Optimizing Tools and Process to Improve Sales Pipeline Management
Introduction to SignalsFromTheOP
Guide to episode
- Sales process and common scenarios determine your sales pipelines
- Common capital equipment sales pipelines to consider
- Sales pipeline metrics to measure and use for pipeline management
- Pros and Cons of CRM vs ERP for sales pipeline management
Hi, I’m Ed Marsh. Welcome to this episode of Signals from the OP. My biweekly videos are intended to be thought-provoking for industrial manufacturing company execs. If you know of one who you think might find some value, please share it with them.
Capital Equipment Sales Pipelines & Sales Process
Let’s talk about sales pipelines, pipeline management, and capital equipment sales pipeline metrics.
I’d say most of the stuff in a CRM and related sales tech stack is all built around the pipeline. If closed/won deals are the ultimate KPI for an industrial sales team, then it’s the opportunity pipeline that’s at the core of that effort.
So first, let’s start with a question. How many CRM sales pipelines should you have?
Or, for your specific business, how many very different sales might require different pipelines?
That, in turn, begs another question. What does the pipeline map to? And the answer is your sales process.
The sales process is the set of steps that are required to move a deal from suspect to customer. Of course sales methodology describes the technique that you use to move them along, but it’s the process steps that you track in your pipeline.
How Many Sales Processes Do You Have?
But how different is your process for different types of projects?
If you look at most sales processes, they don’t really differentiate based on the details of the project.
When I think about the capital equipment space, then, that raises some questions. Is it reasonable to think that you’ll sell a new $2.5MM system as the first transaction in an account with a strongly entrenched competitor, the same way you’d sell an engineering study, or a partnership entry sale, or even achieve approved vendor status?
The short answer is obviously not.
In some cases you’ll have a fairly short sales cycle with relatively little complexity, while in others, you’ll be selling to many more people, including some at high levels. You will have the same sales process milestones, but many, many more important steps and checkpoints. So it makes sense that you’ll need different CRM sales pipelines.
Six Common Sales Pipelines
For a typical capital equipment manufacturer, I’d say you probably need the following six:
- Machine deal
- Approved Vendor certification
- Entry sale
- Machine rebuild
- Training program
- Channel sales pipeline for deals you’re selling indirectly through distributors or reps
These are common scenarios that are each quite different.
Sure, you’ve got to uncover the compelling reason someone will buy, you’ve got to reach the decision maker, etc. But they’re very different kinds of sales processes.
And here’s an important point. The impact on your forecast is much different too. The machine deal will have a material impact in a way the others won’t. It should involve particularly rigorous qualification and requalification criteria – both quantitative (e.g. number of contacts with whom you’re in touch) and qualitative (a brief narrative of the personal benefits/risks for each player) to support forecast accuracy and effective coaching.
Sales Pipeline Metrics
If those are the pipelines, what sales pipeline metrics should you track?
Again let’s go back to the purpose of the pipeline – it’s to guide deals through the process to win more deals.
That means helping sales reps be more effective by following the process, and focusing their time on deals that are likely to close.
It means helping managers understand how to coach reps, and pull in other resources to help close deals.
And it means helping company leaders jump in when necessary, to guide managers, and to measure the effectiveness of each individual, the team in aggregate, and the net ROI of each investment in sales and marketing.
What are the sales pipeline metrics need to support those goals. While your business is unique, generally KPIs include:
- Length of sell cycle
- Conversion rates between each stage
- Length in each stage in the funnel
- Where each rep/team hangs up in funnel
- % of deals disqualified at each stage
- Number of deals meeting criteria to kill for cause
- Variable performance insights with certain types of buyers, against certain competitors, when it’s a new prospect vs. repeat customer, certain product types, certain lead sources
- Close rates
- % of deals ending in “no decision” – maybe even, as suggested by The JOLT Method, whether they’re lost to the status quo or buyer indecision
- Any other metrics you find improve the outcomes, improve forecast accuracy, or improve the efficacy of your Win/Loss reporting, AARs (after action reviews – debriefs) and lessons learned
CRM vs ERP for Sales Pipeline Management
And then, another big question.
A lot of people in the space where I work – middle-market industrial manufacturers – have invested enormous money in their ERP systems.
You’ve heard the stories. Changing implementation consultants half-way through. 2 to 3 X the planned budget. And 2 to 3 X the timeline. An ERP takes a lot of IT and outside support. So it’s natural when it comes time to look carefully at CRM, marketing automation, and other tools, to try to figure out what module might be available for short money that just bolts onto the ERP. Nobody wants another nightmare.
Therefore many companies make the rational, but the shortsighted decision to run with their ERP. If we compare CRM vs. ERP for sales effectiveness, there are a lot of compromises in functionality. Not only are most of the typical sales force automation and sales acceleration functionalities marginal, the pipeline flexibility often is too.
Sure, you can create stages with an associated likelihood of close. There’s probably a graphical interface to move them along. You can create data properties to key deal details you want to track. But that’s not enough.
The Proper Role of CRM in Sales Pipeline Management
In long sell cycle complex sales, you need your CRM to consistently reinforce qualification and requalification criteria. You need calculated values to help determine what deals can be advanced to the next stage, along with appropriate contingent value properties (for instance the number of buying team members identified and engaged) that help to ensure deals are accurately forecast.
After all, if the deal champion says you’ve been selected, but your rep is only talking to one of 10 people on the buying team and has no idea when or how capital is approved, it’s not a “verbal agreement” deal.
This is a key area where you’ll often find the CRM vs. ERP comparison falls short. The pipeline and forecast are, after all, the core of what’s in your CRM.
There are lots of functions that will boost the effectiveness and efficiency of your reps – and those are important, as is integration with marketing automation, sales enablement, sales content management, etc.
At it’s core, if your CRM doesn’t provide superb pipeline capability, then it’s really just a contact manager.
HubSpot Sales Hub Solution for Manufacturers
Here's the good news. If you’ve had an ERP nightmare, and heard stories about tortuous salesforce customization, don’t make a hasty decision. HubSpot CRM, actually called HubSpot SalesHub, is an awesome solution for middle-market manufacturing and industrial companies. It’s easy to implement, operate and maintain by your sales operations team, and it’s easy for sales reps to use.
I’m Ed Marsh. Thank you for joining me for this episode of Signals from the OP. If you enjoyed it, please share it and subscribe – either to my YouTube channel EdMarshSpeaks.TV or at the related blog SignalsFromTheOP.com.