7 Reasons why Sales Pipeline Management is important to your business

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7 Reasons Why Sales Pipeline Management is Critical

Sales Pipeline Management is critical for the success of any company that relies on a sales team or sales channel to drive revenue growth.  Shown below are seven critical reasons why having an accurate sales pipeline management program in place is important to your company.  A sales pipeline management tool will:

  1. Provide a forecast that will highlight opportunities that you expect to close and when you will close them.  Provide a 30, 60 and 90 day (or beyond) revenue forecast for your company.  Knowing what you will be closing is critical to others within your business such as operations, accounting or manufacturing.  Also, a sales manager can decide what critical deals will require his immediate time commitment and oversight.
  2. Show you how to allocate resources to assist in closing business opportunities based upon the deals most likely to close.  See point 1.
  3. Show your management team which opportunities are real and which are just “wishful thinking”.  Experienced sales managers are able to apply a “sniff test” to deals that novice sales team members will bring them if they are identified in the pipeline.  Management will be able to adjust the sales pipeline accordingly after the evaluation and instruct sales team members about what is real and worthy of a further investment of time and wish deals should be punted.
  4. Indicate how likely you will be in achieving your budgets or targets?  If your annual sales goals per sales person is $ 2,000,000 and you are 6 months into your sales year, then you should expect sales revenues of $ 1,000,000 from each person on your team (unless your sales are weighted for seasonal adjustments).  If half and your sales team is at $ 500,000 instead of the $ 1,000,000 target then you might have a better idea of how likely you are of reaching the anticipated sales goals for the year.
  5. Provide you with the ability to consistently look at snapshots regarding sales projections.  Over time, you will build a level of confidence regarding how accurate the pipeline data actually is.  You might also learn that some sales team members have better data that is closer to actual revenue production than others.  This will provide coaching opportunities to help those who overestimate production.
  6. Assist you in tracking “deal flow” or “deal velocity” to determine if any opportunities are stuck.  If your normal sales cycle is a 120 period from the identification of the prospect until the day the deal is signed, then having a sales pipeline management program in place will quickly show you which deals aren’t progressing as they should.  For example, you should have generated a proposal by day 90 if you are expecting to have the signed order by day 120.
  7. Allow you to quickly determine which sales team members are performing and which aren’t.   Without a sales pipeline management tool such as a customer relationship management (CRM) system, then you will be waiting until the end of the quarter or the end of the year to determine how your sales team is performing.  With sales pipeline management, key metrics can be tracked on a more frequent basis.  This will allow your sales managers to more quickly identify and correct problems that exist for each of the sales team members.

It is my experience that effective and attentive sales pipeline management will dramatically impact the health of your sales revenue or your sales quota (if you are a sales person).

More about:  Sales Forecasting 

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