Want more focus, feedback and better forecasting? Use this tool (most advisors aren’t)

Looking to grow without a pipeline is like trying to lose weight without a plan and a scale.

In a recent article, Built for Growth, Develop a Sales Process that Drives Results, I outlined the infrastructure needed to maximize development and marketing efforts. Pipeline is such an important part of that infrastructure it deserves a deeper dive.

Pipeline provides three key indicators

When you’re looking to lose (or gain) weight you use diet and exercise to influence your results and you manage and track how you’re doing using a scale. In business, pipeline is your scale, it informs your activity and decisions. Specifically, pipeline provides these three key indicators:

1. Focus, clarity around where you should be spending your time

2. Feedback, the likelihood of someone becoming a client

3. Forecasting, and the realistic size and volume of new opportunity within a time period

Key indicator #1: Focus

Pipeline tells you and your team where and how to focus your development energy based on where prospects are in their decision-making process. As a reminder, keep your pipeline stages simple (four stages is plenty), define and train your team on what each stage mean and capture key intel and progress for each opportunity in your CRM.

Track these areas to inform your focus:

1. Movement, length of time at each stage and over the entire sales cycle

2. Volume, the number of prospects at each stage

3. The bottom of the pipeline, those prospects you need to close to convert to clients

Time kills sales. The more time someone is in your pipeline or at a specific stage the more likely they will not progress and become a client. The goal of managing your pipeline is simple, keep opportunities moving through the funnel as quickly as possible.

One effective way to manage movement is to use alerts or reminders. For example, create thresholds, if anyone is at a specific stage and hasn’t been engaged in a certain time period (i.e four weeks), or haven’t completed a specific milestone (i.e. sent statements in for evaluation) it’s on you and your team to check-in. Systematically quarterbacking the process takes the responsibility from the prospect and puts it on you. People like to be led, especially in areas where they are seeking help.

Volume informs the overall health of your pipeline, where you may need to shift energy to keep your funnel full.

The opportunity at the bottom of your pipeline has the greatest impact on your business, these prospects are the most likely to drive growth. If you manage your pipeline it won’t be a matter of if but when you close these potential clients.

Key indicator #2: Feedback

Pipeline provides critical feedback on the effectiveness of your sales and marketing processes.

Questions to consider to use your pipeline as a source of feedback:

• At the top of the funnel, ask yourself, are my marketing efforts working to identify enough and the right prospects, those that fit your ideal client profile (ICP)? Do I need to put in additional effort to fill my funnel?

• How are my internal processes working? Are there stages where prospects are getting stuck? Are certain people able to move buyers more quickly than others, why is that? Use the overall length of the sales cycle and time at each stage to help answer these questions

• Consider conversion, how effective are you at closing? What’s working and what’s not? The conversion rate varies, largely depending on the source of the prospect. A referral is more likely to close than a marketing-based lead. What matters is you understand your conversion rate and you work to improve it over time.

Key indicator #3: Forecasting

Many growing firms question when’s the right time to invest in people, technology and marketing to scale. By capturing the size of opportunities and their expected close dates you inform the timing of your strategic business decisions and investments. If you know (or expect) a certain amount of revenue growth from new business is going to hit in Q3 you can prepare for that investment. Maybe you start interviewing for a new role or researching new technology in Q2 with the expectation that you’ll make the purchase once your revenue reaches a certain amount.

Forecasting new assets and clients also help inform how you will divide and manage the new business across your team.

Build your pipeline process with the end in mind

Now that you understand why pipeline matters to your business what are the key metrics to track?

These are the data points to capture for focus, feedback and to forecast:

• Start date

• Close date

• Entry date by stage

• Size of opportunity

• Source of opportunity

• Opportunity owner

• If lost, reasons why

In a previous article, Stop Focusing on AUM, Track These Two Metrics for Growth, I explored how to use metrics to inform your business. Pipeline analysis is an important leading indicator of sales. I’d be watching these four metrics as part of your monthly or quarterly business review:

• # of opportunities by stage

• Overall pipeline opportunity ($) by month looking 12 months out

• Length of the average sales cycle

• Percentage won (conversion rate)

We know the best diets are intentional and consistent. The same concept applies to business growth. Making a sizable shift in your practice requires a plan and tool to manage and track progress – pipeline is that tool.