Sales Topics

Same Old Song and Dance

We’ve all been there as leaders in sales and sales ops. We’re humming along with our usual forecasting cycle and there it is: a huge chunk of pipeline sitting on the same date, usually the last day of the month, quarter, or year (looking at you, December 31st).

This favorite tactic of B2B salespeople everywhere — that is, parking their pipeline at the end of a time period — makes perfect sense. It allows reps to keep active deals in the projected calendar month, quarter, or year while offering the maximum amount of time to close them and avoid closing them out if they stall. It’s also a great way not to have to worry about predicting close dates down to a specific day on the calendar, something anyone involved in a complex selling process can tell you isn’t easy.

For sales leaders, on the other hand, the resulting parking lot is less of a tailgate and more of a traffic jam. All of those parked deals across the full sales team adds up quickly. Throw in pipeline that routinely sits in the same stage too long for every deal, and the resulting gridlock can reduce your ability to forecast down to a rush-hour pace.

A Change Would Do You Good

Here are some practical ways to clear out your parking lot pipeline:

• Close dates: Try regular pipeline reviews plus bi-weekly or monthly required pipeline cleanups (ex. All pipeline with a current month close date has to be moved out of the current month by the 20th if it hasn’t closed yet, depending on your sales cycle, of course). Even better, create CRM workflows that automatically move out the pipeline by the agreed-upon date. This achieves the same goal while making it so reps don’t have to routinely update dozens (or hundreds) of close dates artificially (move them to the next month-end date). They can spend their time working later-stage deals, and you get a more accurate near-term forecast. Combine this with required minimum pipeline coverage amounts by period to balance for deal slippage. Tip: avoid making the last day of the month/quarter/year off limits: reps will pick another date as their go-to and it’ll be harder to spot their parking lots.
• Deal stages: Use a similar CRM automation method to move deals back (or close them out) if they’ve been in a deal stage for a certain number of days (ex. Deals that have been in Stage 1 for 45 days automatically get closed as lost). This keeps deal velocity at a reasonable rate, reveals potential issues at each stage, and identifies which deals the reps are actually working. Tip: review stage durations every three to six months to see which stage has the most slowdown. It might be a sign that your verifiable outcomes at that stage are misaligned with the true selling process and need to be redefined.

Same Old Song and Dance

Pipeline. The sum of all deals that a rep could potentially close at a future date (this month, quarter, year, etc.).  It’s the lifeblood of B2B sales. No pipe, no chance of hitting the year. Too little pipe, same result.  Why? Because reps can’t close what they don’t have, and the reality is that reps won’t win every deal they go after. 

A-player reps understand this completely. They never stop seeking new deals to work. The ranks of your Bs, Cs, and Ds are filled with reps who set themselves for failure by undervaluing the importance of generating new deals and actively fine-tuning a healthy pipeline. So, the rule should be to create as much pipeline as possible, right?  Just can’t get enough of it? 

Actually, no. A rep only needs to maintain a certain amount to boost their success of hitting quota — and the number has a direct relationship to the ARR dollar value of that quota. Put simply, a rep’s pipeline coverage multiple is typically a single-digit number (2, 3, 4, etc). Multiply this number times the quota amount to get the rep’s required amount of pipeline.

A Change Would Do You Good

Here’s a practical way to calculate pipeline coverage multiples:

• Calculate: How do you know how much is enough, or which multiple to use?  Start by taking a look at your win percentage for the year. Also, take your organization’s selling trends over the past 6, 12, 18, and 24 months into consideration. Assume that momentum will continue, and use your judgment for new products.  Take your win percentage and divide 1 by that number (ex. a win percentage of 25% would mean a coverage multiple of 4  —  1 / 25%). That’s your coverage multiple. Tip: Reps might have different pipeline coverage multiples based on what they sell. Be sure to filter by any meaningful territory or product segments that apply to each rep when calculating their multiple.
• Limit: Beware of coverage multiples that are too high. Too much pipeline can mean that a rep is sitting on too many parking lot deals–deals that sit at future dates while the rep pays attention to other deals. This might be a sign that it’s time to add another rep to your team. Just be sure to take a close look at the rep’s deals. Some of them could be aged out or have been pushed too many times to be real.

