Recharger Magazine

Growing Your Sales Pipeline

• By Tom Callinan
• Feb 01, 2007

In last month's article, we discussed how having a well-thought-out sales territory and quotas can help sales reps achieve their goals, as well as using progressive discipline as part of the sales development process. In this month’s article we will delve further into ways to work with each sales rep to drive the company’s revenue growth.

Acccount Reviews:

I have not found any process that works better than account reviews to drive revenue growth. Account reviews should be conducted quarterly on each of a sales rep’s base and targeted accounts. At the minimum, the manager and rep participate in the account review, but upper management should participate in the top 50 reviews, 25 current customers and 25 targeted accounts, and should periodically participate in other reviews. Account reviews have a strategic focus but there are always tactical actions as outcomes.

The rep needs to prepare for the review by completing an account overview. The overview has basic account information — name, address, contacts — as well as information regarding the products and services you sell: what share of wallet do you have (if any); who are the competitors; what business does the competition have; what has changed in the account since the last review; where are your areas of opportunity; and your areas of vulnerability. You also need organizational charts that show the hierarchy from the front-line contact through to the C-level in the purchasing, IT, and finance departments with any relationships mapped to your company’s employees.

I recommend the manager spend at least an hour per week with each sales rep conducting account reviews. A review on a middle-market account takes about 10 minutes and a major account about 20 minutes. If you are dealing with Fortune 200 accounts those may take 30 to 40 minutes. So depending on the account bases the reps manage, they should prepare three to six accounts each week to be reviewed. To ensure you get through each rep’s assignment, schedule out the reviews in advance. If you leave it up to the reps to choose the accounts there is a good chance you will never see the accounts where they are struggling. Make certain each rep provides the manager with his “package” the day before the review so the manager is prepared for the meeting.

After the rep provides the account overview from a strategic and tactical perspective those involved in the account review have a robust discussion of how to help the rep achieve his short-term goals while working toward the common long-term goal of 100 percent share of wallet. It would be really easy being a sales manager if all reps were spot on in their account assessments. Unfortunately, that will only happen with a minority of reps so you will have to ask some probing questions after the rep’s overview so you can help identify areas they have missed. Additional areas of opportunity or concern will surface as you discuss certain tactics and strategies — and as you go through future iterations of the review — so do not try to find every nook and cranny in the overview stage.

I could give a full-day seminar on account reviews so it is impossible to cover everything you need to look for in this article, but I will try to cover some of the more critical areas.

You want to develop relationships higher and wider. Wider would be other departments; for example, you have a strong relationship with the manager of IT so now you need to develop relationships in finance and purchasing. Higher refers to working up to the C-level; how do you develop a relationship with the director of IT and eventually the CIO? Use the “six degrees of Kevin Bacon” method to determine who in your company can leverage relationships with those folks you need to meet. Do not depend on the rep to initiate and manage all of the relationships — multiple levels of employees in your company should have relationships with multiple levels of employees in the customer or prospect company.

You want to thwart any competitive threats. Who is their copier provider? Who handles the printers in their data center? Do they have a facilities management provider? Do they have branch offices outside of their other vendors’ service area? Or do they have branches inside of the other vendors’ service area yet outside of your service area? How do you get that business while ensuring that those vendors do not displace you? Can you get the customer into a stronger contractual relationship or move some of their output from the copiers to the printers? Can you partner with somebody you trust for the outlying offices?

These areas define the robust discussion I mentioned earlier. As each manager facilitates more and more reviews they will become better and, by learning from each rep, they will be able to pass their knowledge onto the entire sales force. By having other managers in the company participating in the reviews they can help with the quality of plans and with the development of the manager and the sales employees. You will be working opportunities strategically rather than living month-to-month. The employee development and growth in the sales pipeline will result in more successful sales employees and reduce your employee turnover — compounding your growth. I have found no better process to drive revenue growth.

Pipeline: Some people refer to this as the sales funnel. Whatever you call it, it is a critical aspect of growing your business and of being able to see into future periods.

So if your new revenue forecast for the current month is $100,000 and your P3 is $350,000 (3.5X) there is slim chance of you attaining your forecast. If it is the first month of a quarter and you need to do $150,000 in new revenue in each of the second and third months of the quarter and your P2 pipeline is $1.2 million (8X), you are going to fall approximately 20 percent short of goal — unless you do something about it now. That is the key; there is not much you can do about the current month but if you know you do not have a pipeline to support future months you can adjust now and put emphasis on growing your pipeline. You can increase account reviews to 1.5 hours per week per rep to look for additional opportunity. You can implement a two-hour telemarketing period every Tuesday. You have time to adjust. Isn’t that a lot better than finding out after the month is completed that you did not achieve your sales goal?

Simply put, if you want to grow your business, your pipeline has to grow. In December, when you are putting together next year’s plan, look at how much your pipeline grew in the current year and over the last quarter. If you pipeline only grew 5 percent year over year and was flat for the entire fourth quarter there is a slim chance you are going to grow your business 10 percent next year — unless you put major emphasis on growing your pipeline. Track pipeline at the rep level and assign growth numbers to each rep. Make certain your entire pipeline is growing versus shifting between phases.

