When it comes to your sales pipeline, less is more

The more prospects you have in your pipeline, the more sales you’ll eventually make. It sounds so reasonable, even inevitable.

Yet research from a leading sales consultancy demonstrates that this simple statement of “fact” is anything but. Truth is, full-to-bursting pipelines don’t necessarily lead to more sales. Sometimes they actually do the opposite.

The research was done by Vantage Point Performance at a Fortune 500 company. The researchers gathered data about the company’s sales teams, and found that salespeople on all but one of the teams had relatively full pipelines. On average, these reps had $41 million worth of potential business pending when the researchers first took a look. These opportunities ended up producing $4.7 million in sales – an 11.4% closing ratio.

That remaining sales team showed a very different profile, however. These salespeople’s pipelines averaged $29 million — $12 million less than the other teams’– but the reps closed 24% of these deals, double the other teams’ success rate. They brought in $7 million per rep versus $4.7 million.

The key to creating such lean, healthy pipelines, the researchers concluded, is to throw out low-value leads by disqualifying prospects as fast as possible.

Against the grain

That cuts against the grain for many salespeople, who hate to walk away from any prospect with a pulse. After all, nobody knows for sure who will buy or not, and some of these leads could turn into sales. So why not keep them around, contact them every so often, and see what happens?

Well, it’s true that you might eventually get some sales from these leads. But they’ll be very costly. They eat up time and attention that could have been spent on high-value opportunities. Salespeople end up not making enough of an effort with the latter, who eventually lose interest. Pretty soon, even the good prospects look like duds.

And so closing ratios on the fat pipeline end up being less than optimal — both because there are bad leads in the mix, and good leads are being ignored.

Fewer leads = productive time

The idea of working fewer leads might seem dangerous. Won’t you end up spending less time with prospects and having less to show for it? Not according to the Vantage Point research. The researchers found that reps with lean pipelines held 25% more meetings with prospects, even though they were working with fewer leads. That’s because salespeople who disqualify low-value leads fast have time to discover more opportunities with the good leads that remain.

The research also showed that time spent on pipeline management is worthwhile. A key finding: Salespeople who spent at least four hours a month reviewing their pipelines with their sales manager generated more revenue than those who didn’t.

Bottom line: A lean pipeline is a healthy pipeline, and will ultimately get you more sales even though you’re working fewer opportunities. And the main thing you can do to keep your pipeline healthy is to ask probing questions early in the sales cycle that will help you separate buyers from nonbuyers.

This blog entry is adapted from the Rapid Learning module “Why a lean pipeline maximizes sales.” If you’re a Rapid Learning customer, you can watch the video here. If you’re not, but would like to see this video (or any of our other programs), request a demo and we’ll get you access.

The blog post and Rapid Learning video module are based on research from Vantage Point Performance, an Imparta company.