Same Old Song and Dance

Revenue leaders at early-stage B2B ventures constantly worry about lead generation and pipeline volume.  Their reps can’t close deals they don’t have, after all.  Reps are always wolfishly hungry for more “at-bats”, and sourcing quality leads is tough.  Given this reality, some leaders and reps become convinced that the only way to get more leads is to funnel more money into Marketing campaigns. 

Here’s why that won’t work.  Inbound leads from Marketing will only get reps so far.  Even if those juices are flowing like wine now, most will get lost in the crowd and not turn into potential deals, let alone go all the way to Closed Won.  Plus, early-stage leaders don’t have unlimited funds for anything, Marketing or otherwise.

Reps need multiple lead sources, and one of the best is a rep’s own outbound efforts. It makes sense.  Reps are in touch with the ground on the market, the buyers, and your product—no one is closer than the people out there selling every day.  Reps also tend to place greater trust in their own leads, having qualified the prospects themselves.  This means they’ll work these deals more carefully than those from other sources, at least until they have proof (meaning several Closed Won deals) that other lead sources are more than a scent and a sound.

Yes, it takes time and effort.  No, reps don’t like doing it.  Let them howl and whine all they want, but they won’t generate enough pipeline coverage to hit their quota unless they diversify their sources and pursue this one themselves. 

A Change Would Do You Good

Tired of being hungry for leads?  Have your reps try this to get back on the hunt:

• Dedicated Time: Reps should set time for prospecting on their calendars.  As with prospect calls and meetings, this time should be untouchable by others.
• ICP: Make it count by identifying the right titles, company sizes, industries, etc.  Specialty tools like ZoomInfo can help, but LinkedIn and internet searches work well too if you’re budget conscious.
• Outreach: Like with prospecting, have your reps block off dedicated time each week to reach out to prospects.  Tell them to plan for multiple touchpoints – no one picks up on the first ring or answers the first email.  For simplicity’s sake, start with a basic 3 + 3 x 3 cadence.  Three calls paired with three emails over three weeks (one call/email pair per week).  Follow up 4-6 weeks later with anyone who didn’t respond.
• Tracking: Have reps log each call, email, or social touch in a CRM, if possible.  Set up a spreadsheet if necessary.  The important thing is to capture key data like date, time, and number of attempts.
• Expectations: Make it known during the interview process that a certain percentage of deals (you’ll decide the amount) need to come from reps.  Coach your current team on the importance of generating their own leads if you haven’t already.
• Compensation: Consider paying higher commission rates for rep-sourced deals to align incentives with behavior. You’ll need to balance this with other drivers in your plan, while remembering how important definitions and tracking are when counting lead attribution.
• Tip: For inspiration, have your reps read Fanatical Prospecting by Jeb Blount.  It’s been a go-to resource for SDRs and sales reps for years.

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.   

Same Old Song and Dance

For early-stage B2B revenue leaders, one of the hardest things to determine consistently is which deals are real and which aren’t.  Whether leaders are following 20 deals or 220, their situation is the same: they’re trying to match reality versus what their reps are telling them across a variety of deal stages, values, close dates, and products, all within a complex selling environment.  That’s enough to make anyone question if their deals have ever been good enough. 

Add to that the common practice of pushes, and any revenue leader is bound to get a little bit angry.  Pushes are when reps move the close date of a deal anywhere from one to several months into the future, typically right before the end of a reporting period (like a month or quarter).  When this happens, the pipeline and forecast can kinda fall apart and things get so crazy: leaders demand deal reviews, RevOps and FP&A scramble to redo forecasts and reports, and marketing gets called in to generate more demand to fix the lower year-to-go coverage.  Everyone feels like they’ve been taken for granted by the sales reps.

