When it comes to your sales, do you take things as they come, or do you tend to have a pretty clear idea of how your sales are going to happen?
If you’re never quite sure how things are going to play out, or you keep going through the feast or famine cycle, then chances are that you need to have a look at your sales pipeline. If you don’t know what’s going on there, there’s no way that you can maintain a healthy supply of leads or even really know what’s likely to happen with your sales in any given month.
So how do you maintain a healthy pipeline? I’m so glad you asked…
Start by setting your sales goal for the month
If you’ve already gone through a sales planning process (like this one), then you should have a decent idea of what your sales goal per month is. If you’re coming at this totally fresh, then determine the amount of revenue you want to generate in a year, and work backwards to get a monthly goal.
Establish your conversion rate
This is the rate of opportunities that you actually convert into business. If you don’t know this already, then sit down and figure out what your conversion rate is for the past few months. Don’t worry if it’s lower than you expected — even if you’re converting at 1 in 10 or lower, the number doesn’t matter. It’s just a starting point.
Work out your average order/sale value
Next, work out the average value of each order or sale that you make. Again, you just need to do this for sales over the past few months; you don’t need an exhaustive database of every sale you’ve made. Once you’ve done this, you can calculate the number of leads you need to have in your pipeline at any given time — your pipeline needs to be large enough to give you the sales you want each month at the conversion rate you currently have.
Let’s make this more concrete. Say that you’ve set a sales goal of £5K per month, and you have an average order/sales value of £1K. This means you’re going to need 5 orders a month to meet your goal. Now let’s say that your conversion rate is 1 in 10. That means that you’ll need to have a bank of 50 opportunities in your pipeline to get 5 orders and meet your monthly sales goal.
Remember, you don’t need to worry if your pipeline isn’t quite as healthy as you’d like, or if your conversion rate isn’t spectacular. All you’re doing is getting a sense of where you are right now. And if you do this and find that you want to improve, we’ve got help for you right here and here.
Until next time