Happy New Year and welcome to 2021! The COVID-19 crisis continues. Market demand is down. Investment decisions are being made at higher levels. Clients are engaging salespeople later in the buying process with higher expectations. There is an accelerating trend around self-service and automation of the buying process. And I am hearing from many of you that you are facing a plan increase this year of 10% or higher.
Now is the time to implement a science-based approach to planning and achieving your organization’s 2021 sales plan.
You will first have to assess how the pandemic has impacted your key pipeline ratios.
- Has the number of new prospects coming into the top of the sales funnel changed?
If so, to what degree? Has the type of prospect changed such that it will impact the size of the first sale?
- What has happened to your average deal size? What about for existing clients and renewals?
- Has the sales cycle elongated or shortened?
- Most importantly, how has your team’s average win rate been affected?
In my experience, too many sales leaders and strategic account managers either have not done the math to determine their ratios or do not pay much attention to it… especially if they are measured annually. They may feel like, “It’s only January, why look at it now?” or, “Wasn’t last year too unusual to even bother?” The answer is no! That is exactly why you need to do the analysis. This year may be unusual too and the last few quarters are likely more indicative than your historic ratios.
Do not let the math scare you. Let’s assume you have a strategic account manager on your team with just one account and a $5 million annual sales target. They have historically averaged $1 million per sale, with a 30% win rate, a six-month sales cycle, without any seasonality impact.
Assuming the pandemic has not impacted their pipeline ratios, you would want them to have a desired pipeline of $16.7 million in qualified opportunities by June 30th to confidently achieve their sales target. Math: $5,000,000 ÷ 30% = $16,666,667.
What is the pipeline requirement value for your entire team… and by when?
I recommend establishing Activity Targets with Leading Indicators per person and for your team for Quantity and Value… which, depending on your business, might include:
|Sales Proposals||# Proposals Issued Monthly||Total $ of Active, Outstanding Proposals|
|Sales Contracts Out||# Contracts Sent Out||Total $ Contracts Sent|
|New Opportunities Created in CRM||# of New Oppty||Total $ of Month’s New Opportunities in CRM; Average Oppty Size|
|Sales Meetings||# of Sales Meetings||Average Oppty Size|
|Demonstrations||# of Demos||Projected Size / Value|
Some of you may be thinking that setting activity targets for strategic account managers is not appropriate or may not be received well. How well received is it by leadership when you miss your quarterly targets? Doing this helps your team, and it helps you. It keeps your people aware of underperformance in time to take corrective action, with your guidance, and keeps you well informed throughout the year.
How else will we know if we are on track towards achieving our annual targets – with enough time to adjust if we are falling behind? How much of an adjustment do we need to make at the quarter or half-time to win?
It is best to consider a quality measure for your indicators, so if someone is trying to hide behind numbers… you can spot it. For example, if the new opportunities added are all low margin business, then you will want to focus on that, too. Consider for your team what easy quality measures could be used in your systems to spot problems and note them in your printout or PDF of the above table.
In all my years of selling and leading sales organizations, from mid-markets to enterprise global accounts, I have consistently seen Activity Drives Results. It must be the right activity, of course, and it must start now, as I have shared here.
The other key area of your focus should be on the large, strategic deals in your pipeline. These “Must Win” Deals represent both tremendous upside and significant risk, depending on how many you win this year. What has been your historic win rate on these deals? How has the pandemic impacted these types of opportunities?
You should re-qualify these deals immediately, then implement a regular cadence of BOTH deal coaching and a monthly review to ensure these deals and the account teams get the attention, advice, and support they require.
2021 is a year to recalibrate and to reinvigorate your team. Team members will be more receptive of you using different leadership and management activities because they know it is an unusual time, and frankly, they are wanting more support. Establishing a science-based approach to planning and driving activity will help ensure your team’s sales success this year!
What pipeline ratios and activity targets would you need to achieve your 2021 goals? Organize automated reports or easy PowerPoint dashboards to share these with your team. Let them know what you will be looking for, why, and how often and that this will be done individually and as a team. I suggest a monthly team accountability email that shows at least two or three indicators and results that keeps everyone informed and accountable to the group. It may even spur mentoring between team members. Then work with each person to develop a mutually agreed execution plan. For example, where and how specifically will the SAM with the $5 million sales target develop $16 million in pipeline opportunities by June 30th or sooner? What options should s/he consider, and where can they go in the account to get more opportunities being discussed?