Some big news today - our producer, Hannah Munoz, gave birth to a beautiful baby boy. Until she returns, Doug has everything covered and hopefully they’ll keep the house under order 😉.
This episode of the RevOps Show is one of Doug’s favorite topics - sales pipelines. He and Jess talk about some of the biggest mistakes that are made with pipelines, what’s the same about every pipeline, how to know whether or not you should have more than one, and what you should do to have a clear, solid pipeline to drive sales outcomes and sales results.
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- [Blog] 10 Questions to Ask When Assessing Your Pipeline
- [Blog] 5 Keys to a Balanced B2B Sales Pipeline
When it comes to structuring a sales pipeline, Jess wants to start out by figuring out where to start, but Doug always gives the same answer - that you need to map your business process. So once you’ve taken that step where do you go? Plot twist! In some ways structuring your pipeline and defining your pipeline is part of mapping your business process.
If you don’t have a defined sales pipeline, how do I start?
Doug thought that his answer was going to be the same as it always is - in the beginning, but he needs a little more context to fully answer.
The scenario is - I don’t have a defined sales pipeline. I want to put one in place for my reps to be able to track progress with their sales opportunities. How do I start putting a structure in place to track those things? How do we identify and define what our sales stages are?
You start by mapping your business process.
If you think about The Revenue Acceleration Manifesto, this is the structure part of the framework driven by the go-to-market strategy. Key elements of the go-to-market strategy are the economic model and sales model. Doug was on a podcast earlier today and the topic was about marketing to sales handoffs and he was asked if you don’t have a handoff, where do I start? Saying you don't have anything is a mistake. You have something, especially if you’ve made a sale. Every sales process goes through the same generic steps or phases/stages. There’s a stage of finding. There’s a stage of learning. There’s a stage of planning. There’s a stage of consideration. There’s a stage of action.
Finding and learning as a seller, the learning happens after finding, but as the buyer, the learning could happen before finding. If you think about product led growth, it’s built on the idea that you start learning before you start finding, and then in the process of learning, you’re finding. A very common term for finding is prospecting/discovery/pursuit.
Doug finds that most good pipelines are going to have five stages, and the last stage is your decision. A strong pipeline is going to have anywhere between five and nine stages. What you want to do is begin to break down what the key inflection points are. Doug likes having five stages because it goes with one of his favorite metaphors for sales - Texas Holdem. The five stages there are pre-flop, flop, turn, river, and show down. At each step the game changes and there’s an inflection point.
Point number one is have we found you, have you found us, and what are you looking for. It intrigues engagement and fit. This is your pre-flop. You don’t have detailed knowledge. You’re seeking positioning. Here we are defining the problem. This is often the place where Doug will add a step, depending on the complexity, size, consideration level, and inertia of the sale. Those steps then get broken down into defining the problem then defining the cost of the problem.
The planning stage brings solution design. There’s a design phase where we’re defining what the solution needs to be. People get lost here when they think about themselves as the solution. Doug likes solution design because there’s two ways you’re going to go about it. One phase is you’re a services offering, so you’re determining if there’s at least a little bit of co-creation. The other element is more of a product element.
Then there’s the transition stage where you’re going from understanding the problem to presenting your product or service as the best alternative. Understand your product is not a solution. A solution by definition is brand agnostic. You’re a methodology/alternative for the solution, but you’re not the solution. This typically manifests in the form of a proposal that then moves into a consideration or adjustment or negotiation that then moves into a final decision phase.
What stages do is prevent you from being too far off course that you can’t course correct without suffering significant loss. That’s why you have more stages in a more complex, complicated sale.
Who should you involve? As you’re defining inflection points and putting the pipeline stage in place, who should be involved? Who should be contributing?
Everybody. Salespeople should be contributing. You should want to hear what’s happening so we can look for patterns. When we work with a full sales team, sales process, sales structure, what we’re going to do is map and talk about flows in a very generic way because we want the business process to drive. The business process has to drive the sales pipeline.
