Sales pipeline stages
Sales people by their nature are optimistic people. The resulting effect of this is that Sales people tend to be overly optimistic with their sales forecasts
Part of the reason for this, I believe, is the descriptors used in the traditional stages in the sales pipeline that to confirm to something like:
Initial Communication / Needs Assessment / Presentation / Negotiation / Commitment to buy.
Most businesses have activities which they commonly employ at certain stages of their sales engagement; but ‘demo’, ‘trial’, ‘meeting’, ‘reference call’, or ‘quotation’ are not meaningful stages in themselves. They are simply activities which we, or our customer, may drive in order to progress further through the customer’s buying cycle. Therefore, these stages tend to be both too subjective and too generic to enable accurate pipeline management.
As an alternative, the following descriptors support most sales cycles and offer a more accurate picture of where in the sales pipeline an opportunity is.
- Unqualified Interest – Someone at a prospective customer has expressed interest in your products or services, but you do not know whether they have a need, or an ability to buy.
- Partially Qualified – The prospective customer recognises a need for a product or service like yours, but you do not know how, or if, they will pursue a purchase in this area.
- Qualified – An individual with authority to purchase a solution recognises a need for a product or service like yours, and is sponsoring a purchase.
- Contender – You have been specifically recognised as a potential vendor to address the customer’s need.
- Preferred – The customer believes that your offering fulfils their buying criteria more fully than the alternatives.
- Verbal Commitment – The individual with authority to purchase has informed you of their intent to order, possibly subject to discussions of a contractual nature.
- Closed / Won – You are in receipt of an order which conforms to your pre-set order acceptance criteria.
Of course there may be other states in which to categorise a deal, most obviously:
Qualified Out/No Purchase Made – You disengage, you are not able to justify continued investment based on your qualification criteria, or the project was cancelled. Typically no budget was spent with competition.
Closed Lost – The customer purchased a solution from a competitor.
Why break the customer engagement into stages?
There are many benefits to mapping out the primary stages of the customer engagement, including:
- Definition of common vocabulary regarding sales stages allows for more consistent description of the progress of a deal.
- As we seek to teach new employees or partners to sell on our behalf, we will be more effective if we can show them the sale broken into clear, manageable steps, with defined milestones and suggested activities.
- By defining stages associated with clear levels of sales qualification, we can much more accurately and consistently represent our deals within the sales pipeline.
Only by accurately representing deals in our opportunity pipeline can we hope to accrue the benefits of pipeline management; including accurate forecasting
ProAptivity specialise in the deployment of CRM solutions into small and medium size businesses. They are the Northern Ireland solutions partner for Maximizer CRM which offers both on-premise and on demand solutions with full Mobile CRM capabilities. For more information contact 028 90735630