Tl;dr - Pipeline management is challenging for complex sales like capital equipment and machinery. Success requires a clear process, superb salespeople, and strong collaboration between marketing and sales. Accountability is the glue that binds it together, and technology and data are important components.
38% of Deals End in No Decision
That's Challenger, Inc.'s early 2020 survey-based estimate of the impact of the status-quo on close rates across many industries.
In the meantime, COVID uncertainty has likely increased that number, and it's almost certainly higher in the industrial and capital equipment sales space where decisions have longer-term reverberations than a one-year software contract.
Add in the impact of ghost deals - those that never really were qualified but were added to forecasts to help satisfy some activity metrics - and it's no wonder that opportunity pipelines end up so distended. Middle stages bulge with deals that are just temporarily delayed, but sure to happen "next quarter."
That creates untenable situations for capacity forecasting, component purchasing, staffing decisions, lead-time projection, and cash flow planning.
Eventually, everyone just starts to wink and ignore forecasts. The sad result is that sales team mediocrity impairs the ability of staff and managers to efficiently perform their jobs.
Too often management accepts sales' protestations that the unpredictability of sales and buyers are the root cause of the challenge. Others recognize that it's actually a shortcoming in the sales team's pipeline management aptitude and the company's approach.
The solution is to improve the pipeline management process.
Continuous (Re)Qualification is the Key to Improving Pipeline Management
It's undeniably correct that ultimately salespeople can't control who will buy from them.
However, they can control and should be held responsible for knowing who will buy from them - or at least those who satisfy rigorous, empirical criteria which correlate to the likelihood of doing so at each stage in the process.
This is achieved through continuous qualification - and re-qualification - and it's the key to the fundamentally important industrial sales skill of effective pipeline management.
Qualification starts like an ideal customer profile (ICP) analysis with an understanding of account-level attributes that correlate to past success and play to your particular strengths.
- Firmographic details including industry, geography, size, public vs. private ownership, profitability, market trends, fit based on your product roadmap, etc.
- Possibly technographics (types of technology they use)
- Competitive considerations
- Soft factors like propensity to buy least vs. most expensive, how they treat employees and maintain facilities, etc.
Based on your industry knowledge and some research, your team can identify likely situational factors including:
- Problems they may likely be trying to solve and/or capabilities they could be considering adding - along with the relative urgency and typical opportunity cost
- Evolving expectations of their buyers and the market
- Regulatory requirements that might impact them
- Other investments they might have to prioritize
That gets you started, but it's really just a first-level filter. In other words, can you confirm that they are the kind of company with which you'd want to do business and that they are likely in a position where they'd benefit from what you do?
People and Process
Understanding the account situation is relatively easy. Nevertheless, it's amazing how often salespeople will confidently include opportunities that don't meet these simple criteria in their pipeline reviews.
Stepping from account filtering into the realm of people and process substantially complicates the challenge. (Check out Bob Apollo for lots of great insights on the topic, as well as the books Secrets of Sales Innovators and Gap Selling.)
First, the sales team has to understand why a company (collectively) and buying team members (individually) will buy. The gap between the current state and the future desired state should be fully explored, quantified, and confirmed with each member of the buying team. If that can't be done (because they won't participate, there is no substantial gap, the salespeople don't have the business or sales savvy to do so) then there's no way a deal can be qualified to move through the pipeline.
Your reps may hear from buyers that they'd like to proceed, but without clear criteria and compelling reasons why it will, the deal will end up on the middle of the pipeline - like a snake's belly after it at a large rodent - and always remain one quarter away from closing. Your CRM should require that qualitative replies and quantitative metrics be completed to substantiate a rep's judgment on qualification.
Secondly, it's not enough to connect with one or two buyers. You're probably facing a buying team of 15-20 across departments and roles. Qualification for each stage in the sales pipeline should require confirmation of engagement with key buyers, and confirmation of critical deal facts with them. To ascribe a closing likelihood of any more than 10 or 20% while only talking to 10-20% of the buying team is absurd.
Nothing is Static
All of these qualification factors are subject to change at any point in the buying journey.
A private company could be purchased by a public one. Key stakeholders can change. High priority (think cybersecurity) projects can arise which preclude all other planned investments despite earmarked capital. And of course, another company's sales team could outsell yours and change the deal criteria.
So opportunities must be continuously qualified: to satisfy gateway criteria for advancing between deal stages; and requalified to ensure that circumstances haven't changed in ways that impair or invalidate earlier qualification.
No deal is permanently qualified.
Strong Sales Pipeline Management is Built on Culture
Obviously, a simplistic BANT approach isn't going to work for a complex sale like high-value capital equipment that's purchased by a large buying team in a protracted and complex journey.
It takes a sophisticated understanding of the value you provide, the buying team roles, buyers' journeys, and business savvy.
Further, it takes a culture of accountability, curiosity, comfort with ambiguity, and transparency/honesty in which your sales and marketing teams are comfortable challenging each other respectfully in pursuit of the best answers for the company.
The framework that supports the process is a standardized sales process that recognizes important qualification and collaboration points, and builds on the alignment of sales and marketing and strong sales enablement efforts to collaboratively drive the process.
The Role of Marketing, Technology and Data
Industrial sales and manufacturing marketing are now inexorably connected as the pipeline management challenge illustrates.
In order for salespeople to manage the complex, large scale task they face, they require tools to foster efficiency, and data (first-party data from your own website, second and third-party intent data, and other types of firmographic and enrichment data) to help them identify active buyers, locate and contact all appropriate members of the buying team, and to understand how the buying team is working on their project.
Many of those tools and data sources are part of the marketing tool kit.
Further, many of the early sales steps are conducted passively through targeted marketing content, and many of the advanced steps require specialty content and tools that are developed by marketing to help sales reach each member of the buying team with the right message for their role, goals, perspective, and the stage in the buying journey.
Therefore, while you'll understandably hold your sales team accountable for their pipeline metrics and effective sales pipeline management, your team will only excel if you bring all revenue growth functions together in a unified pipeline management effort.
There's no reason why poor pipeline management should be excused. Many business management functions rely on it. With rigorous and continuous qualification, and proper collaboration between your revenue growth functions in marketing and sales, you can improve pipeline management and forecasting accuracy even for complex, long sell-cycle sales like capital equipment.