Same Old Song and Dance
Few things worry B2B revenue leaders more than pipeline management. Of the 182 things leaders need to do each week, it’s one of the more difficult: dozens of deals, all with varying amounts and in different stages, all sitting at future dates on the calendar. Collectively, it’s supposed to represent the Revenue team’s ability to hit their sales number that year. But when looked at more closely, what’s in the CRM might not be as mature as it appears.
Sadly, many of those deals could be as phony as prank phone calls. Savvy leaders know that a good portion of what’s in the CRM can and will disappear in the blink of an eye. True, there are many things that can affect a B2B deal as it moves through pipeline stages. So which deals are here to stay, and which are about to walk away from you?
One of the best ways to tell is to check the deal’s age. Older deals aren’t necessarily better. The reason comes down to simple human psychology: loss aversion. Sales reps tend to hold onto deals too long because the thought of “losing” them—closing them out and letting go of the possibility and the pipeline they represent—is more painful than just leaving them there. For reps, it’s better to push the deal out to a future parking lot date and hope that it doesn’t come up in the weekly pipe meeting. Maybe the extra time will help it close, right? Actually, time works against deals closing past a certain point. This is why when companies get around to doing loss analysis, it’s common to discover that the average age of their Closed Lost deals is 1.5x-2x longer than for Closed Won.
A Change Would Do You Good
Nobody likes it when the pipeline is aging out. Here’s how to check the expiration date:
- Calculate age: if you have a RevOps or SalesOps team, have them determine your average deal cycle length. Bonus points if they can tell you the average time in stage for each of your deal stages.
- Estimate age: if there aren’t enough deals to calculate an average, estimate the length by talking to your more experienced sales reps (get a directional idea based on specific deals) and then validate how long those deals took by checking the CRM.
- Check age against stage: a deal should progress through the stages over time. Stuck deals are typically a yellow flag, if not a red one. Deals that sit in your first or second stage of a multi-stage deal cycle are almost surely a sign of bad pipe.
- Set up an aging deals report. Most CRMs have this out-of-box. You can regularly check to see which deals are past or approaching your average Closed Won deal age.
- Set time limits: since time kills deals, put a time limit on prospect responsiveness. If they don’t reply or signal that they want to move the deal forward within the timeframe you’ve set (say, 30 days), move the deal to Closed Lost.
- Bring it back: after you’ve closed out that old deal, set up a nurture track to check in with the prospect at a better future time (like in 90-180 days). You can always reopen the deal later if it makes sense.
- Tip: As a leader, make it ok for your team to move deals to Closed Lost. Put the word out to your reps that you’d rather have them get the aging deals out and focus on the deals that can close. Reinforce this by recommending that they close out deals that pop up on the aging deals report.