Having a big pipeline of “prospects” is typically seen as desirable. The more prospects you put into the pipeline, the more will eventually emerge as customers. At least that’s the theory!
And in principle, the theory is valid. Some of those that you put into the pipeline will become customers. But we always need to ask ourselves two important questions about our pipeline: “How many of these opportunities do I expect to turn into customers… and how long will it take for them to emerge from the other end of the pipe?” Most selling professionals are not asking themselves these questions.
Most salespeople will take twice as long to wrap up the opportunities they don’t win than to close the opportunities they do. In other words, it takes significantly longer to walk away from deals that aren’t going anywhere.
THE TIME FACTOR
Taking so long to close-out a non-winning opportunity wouldn’t be so bad if the salesperson was investing very little time and energy on dead ends. But that’s typically not the case. Major time is often spent creating multiple proposals and “following up” with phone calls, texts, and emails. Also, additional time is spent recording all that follow-up information in the company CRM application.
In addition, significant time is spent reporting on the “progress” of these dead ends during weekly meeting with the sales team, and/or the manager. If management request weekly summaries of “top ten” opportunities, time is required to write detailed summaries. Add to all of that the time and energy invested by other company personnel who participate in the development process – technical, production, and financial people, for instance – and you realize there is a lot of time and effort invested in many opportunities that yield no return!
Why do selling professionals cling to opportunities that drag on or become stalled? Part of the answer is culture. In many organizations, a packed pipeline is considered a sign of success – tangible evidence that the salesperson is “working.” The association may not always be accurate, but it exists nonetheless.
Another issue is fear. Some hang on to an opportunity too long out of fear that they won’t be able to replace it. They possess a scarcity mentality; the notion that there are not enough good opportunities to go around. They believe that in order for one person to win, another must lose. If they let go of an opportunity, they reason someone else will capitalize on it and win, and they will have lost. So they hang on to stalled opportunities just a little longer… and then just a little longer after that.
THE “SELL-BY” DATE
Consider how much easier (and more productive) a salesperson’s typical week would be if each opportunity were stamped with an expiration date: “Close by 12/11/18.” If the sale wasn’t closed by the expiration date, the salesperson would be required to move the expired opportunity from the pipeline and replace it with another. No opportunity would be allowed to loiter in the pipeline forever!
Since prospective opportunities don’t come with a pre-stamped expiration date, then opt for the next best thing! Assign “sell-by” dates to all of your opportunities, based on the average length of the selling cycle. If a sale isn’t closed by that date, there must be compelling evidence presented by a salesperson and everyone else involved to keep its place in the pipeline. Otherwise, it comes out.
With this approach, selling professionals will spend less time “managing” the pipeline, and more time identifying new opportunities and moving them forward! And, closing number will improve!