Sales Pipeline Equilibrium: Creating Performance Metrics for Your Sales Database

Equilibrium: def.-The condition of a system in which competing influences are balanced.

Opportunity Does Not Exist In Infinity

In any sales pipeline, there are competing influences. The most common influence is time. Time is a competitor of opportunity. When we imagine opportunity without the competing influence of time, it is no longer opportunity, but instead, inevitability. An opportunity only exists because there is a window to seize it in. Therefore, we can understand that each sales opportunity has a direct competitor in the passage of time. If our sales team were not plagued by finite windows, then there would only be an eventual sale or an eventual closing. When a prospect is disqualified, it is because they do not meet the criteria "at that time". Again, without the competing influence of time, even a disqualified lead becomes an eventual closing.

Creating Equilibrium

So if we look at time and opportunity being competing influences with relation to the Sales Pipeline, then it becomes necessary to understand how to balance them. What we are trying to achieve is the juncture of enough time to match the amount of opportunities I have, and conversely, match enough opportunities to time. If I haven't lost you so far, let me paint with a broader stroke--It may not be about buying more leads or better leads, it may be about making sure the agent's pipeline is in equilibrium.

Achieving the "Right" Number

Frequently, I have clients and prospects ask me how many leads should they be buying? Conventional wisdom asks several questions to determine this number-- how many agents are they buying for? What is the expected conversion rate? How much marketing spend is budgeted? Once these questions are answered, the equation is smoothed by averaging it out either by personnel or by days in the month, etc.

Is this right? While I certainly advocate this method as a starting point, I do think an additional measure needs to be taken into account and can create a much different picture than what we are typically accustomed to. Each of the above questions have answers that take place, for a lack of better imagery, at the starting gate. Number of agents, marketing spend, expected conversion rate, all take place before even picking up the phone. These are forward looking numbers with no cap, or in our discussion, no competing influence of time.

Balance Comes From Both Ends

However, when we look at the pipeline size from the opposite end, and understand that time to reach all of these opportunities becomes a factor in our decision making, we will want to adjust the front end. Let me illustrate in a stark way. If I have an existing pipeline of 400 old leads that I want to try and contact this month, and I am getting 3 brand new leads per day, it should not be a problem to manage making enough phone calls each day to cover all of my opportunities. But, what if I had 1200 old leads that needed contacted this month, plus I was fed 6-7 new leads per day from an Internet channel? At some point, I will have more opportunities than I do time to attempt, thereby, causing my pipeline to be out of equilibrium.

How do we fix it today? Most of the time, we do one of a couple dangerous things--stop buying Internet inquiries or we stop calling old leads and consider them secondary in importance to the "fresh" leads. What typically isn't being done is measuring the total Pipeline Equilibrium (factored by age of opportunity, labor capacity, pipeline flow through, and lead buying) and steadying the sales course based on that number.

Building Pipeline Equilibrium

When an organization measures Pipeline Equilibrium, it is now looking at factors such as how many leads flow out of the system per day based on age, qualification, time period, etc. along with how many leads flow in--not only brand new leads, but existing pipeline leads newly qualified (ex-rates adjusted, making 130 pipeline leads "qualified"). Then, managers can review the Pipeline EQ over months, days, teams, and individuals, to understand how to more closely adjust flow through, staffing, lead buying, as well as maintaining an expected call volume and conversion.

When the sales organization measures by Pipeline Equilibrium, it is exerting a much more fine-tuned control of the system rather than simply turning leads on and off or simply measuring spending based on conversion. Understanding the pipeline and how to put it into equilibrium is an important key to effective lead management.

Keith Burwell is the SVP of Business Development for Kaleidico a leader in lead management software solutions.

For more information how Kaleidico can help you determine your Sales Pipeline Equilibrium, please contact us at 866-667-5253 or sales [@] kaleidico [dot] com.