This year we will begin featuring guest blogs from several members of the PKF Texas Consulting Solutions team. First up is Tony Piperato, our manager in charge of the Microsoft Dynamics CRM work we’ve been doing. His first post is about taking a realistic look at your sales pipeline and not just having “woo hoo!” meetings.
I’ve been involved with sales in one way or another for many years now. Two things that have always intrigued me have been the sales pipeline meeting, and the sales pipeline itself. Let me tell you a story about a fictitious company called “initech” (if you saw the movie Office Space you’ll remember initech!). When I first came to initech, a $100 million in annual revenue company, I was a Practice Director trying to build a Dynamics CRM Practice. I worked closely with the BDM’s (Business Development Managers) across the country to educate them on how to sell Dynamics CRM, or at least get me in the door.
We’d get on conference calls with our president, and he’d go through charts and graphs that were put together by someone else using data from our CRM system, and everything just looked peachy. On the call, he’d move from BDM to BDM and ask how they were doing and what they were working on. Each BDM would provide us with a rosy outlook on big dollar deals that were going to close “next week”. Our president would “woo hoo!”, and everyone was happy.
The funny thing was, these calls were always the same…big pipeline…great news…closing next week…woo hoo! After about four weeks, I finally got access to our Microsoft Dynamics CRM instance and began looking over our sales pipeline… I was impressed. Wow, we had $326 million worth of opportunities at various sales stages in our pipeline…what a year we were having! But upon closer inspection, and after running some pretty routine advanced finds (queries), I began to peel back the layers of the onion and it brought tears to my eyes!
Of the $326 million worth of pipeline, $40 million was supposed to have closed before that day! And of the $40 million, $26 million was supposed to have closed the previous year! Opportunities that were at the first stage in the sales opportunity process were randomly given estimated revenue values of $1 million (said with an Austin Powers accent)…Really? You’re in the very first stage of the opportunity, but you know it’s worth $1 million? So, of the remaining $286 million of pipeline, over $200 million was overstated rubbish.
I quickly got on the phone with the President and informed him of my observations. My findings were met with dead silence on the other end of the phone. He simply couldn’t believe it. Stunned, he cancelled the monthly pipeline meetings and began cleaning up the pipeline. Within two months, the pipeline was down to $36 million and still had a few overstated opportunities. But at least it was somewhat realistic!
Initech was purchased by a much larger company during this whole mess, and it was only eight months later that the president was no more. He had committed four basic sins when dealing with the sales pipeline. First, he never looked at the numbers, or even bothered to understand how to use the system to understand the reality of the numbers. Second, he relied on other people to generate the sales reports; people who didn’t know what they were looking at and didn’t care; they just generated the reports. Third, he believed his BDM’s when they gave their rosy sales reports…Not placing blame here, we all know that the job of a BDM is the toughest around, but opportunity reporting should be accurate, even when it hurts. And fourth, he never really had a true sales pipeline meeting that helped move opportunities through the various stages, he just had a “woo hoo!” session.
In my next post, we’ll begin to dive deeper into these four sins and discuss how an organization can benefit from: Developing a realistic sales process; accurately reporting on the sales pipeline; nurturing and helping the BDM close the sale instead of just putting it out another week; and how a real sales pipeline meeting should be conducted to save everyone time while providing insight and feedback to close business.