The other thing Doug looks for in this is language because the words he uses and what he labels things as is going to cue the behavior. If he says demo, then everyone’s going to run a demo, but if he says solution design, they’re going to do something completely different.
We get a lot of visceral reactions to pipeline stages because of language, so it’s important what you name those stages.
Another reason we get a lot of visceral pushback is when we define the stages in certain ways. When Doug says demo, the effort required from a selling organization is one level. If he says solution design, it’s a distinctly different level.
Doug has seen pipelines with 17 stages where the stages are along the lines of meeting, schedule activities, meeting scheduled, meeting held, etc. There was one that he saw that had a no-show stage, but when they try to rebook the opportunity goes back and forth like ping pong.
One pushback Doug received from someone was that they had to be able to track what it’s taking to get from meetings. Typically salespeople are going to have seven to nine meetings to make a sale but you only have one meeting stage. This is where salespeople will have a visceral reaction because they view the process as restraining.
Are one or two pipelines better than one? Are one or three pipelines better than two?
We have two pipeline phases, a pre-sales opportunity pipeline which is what our market development reps work from and a sales development pipeline. But these can be considered one pipeline because they overlap at the very end. We’ve broken them up into two different pipelines because they are two different processes. Then we have three pipelines for sales that cover the same process. One pipeline is for a project, one is for ongoing programs and one is for add-ons. The project pipeline and the ongoing services pipeline are distinctly different sales motions. Where stages are in each of these will differ based on exit criteria. There’s some overlap between the two, but overall they’re different.
Our add-on pipeline has only three stages in it because it’s a simpler pipeline. If you want to talk about adding more people to the sales coaching program, for example, this would go into our ongoing delivery of services, so the solutions have already been designed. Another example, our business acumen for sales, our deals selling course, those are much more simpler. We don’t do solution design for those courses because the conversation is different.
The reason that there was a belief to begin with that there should only be one pipeline was because the systems that existed only enabled one pipeline. So you went to your lowest common denominator. Going to where there could be a very similar motion and where Doug could see himself going to two distinct pipelines or more is if the velocity or complexity was materially different. For example, if he’s selling the same set of services to enterprises that he’s selling to smaller businesses, they technically have the same stages, but the velocity of those pipelines is different. That enables you to separate them.
If you are breaking up one pipeline into two, do you lose functionality with tracking and reporting?
Not really if you configure it correctly. There’s some visualization that you lose. If you have two different pipelines, you have to do added work to view them as one. If you have the same person selling enterprise that sells to SMB, Doug would move more towards the same underlying motion that would move towards a single pipeline. If you have different teams, that’s going to move him more likely to separate pipelines.
What are the other things that you should consider outside of just stages as far as pipeline structure?
In each stage you need to answer these questions:
- What’s the objective?
- What job is this stage doing? That can communicate intent.
- What’s happening in the customer’s world? What are they doing? What are they thinking? What actions are they taking?
- What’s happening on our side? What are we doing? What actions are we taking?
- What has to happen for us to consider us past the first milestone?
Where do pipelines fail? What are the mistakes that people make with pipelines?
The biggest mistakes are that they're too rigid. They don’t support infinite paths and styles. Rigid would be like the 17 step pipeline, that’s a very rigid pipeline. Another mistake is when pipelines are too linear. Another one is mistaking activities for stages is too vague, too broad, too meaningless.
Doug also sees people way overestimate how fast things are going to happen which leads to bad forecasting. How you’re judging and setting up your analytics is important. Very often salespeople either always oversells or undersells because they only have one path. Overall the business process has to drive.
Some other takeaways Jess has for this episode include:
- When you’re outlining the structure make sure you define your inflection points.
- Make sure your stages are actually stages and not just activities.
- There’s five categories of defining - what’s the job of the stage, what’s happening for the prospect, what’s happening for us, exit criteria and when it’s triggered.
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