We brought together sales leaders of the B2B SaaS companies in our portfolio to discuss pipeline management and to consider the culture and processes that enable early-stage companies to supercharge their pipelines.

The Beringea Scale-Up Academy recently looked at how early-stage SaaS companies should think about building exceptional products, but any successful start-up must be able to translate an innovative product into a sales machine.

The sales pipeline is a critical part of this machine, so we convened CROs and Heads of Sales from our B2B SaaS portfolio to consider the tips and tricks to supercharging their sales pipeline. This discussion was hosted by Steve Bookbinder, the founder of DM Training and a highly experienced sales trainer who has coached more than 50,000 salespeople globally on managing their pipelines.

In this article, we’ve asked Steve to share his perspectives on six key questions that sales leaders in early-stage software companies should be considering when it comes to pipeline management.

Q: When — and how — should a company focus on its sales pipeline?

Let’s break down that question by first considering the difference between managing and monitoring. Most companies merely monitor their pipeline, which is to take the most optimistic view of a pipeline, regardless of what is in it. Managing a pipeline means that we are managing the resources that produce the right pipeline stages needed for us to reach out goals.

The pipeline is analogous to the manufacturing process. We can’t begin that process without first knowing exactly what we products we need to end up with.

Sales come from pipelines. Beginning the sales effort with a target pipeline is as logical as beginning a fitness plan with specific goals or beginning a weight-loss program with a target weight. Even if sales leaders are not actively managing their pipelines there is in fact a pipeline, from which sales emerge. Want to change sales? First change your pipeline. The single biggest mistake companies make, and salespeople make, when they begin thinking about managing their pipeline is they fail to ask themselves the right question when they look at their pipeline. That question is: What is my pipeline supposed to look like?

Q: How can sales leaders determine what their pipeline supposed to look like?

In general, business dashboards have the most value when busy sales leaders can glance at the dashboard and draw a conclusion and make a decision. If you can’t do that — in a glance — those insights don’t necessarily ever emerge. The key is that we know what to look for in advance. Let’s apply that to sales pipelines, which are sales dashboards if we build them right.

Most people look at their dashboard without specifically knowing in advance what they are looking for. So, they end up trying to gather meaning from whatever they see. So, if there is a lot of stuff in their pipeline, people generally conclude “that’s good! we must be very busy.” If the pipeline appears to be empty, we generally conclude “we need to get busier.” Neither conclusion is helpful.

But, if we first create a target pipeline, which I call the “ideal pipeline,” we have a much simpler time of gaining insight. Armed with an ideal pipeline, we can compare the actual pipeline to the ideal and see the gaps. Now we know in an instant what specific actions we need to do more of, less of or more effectively. We can spot skill gaps among the sellers contributing to the pipeline.

Q: How do you create an ideal pipeline?

To determine the ideal pipeline for a team (and for each salesperson on the team), we need to ask ourselves: If sales were going along as planned (or perhaps hoped?), what kind of sales would be closing each month? The first instinct is to identify the total revenue that would close each month. But, we need to go one level deeper to determine what kind of sales would make up that total revenue.

To make the numbers simple, suppose we know we want £100 to close each month. We need to decide what portfolio of sales gives us that total? One deal worth £100? Two deals worth £50 each? One large deal and 3 small deals? 4 average size deals? How we plan on arriving at the total revenue goal is crucial to determining what is in the rest of the pipeline. Again, to make the numbers easy, let’s suppose we need 3 deals to close each month — one big, one average size and one small size. For us to close those 3 sales each month, they must be in the ‘just before close’ pipeline stage, sometimes called the 90% stage. We know if we have 4 sales within the ‘just before close’ stage, we can reliably predict 3 sales. But, if we have 3 sales about to close, we may miss our target. This calculation gives us a target for the crucial 90% column. Imagine having completed this thinking in advance of looking at your pipeline. Now, instead of the sales leader getting distracted by “a lot of stuff in their pipeline” they will train their eye on the 90% stage and look for 4 sales opportunities, representing at least one big, one average size and one small deal. The team’s goal is to make sure their 90% column always looks like that. Once we nail down that specific goal, working backward, we can reverse-engineer what the 50% stage and 25% stage would have to look like to get us to our target. We need to think about the likely closing ratio for each kind of deal to know how many opportunities we need at the early stages to end up with right number of sales opportunities at the later stages.

Knowing what the 25% stage would have to look like (both the number and relative size of each sales opportunity), we can determine how many first appointments we’ll need to yield that result…and, by extension, how many leads of each potential size we’d need to generate. Now we not only have specific goals for the sales team, but we can also dovetail the marketing department’s goals to fit. The sales leader can determine the marketing and sales resources that would be needed to achieve this ideal pipeline, which further ensures their success in reaching those targets.

Q: How often do we need to review the pipeline?

A: Pipeline meetings are often painful and for that reason, companies find excuses to skip or shorten those meetings whenever possible. I like the idea of shortening them, but we create the right sales culture by having these meetings weekly. The reason for the weekly cadence is that sellers usually only update their pipeline in advance of the pipeline review meeting. The meeting cadence tends to determine the update cadence, too. This is crucial for the sales leader who needs real time, current sales data, which is the key to accurate forecasting.

Q: How do we get the most benefit from pipeline review meetings?

A: The pipeline review meeting is where the sales culture emerges if we do those meetings right. Step one is to share the inspection questions in advance and make sure everyone agrees to use and follow those questions. Here are the 4 essential inspection questions (each company may want to include their own customised set of questions, too):

• What is my pipeline supposed to look like (number of sales and relative size of sale at each stage)?
• Since last week, what has changed? (Hint: if nothing has changed, you don’t even need to continue with that week’s meeting.)
• Is every sale within its normal sales cycle? This is the most important question because it requires that each of the sellers understands and agrees that we can only count on sales that are within their normal sales cycle. The longer a sale goes beyond its cycle, the less likely it’ll close. Spending more time working on — and counting on — a sale that is older than its normal sales cycle is spending valuable resources (time and energy) on a sale which is statistically less likely to close. The number one reason forecasts are off is when we fail to remove “too old” sales from the forecast. The other crucial understanding of sales cycles is understanding that sales of different relative values have different normal sales cycles. While a large sale might normally close within 3–6 months, average size deals may only need 1–3 months and small deals 1–4 weeks.
• Does every sale have a scheduled next step? So, if the sale is at the 25% stage, we can ask when is the customer going to talk to us next? If the sale is at the 50% stage, we can ask when will their decision be announced? If at 90%, when will we have the contract?

Q: The inspection questions will uncover a lot of sales that once looked promising but are now too old or have no next step…we know not to include them in our forecast, but what should we do with them?

A: Sales that are too old or have no next step might not be right for the forecast, but they are exactly right for a team strategy-session. Let’s find a new pipeline stage for them, such as “sales pending” or “parked,” which removes them from the forecast, but not from our attention.

Let’s workshop each sale that is stalling. Encourage the team to share best practices and / or experiment with new sales strategies which they can replicate for all similarly stalled sales. And, to ensure that your critical sales do advance, let’s role-play out the next meeting for the “surviving” opportunities, so we can anticipate every objection and come up with a remedy turn-around in advance.

If you use your sales meetings in this way, each team member will contribute their best idea, feel positive about their contribution, and develop their skills faster. By managing the team and their meetings in this way, sales leaders will super-charge their pipelines — and their sales!

If you’re interested in learning more about the Beringea Scale-Up Academy and our approach to working with portfolio companies, please get in touch with us at info@beringea.com.