What are the metrics that should be analyzed when effectively managing pipelines?

In addition to Dave's thoughts, I like the SiriusDecision's Demand Waterfall approach. Measure the percent of marketing qualified leads (MQL) that convert to sales accepted leads (SAL)... ditto for SAL's that convert to sales qualified leads (SQL) and finally the close rate on SQL's. New best practice benchmarks seem a bit inflated to me (particularly the percent of inquiries that become MQL's), but he relatively simple, intuitive process could really help a company move in the right direction.

As Dave touched upon, you need to strike a balance between activity, conversions and results for effective pipeline management. The pipeline should consider sales motion in terms of # of dials, first calls (meetings), qualified opportunities, developed (proposals), closed sales projects, in-progress (implementation) and also fall-back opportunities that have stalled out in the pipeline.

That covers the activity components. Then you want to assess the % of conversions in each phase of the pipeline to map progression, average sales turnaround times, close ratios, average sale value, # of new customers, etc. to obtain an accurate view of sales effectiveness and sales profitability.

Let me start my answer with a caveat: our work concentrates on B2B complex sales with longer cycles, so the metrics I'll describe really don't work in a transaction sales environment.

We've found it extremely impactful to define sales/opportunity stages that describe the buyer's buying process. There are only a few of these (8 or 9), they are unambiguous, and they can be collated and analyzed in many ways. Each of these "buying" stages passes the "did it happen or no" test with ease and helps remove subjectivity, hope and CYA from the discussion. You capture the number of occurrences of each stage per time interval (week, month, accounting period), and set annual as well as interval targets for each stage. This allows you to track actual against plan, as well as conversion ratios from stage to stage.

You also track total sales income at the same time, showing the annual income target as well as the income targets per interval. Then you track actual against plan. So now we have a more comprehensive view of the pipeline, showing conversion ratios from stage to stage, dynamic relationships between buying-stage achievement and sales income. The data should be presented in drill-down fashion so that it's possible to see collated data at the top, drilling down to individual contributor performance.

A critical metric or data point that must be tracked is the ranking of the prospects that are currently active in the pipeline. In our methodology, Selling the SMART Way, clients rank their prospects based on a complex set of criteria that demonstrate potential for high lifetime customer (not simply whether or not the deal is likely to close). Including prospect ranking in your pipeline analytics provides enormous insight, showing the extent to which sales personnel have been capable of acquiring high-value prospects and customers. Our clients' experience has validated my personal belief that when you invest in cultivating A-ranked accounts (those with the highest long-term potential), the REturn on Effort of sales personnel is more favorable.

Finally, you select a small number of selling activities that appear to have a meaningful impact on stage achievement and income performance. These activity metrics may be difficult to select, because they are not necessariliy sequential in nature. Some of the most successful ones we've seen our clients use include "follow up after submitting proposals," and "conduct annual planning session with customer". Again, we like to restrict the number of these metrics to no more than 5 or 6.

Having a complex set of metrics in these categories is not only revealing, it also helps to prevent sales people from attempting to 'game' the system. Since each set of metrics can be validated through coaching and discussion, as well as through its statistical relationship to other metrics, there's really nothing to be gained by a sales person trying to inflate his or her pipeline figures.

The process improves visibilty and accountability significantly. Furthermore, it provides the kind of insights that drive continuous improvement. We're pretty proud of it. You can learn more if you're interested with a visit to our website, www.bristolstrategygroup.com. Best, Ellen

My two bits: suggestions offered are all valuable. Metrics that help us understand what's being achieved are valuable.

The missing piece, IMO? Metrics on Return on Effort, delivered in real-time. Metrics that show the causal connection between what salespeople are doing and the buyer actions, if any, that sales efforts are triggering. Metrics that help us understand the true costs (in sales effort) of what's being achieved. Metrics that help everyone involved learn how to improve the very things we're trying to measure. Metrics that nudge those involved to do more of what's working and less of what isn't. Real-time metrics that let little changes, made day-to-day, add up to big improvements in sales performance over time.

Trust this adds some value. - John

Below is a 30-minute sales meeting template I often use to help clients manage their inside sales teams and reps. The key here is to make it as metrics-driven and objective as possible, with a focus on identifying and resolving obstacles to greater success.

Opportunity Pipeline Review (10 minutes)

Closed-Won vs. Quota, quarter-to-date (or month, or whatever your selling period is)
Pipeline volume with current-quarter close-date (should ideally be at least 3X quota)
Discuss roadblocks & challenges (where are some deals stuck? how could the pipeline be bigger? Are there any future quarter deals that can be pulled into the current quarter?)

Lead Review (10 minutes)

Current lead volume and follow-up (are there any untouched leads? are there any that are active but haven't been contacted in a long while?)
Which current leads are close to becoming opportunities?
Discuss overall lead disposition and follow-up (why are some leads not moving forward? what are the primary lead-to-opportunity objections & roadblocks you are encountering?)

Activity Review (5 minutes)

Metrics review (dials, talk time, demos - last week goal vs. actual)
Discuss roadblocks and challenges (what specifically is keeping you from hitting activity goals? what tools, resources, etc. would make these goals easier to achieve?)

Additional Challenges & Roadblocks (5 minutes)

What specifically is keeping you from selling more?
What specific, additional support do you need to find and close more business?
What additional support can the business provide to make you more successful?

The three metrics I review are Size, Shape and Speed. Where size = total revenue, shape = revenue by sales stage and speed is days in sales pipeline and days in sales stage.

Of course this requires sales to accurately place deals in the appropriate sales stage. For that to happen we define actions we should be doing in a sales stage, actions we expect the customer to be doing and most importantly observable customer behavior that tells us we should progress a deal. An example of this last point might be that we only progress a deal from Qualification to Solution Presentation if the customer verifiable outcomes are:

1) “We agree on the business challenges, goals and success criteria or proof points”

2) “I will defend the Eloqua decision because I am in agreement of the economic of business value of your differentiation.”

3) “If you demonstrate those, we will move forward.”