Forecast: P3 pipeline is not a forecast. Pipeline is everybody who will buy in the next 30 day period; it does not mean they will buy from your company and those 30 days can transcend months. You need a forecast of what will close in the current month from your sales team. You are working strategically with the account reviews but you also want to ensure you have a strong tactical approach to bring the business home. The forecast provides the visibility (I call it heat and light) to bring in the available business.

Track the forecast by transaction. If a rep tells you he is going to close five accounts for $30,000 in new revenue and he actually brings in $33,000 in new revenue from four completely different accounts, is he at 110 percent of forecast or 0 percent? Zero! Clearly it was luck that he arrived at approximately the same revenue figure he provided in his forecast. This is the same rep that next month will give the $30,000 forecast and deliver $8,000; he needs help managing his business. That will happen over time with account reviews but you need a robust forecasting process to ensure that your sales team delivers today.

Put forecasting criteria into place. Did the rep conduct a conceptual presentation? Did he conduct the first and second assessments? Does he have support for the solution from a strong advocate within the account who can get the contract signed? Is the account deciding between two options with wildly different revenue potential? Does he have verbal approval on the order by a decision maker? Are they credit approved? Make certain you detail out the criteria and use it as a litmus test for each forecasted order. Over time you should be able to get to within 5 percent of your current month’s forecast.

Income planner: It is rare when I ask salespeople how much they would like to make and they do not respond “$100,000.” It seems like the magical number for salespeople. My next question is, “How much you need to sell to make $100,000?” You would think I asked them how you solve for the integral of a square root. Eyes get big, mouths usually open slightly, and eventually they start to stutter out some general response like “a lot.” OK, let’s simplify the question (that is a comment to myself, not them). “How much would you make if you achieved quota?” They don’t know. Yet how many times have you had a salesperson quit and tell you he wasn’t making enough, or that he was going to make more at a new job?

You need a simple income planner that can forecast out how much reps will make if they achieve their sales goals. The planner will be an Excel schedule. For reps who made $40,000 the last two years and tell you they want to make $100,000 this year, yet nothing much has changed regarding the compensation plan, products and services, territory, and their skills and behaviors, you can demonstrate for them how much more they would need to sell to achieve that lofty goal. Then you could show them a more reasonable step, making $50,000 this year.

As each month passes you review their income planners with them. Are they on track to achieve their goals? If not how can they get back on track —what “levers” in the compensation plan do they still have time to pull? What activities do they need to focus on? Are their pipelines growing at a rate that will support their income goals? You may need to have a difficult conversation with some of them; they are not going to make their income goals for the year. Why not, and how do you correct that so they can be more successful next year? This is a fantastic opportunity to keep your sales reps focused on something that motivates them — their income. It is also a fantastic way to demonstrate that you care about their welfare.

Review and Plan (RAP): The RAP is a monthly meeting between employee and manager. I strongly encourage you to implement this process at all levels and in all functions of your company.

For the sales reps this is the meeting where you review last month’s forecast and compare it to results, tying it in at the deal level and helping to identify where they missed. Meanwhile, you are working with them to get each within 10 percent variance for the month (any individual rep will be within 10 percent, but the entire team should be within 5 percent). You then review the current month’s forecast. You review their results to quota and how their forecasts and pipelines support future quota attainment. Is the pipeline growing, shrinking, or shifting? Are they above quota or below and have they been improving or regressing? Next you transition into the income planner, plugging in last month’s results along with the current forecast — are they on track or what do they need to get back on track? Do their pipelines support their income goals? Provide an assessment of the account reviews for the month; were they well prepared? Detail out the accounts you will be reviewing in the current month. Finally, go over any other areas of development you are working on with each employee.

I believe the most important responsibility a manager has is to develop employees. I spoke about development in the account review process. Development was inferred in my overview of the income planner. The RAP is a primary developmental meeting. This is your opportunity to spend 90 minutes one-on-one with each employee to help them achieve their goals. Make certain you are prepared for the meeting, that you do not allow interruptions, and that you follow it up with a memo detailing what was covered, as detailed in the progressive disciple section.

We covered a lot of processes over this two-part series. We started with territories and how a proper mixture of base accounts and target accounts ties into quota. We discussed progressive discipline and how to use it to help keep your employees motivated and learning, but also to weed out those who cannot be successful in our business. We discussed account reviews and how critical that process is to driving revenue. If you are conducting account reviews the results will certainly show up in your pipeline; if you grow your pipeline you will grow your business. Pipeline will also provide you visibility into future periods but you also want to ensure you achieve the current month’s goal so you need a good forecasting process. We discussed income planners and finally, we tied a lot of the process together with the monthly RAP.

I have provided you with the blueprint to successfully drive a sales organization to market-share gains. You will increase your productivity and reduce your sales turnover. Your profits will increase and your company will be a better place to work. You will also increase the value of your assets. The only thing left is for you to put these processes to work!

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Tom Callinan is the managing principal of Strategy Development, a management consulting firm. Contact him at callinan@strategydevelopment.org or visit www.strategydevelopment.org.

This article originally appeared in the February 2007 issue of Recharger.