As much of a pain as this is, the truth is that pushes happen.  They’re not a red flag by themselves, but they could be a yellow one.  Too many pushes typically signal that the deal is in danger of not closing.  Combined with the deal stage (especially early stages) and age (older is worse), multiple pushes almost always mean no deal.

A Change Would Do You Good

Tired of feeling cheated and wronged with deals?  Here’s how to avoid pushes:

• Normalize: Deals push. It’s normal, especially in a complex B2B deal cycle. Have your RevOps team or an analyst figure out the average number of pushes per deal. Tip: Break down by product or other meaningful segment if needed, but be careful to have a viable sample size so you’re not drawing the wrong conclusions from a small number of deals.
• Monitor: Set up a report to track the total number of pushes. You’ll likely need to do this manually unless you upgrade your CRM or buy a pipeline analytics tool. Most CRMs don’t have this as part of their basic out-of-the-box functionality.
• Redefine: Consider reviewing your deal stage definitions and verifiable outcomes.  Too many pushes might be a sign that deals are being added to the pipeline and advanced prematurely.

Same Old Song and Dance

Complex B2B selling is hard. Multiple decision-makers, weeks or months of conversations, competitive offerings to overcome, several contract terms to negotiate….

So many things can go wrong along the way, even for the most experienced sellers. Keeping it all straight requires designing a sales process with several stages that reflect your internal selling steps and the customer’s buying journey.

But even with a well-laid plan, all of the moving pieces can cause confusion for account execs and sales leaders alike. Which deal stage is correct based on the latest phone exchange, virtual demo, or onsite meeting that the rep did in Houston? When’s the correct time to move something forward in the process, without jumping the gun? How long should a deal stay in the same stage before it’s officially considered stalled (or sings its swan song as closed lost)?

A Change Would Do You Good

Here’s a practical way to confirm an opp’s deal stage:

• So, how will you know when a deal truly belongs in a given deal stage? Don’t just trust your feelings. Create verifiable outcomes for each stage. A verifiable outcome is exactly what it sounds like: a result that can be validated objectively. A basic example is confirming the next meeting on both sides’ calendars as an indicator of interest following the initial discovery call. Think through the key events that need to take place to move your deals forward, and then align them to your deal stages. Don’t move deals forward to the next stage until you complete the verifiable outcome(s) for the current stage.
• Tip: Try to define one key verifiable outcome for each stage. That will allow you to align each stage with a single event from your selling process, with the added bonus of being able to automate or semi-automate each stage in your CRM.

Same Old Song and Dance

Forecasting sales pipeline accurately in a complex B2B environment is challenging: deciding when to start counting deals as pipeline, selecting the correct deal valuation, determining your weighting methodology, sorting through unclear deal stages, and knowing when you have enough forecasted pipeline to hit your number are typical hurdles sales leaders face. Any one of them can be enough to cause your crystal ball to cloud up.

Sales leaders use many methods to cut through the murkiness. One common way is to ask AEs to provide insight. They rate each of their deals according to established criteria, and these forecast categories act like an additional layer on top of deal stages. An example is any deal that the AE believes has a 90% chance of closing in the current month would have a forecast of Commit. That same deal would likely be in a later deal stage, too. The main benefit of this approach is that it allows sales reps to weigh in on how likely they feel the deal is to close. Two clear drawbacks are that a) it can become a highly subjective exercise, even with defined rules, and b) it’s one more field for your sales reps to fill in and update.

Another way is to apply deal amount weighing by stage. This means setting percentages based on actual or estimated close rates (ex. 10% once a deal is qualified, 25% after completing the first demo, etc.), and applying those percentages to each deal by stage. Although it seems like a straightforward way to decrease the value of early-stage deals, the practice isn’t always understood or supported by AEs. Some prefer to change the deal value itself as it progresses through stages. Set weight percentages can also get complicated if there are drastically different close rates for certain products or business segments that require a variety of weights to be applied.

