If you’re like most Sales Leaders we’ve worked with, you’re glad the first half is behind us. You are also trying to figure out how to make up lost ground. We’ve found the two most effective ways to recover from a first-half revenue miss have been 1) closely examining pipeline 2) identifying additional opportunities in your customer base.
Examine Your Pipeline and Assist Your Sales Team:
This is a sales leader’s opportunity to leverage insights from win/loss analyses and to review the current pipeline report with their sales managers. Best-in-class sales leaders foster an environment of coaching and peer learning. Therefore, the tone of this review should be collaborative. When people feel defensive, they are unable to learn. To assist in your reviews, SBI has created a pipeline review checklist that can be used to guide the conversation with your organization.
A mature pipeline and forecast management process should accomplish the following:
1. Identify the must-wins that will make or break the quarter. This is not the time to be a hero. For sales leaders who have built good relationships with their peers, this is an excellent opportunity to enlist their support. For the top 10-20% of opportunities in the quarter, sales leaders should ask a C-suite peer to own that opportunity. Often, their creative perspective and willingness to champion the opportunity internally are just the nudge that deal needed.
2. Review stuck deals. A pipeline dashboard should have key triggers for stuck opportunities so that sales leaders can spend time reviewing them. Example criteria include:
- Stuck in stage for 30 or more days
- Status not updated for 14 or more calendar days
- Opportunities with total cycle time more than 1.5 times the average cycle time
This is not an exercise in beating people up. In a psychologically safe environment, a sales team can effectively collaborate on how to get these opportunities un-stuck. Giving the team full transparency to the lessons learned in win/loss analyses will bring out their best ideas on how to improve the win rate. This should identify some opportunities that can accelerate into the quarter. More importantly, it identifies the deals they should walk away from so that individuals and teams can be focused on higher probability opportunities.
3. Look at the early-stage pipeline. It’s easy to get too focused on the late-stage pipeline, but most deals get stuck in the early stages (i.e., a 10-25% probability). These deals are often stuck because the buying decision team is not aligned on the problem(s) to be solved. Often, coaching from the sales managers can help identify and involve the right buying decision team—this can help accelerate those opportunities as well as increase deal size as the team solves more significant problems.
4. Don’t forget the channel. It may be tempting to look for one more partner or try to nudge opportunities with discounts, but effective sales leaders resist the urge to run this play. Instead, they use this chance to double down with their best partners. Getting one or two more deals from top partners is a higher probability play than trying to drive activity from lower-tier partners. While they may be tempted to discount, this creates more challenges. Any discount rationale for channel partners must be transparent and in compliance with Robinson Patman (prohibits anticompetitive price discrimination). Instead, effective sales leaders lay out transparent, easy to understand incentives that will drive action from the right channel partners.
For additional insights on pipeline and forecast management, please review this article.
Identify Opportunities in Your Customer Base:
In the majority of our engagements, we have found that pipeline reviews over-rotate to new logo opportunities. Best-in-class sales leaders include existing customers in the pipeline reviews, as these generally represent most of the revenue number and provide the best opportunity to get the quarter back on track. Consider using our Pipeline Inspection Checklist to help evaluate these opportunities.
Best-in-class companies win new logos at a 30% rate. Those sales leaders resist the temptation and make sure they are spending more time on their existing customers. Mature companies are much more likely to make the number from their existing customers than new logo customers.
For example, benchmark dollar retention rates are 98-103%. A solution that creates genuine value for customers is retained and can even secure annual price increases. The customer success team should be proactively articulating the value created by a company’s solution(s). While this benchmark reflects account losses (e.g., the account stops spending completely) and buy-downs (e.g., they bought 100 licenses in 2019 and 80 licenses in 2020), these benchmarks exclude upsell (e.g., they bought 100 licenses in 2019 and 110 licenses in 2020). B2B companies that have a deep understanding of their account and buyer segmentation and how they generate value from their solution can most effectively identify the segments where they can increase the price with minimal impact on retention and customer experience. Compensation plans should reward customer success/account management teams for higher price capture via payout, quota retirement, or both.
SBI’s benchmark for upsell (selling more of the same solution) is a 70% win rate. This can include expanding share within the same buying center, but most of the time requires entering a new buying center. An effective client advocacy program can help customer success teams generate referrals to new buying centers. In a mature customer success function, they can run the opportunity themselves, where a newer team can refer these to the sales team.
Cross-sell (selling new solutions to the same customer) is a play many sales leaders overlook. While more difficult than up-sell, a 50% win rate is 1.6x more likely to close than a new logo opportunity. The best opportunities to focus on in Q3 will be selling a new solution into a buying center that is generating a lot of value with their existing solution(s). The customer success team is likely best equipped to identify and capture these opportunities. Well-designed product bundles can increase the win rate and increase the average selling price, creating two tailwinds for the quarter. This will be the gift that keeps on giving as we consistently see a higher retention rate where customers own multiple products.
The first half of the year is behind us, and while many aspects of the future remain uncertain, we’ve found the most effective approach to make up for your gap in revenue plan is a thorough inspection of your pipeline and mining opportunities within your existing customers. Begin by using account segmentation to prioritize existing accounts and our Pipeline Inspection Checklist to help guide your review process. The best time to plant a tree is 20 years ago; the second-best time is today. Don’t wait any longer to adopt a word-class pipeline review process and account segmentation.