One of the tenets of successful sales management is effective pipeline management.  Sales managers have to have an accurate read on their team’s opportunities and a good understanding of when they will close.

This truth is never more important than in a capital equipment sale.  If a product has a long lead time or a highly customized build, the sales pipeline is even more critical. discusses this topic in their article Pipeline = Lifeline (great title):

“Pipeline management is a critical issue,” Stein says. “Few companies have it figured out.” For those that do, they will reap a myriad of benefits, including better forecasting the length of the sales cycle.

Absolutely.  An accurate pipeline also affects other departments within a company:

The second major component of a successful pipeline is having a chief revenue officer (or equivalent individual) understand the sales cycle for products and services in a time sense, and be able to “overlay” quotas against time. “Everything done should be quantifiable,” McNally says. “The CRO can see issues before they manifest themselves. A good pipeline means no surprises. A good pipeline allows you to create correct expectations. Another benefit is, over time, you will see trend lines developing.”

The feedback loop created by the pipeline provides market data to the marketing department that leads to the trends mentioned in that quote.  Operations is also provided a preview of what parts will be needed for the builds and allows for more predictable inventory turns.

In smaller companies, pipelines provide a forecast of cash flow that allows for adjustments before an unexpected tightening.

With all of these benefits, it still surprises me how little emphasis sales managers put on perfecting the pipeline.  My conclusion is that the most unknown, or inaccurate pipelines are products of sales departments without clearly defined sales processes.  Each salesperson has their own approach to qualifying and what constitutes a prospect.  The sales manager has to struggle to ascertain the truth.  The pipeline turns into a pipe dream.

But it doesn’t have to be this way.

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