The difference between excess and waste in your sales pipeline

When it comes to your sales pipeline, what is the difference between excess and waste? In the context of pipeline management, “excess” is the number of opportunities in your pipeline that you should not pursue – not right now, or perhaps ever. “Waste” is the number of opportunities in your pipeline that you should pursue, but due to bandwidth or resources, you don't pursue at all – so you are wasting a good opportunity.

I was discussing CRM technology with my colleague and USNA classmate Evan Barnet,[CEO, Barnet Associates], and quickly found myself exchanging ideas on how to grow and manage our own pipelines. He said, "I use the rule of 50. I keep 50 opportunities in the active pipeline and 50 opportunities on the lead list to replace the ones that drop out".

Following this principle, he avoids finding himself overwhelmed by an active pipeline bloated with hundreds of opportunities; too difficult to effectively manage and prioritize even for the most seasoned professionals.

His statement validated my position on the management of sales resources[See "In sales, chasing a bad deal is always a bad idea" blog], but gave me an additional perspective - that of excess and waste in the funnel.

Assume that you have two sales professionals on your sales team. Sales Managers "Bob" and "Bobbi" each have 50 opportunities on their respective active pipelines. You do your weekly one-on-one pipeline review with them and keep them on task, chasing their top 20 opportunities.

How frequently do we accurately compare opportunities across pipelines to see if as a team, we are chasing the opportunities that matter most? Not as often as we should. Unless you have an unbiased, accurate and easy way to stack-rank all the opportunities, you can miss the fact that Bob’s top 20 opportunities are not nearly as good as Bobbi’s worst 30 opportunities. (That Bobbi is working the best of all the opportunities.)

Compensation, account and territory mapping aside (all valid concerns) we should have our sales resources chasing the top opportunities for the good of the company. If we slightly modify the rule of 50; we can eliminate "waste" in our sales pipelines by using them to replace "excess" or poor opportunities across the board.

An effective stack-ranking methodology can empower sales teams to put focus where it is needed - consistently booking the right opportunities while keeping the funnels manageable and healthy. This approach would call for some flexibility on the territory and compensation plans so that the wallets of the sales professionals don’t suffer; but in doing so when sales teams hit quota targets more consistently, everyone in the company wins.

Thanks for the talk Evan!

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