A Change Would Do You Good

Here’s a practical way to help see the future:

• Look to the past to get more accurate weights: Using a historical measure, such as trailing twelve-month rolling average conversion rates by stage, takes the guesswork out of it. This method relies on actual data, instead of requiring constant input from your reps, or forcing you to choose what would likely end up being arbitrary weights. The best part? Your fortune-telling abilities improve over time: weights will stay up-to-date automatically as you go and better reflect your actual close rates by stage. Bonus points for having your AEs enter a standardized dollar amount for each based on average closed won deal amounts. The removes another layer of subjectivity from the process. Tip: Make sure you have enough data points to calculate a correct average. Too few could cause wild swings in the average.

Same Old Song and Dance

One thing that causes endless aggravation for early-stage B2B revenue leaders is deal reviews with their sales reps.  Whenever these meetings take place, one thing is typically guaranteed to happen: the leader walks away having heard a lot of words but not getting a lot of answers about deals: are they going to close, when, how confident is the rep, what are the next steps, does the rep need help…?  Not getting answers doesn’t exactly spark confidence.

A big part of the problem is that these calls are too conversational and unstructured.  When offered up 30 mins to “talk about their deals”, many sales reps do what many sales reps do: they show up and throw up. Meaning that they talk about every conversation, email, and call they’ve ever completed with a prospect, tossed around with a heavy dose of anecdotes and rose-colored predictions. This leaves revenue leaders longing for a little less conversation and a little more action.

Deal reviews need to occur, and they need to be meaningful for the leader and the rep.  To get a little less bark and a little more bite out of them, the discussion should center on movement: of a rep’s active deals, which ones were created, which ones advanced, and which ones closed or are close to closing?  Leaders typically know about Closed Won deals, and often about those that are about to close (especially the bigger ones).  But they’re less likely to know about ones that are newer to the pipeline.  Those deals, if nurtured correctly over time, could become wins.

A Change Would Do You Good

Tired of talking about deals without results?  Don’t procrastinate or articulate.  Try this instead:

• Weekly Cadence: Meet once a week.  Regardless of how many deals there are or the average deal cycle length, meeting once per week keeps the emphasis on results and movement.  It also gives reps enough time to do the activities (calls, emails, virtual meetings, site visits, conferences, etc.) that lead to deal movement.
• Expectations: In addition to defining the verifiable outcomes that identify the correct deal stage, set clear expectations for what you expect in the meeting.  When the meeting ends, what information needs to be exchanged between leader and rep.
• Format: Use the same format each time, and let the agenda drive the meeting so you don’t get off track.  The best I’ve seen comes from Mike Weinberg’s Accountability Meeting agenda.
• Movement: Keep the focus on what’s moved…and what hasn’t.  Stalled deals (age, pushes) might be ready for the Closed Lost pile or may simply need some direction or help from leadership.  Use this time to figure out which. 

Same Old Song and Dance

Revenue leaders in early-stage B2B companies have limited budgets.  One of the hardest choices they make is where to invest when it comes to generating leads.  It isn’t black and white: there are a seemingly endless number of sources: SEO, social media, form fills (website and social), conferences, webinars, white paper downloads, etc.  Leaders really, really ought to know how to make the right decision.

Aside from the most obvious reason (attracting new clients), leaders must answer the question when seeking funding.  Often the first thing investors ask when talking to you is “Where will you source your leads?” or “What are your best lead sources now?”  Leaders need to have a good, fact-based answer.  This can be the difference between building confidence in your company’s growth potential or having would-be backers break your heart because they don’t believe that you have a plan to generate reliable (and convertible) customer interest.

Even before courting VCs, revenue leaders need to know how to let it all out to increase growth.  It’s a matter of survival for early-stage B2B companies: once the first small set of channel partners or early adopters signs up, how does the next, larger wave find out about your company?  Companies won’t live to tell the tale if they waste valuable months of discovery. Those seed dollars and early customer payments burn awfully fast.

