.
We have to lay ourselves and our funnels open–naked (bet you were wondering how I’d work that in), for everyone to look at and understand. Good or bad, they have to accurately reflect what’s happening in the business. Only then can we start to truly understand what the challenges are and address them. It may be a sales person issue—then managers must coach and develop the person to improve their abilities. It may be a substantive shift in markets, a change in competitiveness. All the problems are solvable, but first we have to recognize they exist. The funnel/pipeline is a key indicator. We have to be prepared to run naked through our funnels!
