How to Make Your Opportunity Pipeline More PredictableBy Theresa Lina Stevens | Print
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Having trouble predicting revenues and making sure more business is coming your way? In this first part of a series, Theresa Lina Stevens starts going over ways to keep new busines coming down your corporate pipeline.During soft-market years, many technology services companies have difficulty accurately forecasting revenues and keeping the opportunity pipeline full enough to deliver the revenues they need.
And even worse, by the time they realize they're at risk of not meeting the revenue goals, it's too late to do anything about it, because sales lead times are so long. The good news is that there is a relatively easy way to fix this problem: a quantitative approach to pipeline management.
If you can relate to the scenario above, you need an opportunity management framework and plan for projecting, monitoring and actively managing the early stages of the opportunity pipeline.
And their business development teams tend to be great at moving opportunities from hot prospect on through to closed deal/no deal status. They clearly view this as their job and do it with verve.
Why, then, do so many teams fall short of projections? And what can a company do to ensure enough deal flow when demand is down and competition is intense?
I find that the biggest opportunity management weakness in most organizations is that they don't have a systematic approach for defining, filling and monitoring the top of the opportunity pipeline.
But before we can fix a process, we need a common framework. One key to successfully planning, monitoring and managing your deal flow is a pipeline development framework that keeps everyone in the organization on the same page and clearly communicates your status at any given moment.
It's especially important to have a framework when your team has come from various other companies and been through a variety of training. You'll often find people using the same terms and meaning different things.
The ideal solution to this problem is to find a sales management and training company that has a methodology particularly well-suited to your company, and send everyone to the training. The right tools, guidelines and strict quality assurance also can help solve this problem.
Sizing up your opportunities in five categories.
But if you need a fast solution, here is a very simple model you can start using immediately. There are five categories of opportunity, based on whether the prospective buying entity perceives a need and whether it is ready to consider taking action: target, suspect, prospect, proposal and deal.
"Entity" is a catch-all referring to a potential client organization, whether it's a company, a business unit within a company, a department, etc. (referred to by some business development people as "sphere of influence.") Here are the definitions of each category:
Target: A likely candidate for business, regardless of whether it has a current need or is ready to act. These should fit your target profile and criteria. And of course, they must be worth an investment to initiate a dialogue, so that you'll be on their top of mind should a need arise.
Suspect: An entity that has determined it has a need and/or is willing to talk to you about how you can help.
Prospect: An entity that is ready to take immediate action and is actively interested in possibly progressing to the proposal stage.
Proposal: A situation in which an entity has actively engaged in a process regarding a possible contract (e.g., formal written proposal, presentation or discussions). Also includes situations in which there is a verbal deal but no signed contract that allows fees generated to be booked.
Deal: Written evidence of a formal agreement with agreed-upon terms. Ideally, it's a signed contract or an arrangement letter.
In recent years, the terms "leads" and "lead generation" have become more common within services organizations. The terms arose from transactional and in-bound selling environments such as hardware and software companies, but services companies should avoid them for two reasons.
First, they are ambiguous, as a "lead" could be defined in any number of ways and fall anywhere below "target" on the above model. The terms above are more specific and provide much more information about the quality of the opportunity.
Second, the word "lead" implies the sell-it-and-move-on-to-the-next-one mentality you need in a transactional environment. It also often refers to in-bound inquiries that result from broad direct marketing activities.
Both of these are the exact opposite of what you need in a services environment, where solution-selling and ongoing, long-term, personal relationships are the key to success. Therefore, I recommend discontinuing the use of these terms to avoid the mindset that often accompanies them.
Instead, the above model offers a more specific way of categorizing your opportunities.
Here's what you can do today to put this to use: Analyze your current opportunity pipeline and determine which category would apply to each of your opportunities. Is your pipeline as robust and solid as you thought? Based on your historical conversion rates, does it appear that your pipeline will deliver the revenues you need?
In upcoming segments of this series, I'll help you take a more methodical approach to answering these questions. I'll also provide a template that will help you manage pipeline risk and improve the accuracy of your revenue projections.
Theresa Lina Stevens specializes in market dominance strategy and marketing for IT and professional services companies. She is CEO of Lina Group Inc., which helps clients gain and sustain a unique and high-profit, high-growth market position through a proprietary approach called the Apollo Method for Market Dominance. You can reach her at firstname.lastname@example.org.