I’ve been teaching someone on our team recently about how a sales pipeline works — and so I thought I’d summarize my sales approach here for you (I’ve used this for straight up sales as well as for partner sales).
Note: I’m going to refer to the party I’m selling to as a “customer” but it could easily be a partner in the case of partnership sales.
There are any number of sales pipeline stages you can use: I’m going to use Leads, 10% Opportunities, 50% Opportunities, 90% Opportunities and Closed Won/Lost. I first adopted this methodology when I began using Salesforce.com which mapped well to how my mind works.
Stage 1: Leads
First you have to get leads in the door. What is a lead?
A lead is a potential customer at its earliest stage.
Some people call this a sales “prospect.” So, what is a prospect and what’s the difference between lead and prospect?
I think using either “lead” or “prospect” is fine, though in sales I tend to prefer to use lead to define my earliest stage potential customer. I then use prospect more as a verb as what I have to do to find leads (e.g. when I read about a potential customer in the newspaper or on a Web site I am “prospecting.”).
For example, here are the criteria I used for qualifying sales leads (qualifying leads may be quite different based on what industry you are in):
Prospecting sales leads is a full-time job. There are two main types of leads:
1) Inbound Leads
To generate inbound leads, you can simply run advertisements (leaving your phone number, email or Web site information) or it may be as simple as you have a Web site with a “Contact Us” link that leads to a sales lead form (which of course would ask for the type of information (such as their size, type of business, etc.) that helps you define whether someone is a good lead.
2) Outbound Leads
Outbound lead generation consists primarily of having an outbound marketing program or outbound sales (such as outbound telesales). The point is that generating outbound leads consists of proactively making a day to day effort to find leads.
The next stage after qualifying a lead is turning it into what I call an “opportunity.” I have three stages of opportunities: 10%, 50% and 90% — let me explain each.
Stage 2: Opportunity (10%) (“We have connected with the right people at the right business”)
I define a 10% Opportunity as having the following qualifications:
Stage 3: Opportunity (50%) (“We’re in the ballpark on this deal”)
I define a 50% Opportunity as having the following qualifications:
Stage 4: Opportunity (90%) (“Negotiations are complete”)
I define a 90% Opportunity as meeting the following criteria:
Stage 5: Closed Won (or Lost)
Finally, when you close a deal you have two scenarios:
1) You closed the deal meaning you won it. That means that you have the contract in hand and you’re off to the races!
2) You closed the deal because you lost it. This is ok. Think about the old story of the vacuum cleaner salesman who sold vacuums for $100 but had to knock on 50 doors to get a sale. Well, each “Closed Lost” deal of his was worth $2 each, right!?
Finally, there are plenty of customer relationship manager software prorams (aka CRM software) available to help you with the stages above. Most include the basics of:
I happen to use Salesforce.com and I’m quite happy with it…but there’s plenty of other good sales software out there (see A Quick Evaluation Of 9 CRM Tools).
And don’t forget to check out my favorite book on Selling — read my article on it here: SPIN Selling.
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