Here’s the real truth about a sales pipeline: it’s not a solid pipe. It’s got a lot of holes in it. Not everybody you stuff into the front end will come sailing out the other with a big fat cheque in their mouths.
So the first thing to do is to understand your sales close ratio. What percent of people you make initial contact with will eventually buy, or how many buy out of every 10 contacts?
Let’s say you’re selling website design services, and you have a list of 20 prospects you think will make good customers. 5 will tell you to beat it, 5 won’t even give you the time of day and 8 give you all kinds of excuses why they can’t buy. Excuses like pricing, they’re going with a competitor, they don’t need a website because they’re making nearly $1000 per month going door to door selling powdered water, etc.
However, 2 will buy, thus making your close rate 2 out of 20, or 10% in this example. The more work you do, the more accurate your actual closing ratio will be. Identifying this ratio gives you the magic key to sales success.
So, if your goal is 1 sale, you have to talk to 10 people. If you want 6 sales, you need to speak with 60.
During a sales process, you might discover that in order to close a deal, it takes an initial call to set up a meeting, two meetings to properly discover the needs, two proposal drafts, a contract negotiation call and 10-15 emails over the course of the process.
Well, you get the point. There’s a lot of numbers involved. These are all just examples, but your homework assignment will give you the tools to determine your actual numbers.
In a future lesson, we’ll discuss how each conversation that goes into the pipe is at a different stage of the sales cycle. What’s important for now is the time factor and your closing ratio.
Now you know the true magic key to sales. To make X number of sales, you must talk to Y number of prospects. This is how sales pipeline management works and how you can guarantee that you make your sales goals every month.
CEO and co-founder of Pipedrive