A Change Would Do You Good

Not knowing where to source leads is a thing you can do without.  Try this instead:

• Tracking: Start measuring a couple of key things: conversion rates and cost per lead.  This means you need to track each step in your lead funnel and attribute costs correctly. The easiest way is in your CRM because it provides a reliable way to capture the info each time.  Marketing (demand gen leader) or a trained BDR are usually the most consistent with entering the information relative to other options like sales reps.  Automate as much as you can.  If using your CRM isn’t an option, a spreadsheet is better than nothing.
• Metrics: As mentioned, the most important metrics to track are conversion rates (total and stage) and cost per lead.  The math is simple for each: total conversion rates (how many leads made it to that stage divided by the total number of leads, stage conversion rates (how many leads made it to the stage divided by leads that made it to the prior stage), and cost per lead (dollar spent on the lead generation campaign divided by the number of leads that made it to a certain stage, like Closed Won). 
• Definitions: When tracking conversion rates by source, clearly define each step so you know what went into the top of your funnel and what converted to each step (Lead, MQL, SQL, etc.).  It’s important to do this all the way to Closed Won.  That way, everyone is on the same page and has a common understanding when you talk about “cost per” metrics.
• Tip: Find the balance between conversion rates and cost per lead. Typically, lead conversion is a single-digit number, meaning the degree of difference between sources is often one or two percentage points.  This is where cost per lead comes in.  Having the highest conversion rate out of all the sources is meaningless if the cost per lead is several times that of other sources.  You’ll need to find a better lead source or get the cost down.

Same Old Song and Dance

Early-stage B2B revenue leaders often don’t know how many sales reps they need to hit their goals.  Most are either pressured to hire more reps when things are growing and/or when they receive funding, or advised against hiring new reps because it might be too soon and there are other hiring priorities.  These mixed messages make it hard to know what’s right.  So, should you hire a Seven Nation Army or no one at all?

Everyone from the Queen of England to the Hounds of Hell knows that both overhiring and underhiring have consequences.  Bring on too many reps too quickly and you might face uneven performance and issues of not having enough opportunities for them to work.  Too few reps and you risk leaving growth on the table from not having enough reps out there working the straw. 

And if that ain’t what you want to hear, I’m gonna serve it to you: you need to decide how many to hire sooner rather than later.

A Change Would Go You Good

Want to keep from talkin’ to yourself at night about how many reps to hire?  Use the following steps to frame the discussion:

1. Determine how many deals you need and how long they take to close:

1. Deals. Break down your sales new business goal into how many deals you need based on ACV.  Remember to split out by product / solution if you have more than one and they have drastically different values. 
2. Sales Cycle. How long does it take to close a deal, on average?  Same advice for product.
3. Stress Test #1. Combine the two as a first stress test.  Based on the number of deals needed and the average sales cycle length, how many reps does it seem reasonable to hire to close that number of deals in that amount of time?

2. Determine how much pipeline you need:

1. Close Rate. What’s your close rate percentage for deals? Divide the number of deals you need by this percentage and this is how many deals you need in your pipeline to hit your number. 
2. Total Dollar Value. Multiply by the ACV to get the total dollar value of the pipeline target.
3. Stress Test #2. Does the total addressable market (TAM) for your target market segment(s) support that much pipeline?
4. Stress Test #3. Check your current pipeline. How much do you have relative to what you need?

3. Decide if you have the capacity to support growth:

1. Stress Test #4. Think about capacity in three areas: 1. Leads: based on how much pipeline you need, and how much you currently have, how are you going to source enough leads to keep your reps fed with new potential opportunities? (see starting a sales dev team and sales rep prospecting). 2. Client Success: if you close as many deals as you calculated above, will your CS team be able to keep the increased number of clients happy (on top of current clients)?  3. Sales Enablement: how are you going to create a consistent onboarding experience for your new reps? Tip: a single “no” to any of the questions in Stress Test #4 will likely require further investment of funds and/or personnel, process, and resource changes. Make sure you’re prepared to put in the commitment to give your new sales reps the best possible chance of success.