It would be great if we were able to close every prospect we ever targeted, but that’s just ridiculously unrealistic. So how many prospects should we have in our pipeline? And how many do you have in there right now?
David: Hi, and welcome to the podcast. Today, cohost Chris Templeton, and I will be talking about the prospects in your pipeline. Should you have more? Could you have less? Welcome Chris.
Chris: Hi David. You know, many business owners and sales people think in terms of growing their customer base. But the number of prospects in their pipeline is a key element of that, isn’t it?
David: Yes, absolutely. And it’s very often overlooked. It’s one of these things like we were talking about in the previous podcast, things that people know — business owners know, salespeople know — but we don’t always practice. The idea that we have to have a nice solid sales pipeline. You have to put enough in the front of the pipe, so you can have some coming out the back of the pipe? Or some people use the analogy of a funnel. If you don’t have enough going into the top of the funnel, you’re not going to have anything coming out the bottom. So yes, having a really solid pipeline is absolutely key. If you think of like an oil pipeline or something like that, if you have great gaps in the pipeline, if you just have great pockets of air, that is not going to accomplish the goal. And it’s the same thing with customers with prospects. If you’ve got a nice, solid pipeline of customers in place or prospects in place, then the likelihood that some of them are going to close is pretty great. And you will very likely have the type of customer base that you can grow and the type of business that you can actually live in. But if you’ve got tremendous gaps in between your prospects in your pipeline, then the likelihood of success is greatly diminished. Before we started this podcast, we were talking about this topic, how many people do you have in your pipeline? And I responded with “both of them.” You know, and for some people, that’s where they are. They might have a few people, they have a handful of people in their pipeline. And they’re just crazy about the idea of when is one of these people going to close? And they fail to take into consideration that if you had twice as many people in the pipeline, then your closing ratio could be cut in half and you’d still make a sale.
Chris: And the other thing is the whole time, if I’ve got a full pipeline, if I’ve got 20 or 30 potential people that I’m working on over time, or a hundred, whatever the case may be, depending.
David: Or a thousand, yeah.
Chris: Depending on where I am in that, I love the funnel analogy. At the top, it’s probably somebody who may be receptive at some point, or is even a lead that you haven’t talked to. But having that pipeline loaded with potential clients, I think is one of the greatest ways to reduce stress in your business. Especially if you’re a sales person. Would you agree with that?
David: Yeah. It reduces stress and it increases the likelihood of success. And it positions you to be able to generate the sales that you want to generate. You know, one of the things I’ve always struggled with, with the idea of either a pipeline or a funnel is that if you have a pipeline, if you have a funnel, you put something one end, it all comes out the other end. In a sales funnel or a pipeline it doesn’t really work that way. Some of them are not going to make it all the way through. So it’s like these things have these various escape valves going off in one direction or other, and the ones who aren’t going to make it get siphoned off. But the ultimate visual, I guess, is that you put a bunch of them into the top and the ones that actually make it through the bottom of the ones that become your custom.
Chris: Yeah. And it’s almost a filtering process. You know, how rock is graded. You know, you get the big ones out first and then the ones in the middle, and the big ones are the ones that aren’t qualified or just don’t have any interest. And as you get a little finer, finer, finer, that you’re getting people that are ready to buy now on the other end. And I think that’s one of the things that’s really important to think about in terms of a pipeline is that we are filling it with enough. So that what filters out at the bottom really is the exact kind of clients that we want. And hopefully that filtering process is also getting out the kind of clients that we don’t want. So when you look at this, David, what do you think the number of prospects a sales person should have in their pipeline?
David: Yeah, it’d be great if there were just one number… Seventeen, Chris.
Chris: Forty two.
David: Yeah. Right. The answer to life, the universe…
Chris: And everything.
David: The answer is 42. Okay. Some people will get that reference. Most will not. It’s going to be different, depending upon the business and the number of customers necessary and the ticket value of the item and all that sort of thing. But there is an ideal number, probably, for each salesperson, for each business owner. There is an ideal number. I can’t tell you what that is in your business, but a lot of it is going to be related to things like your closing ratio. What percentage of the people that you bring into your pipeline are actually closing? And how many sales do you need to close over the course of a day, week, month, year in order to be able to get to those numbers?
David: So in some cases you basically have to reverse engineer it, to try to figure that out. How many sales do I need to make? What percentage of sales do I generally close over the course of 30 days? And that’ll tell you how many prospects you need to have in your pipeline to be able to do that. Also to take this analogy a little further, as far as the funnels and the pipelines and all that sort of thing. In our last podcast, we were talking about qualification and we were talking about qualification of clients. Now we’re talking about qualification of prospects. But if you think in terms of qualifying a prospect upfront to determine if they’re either ready to buy or have specific dates in mind when they want to buy, or they’re generally receptive to you. And then you take those people and you put them into the top of your funnel, then you’re going to be a lot more likely to get a lot more of them coming out the bottom, because you’ve already done the qualification. You don’t have to take them out because they’re no longer qualified. If you’re only putting in the ones who are qualified to begin with, then your likelihood of success is greatly increased.
Chris: So talk a little bit about how you do that. How do you help salespeople to put more qualified, more receptive people in at the top of their funnel and to kind of pre-weed, so to speak the types of clients that we don’t?
David: Well, one of the first things is that I encourage my clients to qualify early. Qualify fast. I can’t tell you over the years, how many times I’ve had a conversation with salespeople who are going out and trying to schedule appointments with people. And I would say to them, “why would you want to schedule an appointment with someone if you haven’t qualified them yet?” And I’ve done this over the years. I mean, I’ve made these mistakes. One of the reasons that I do this podcast is not because I’m particularly smart. It’s because I feel like I’ve made every stupid mistake that could possibly be made. And if I share each of them, then my audience is not going to have to go through that, which is a real goal for me. But what I recognized is that there are people who will spend days, weeks, months, sometimes, even years trying to get an appointment with someone. And they finally succeed in getting that appointment. They get together with the person and they find out they’re not qualified to buy from them. And you could have found that out in the very first conversation, you could potentially find that out via email. And if you’re able to do that first, the more quickly you qualify people, the more quickly you’ll be able to interact with qualified prospects and get that funnel, that pipeline in place that you want to have. So just doing that up front is really the biggest trick.
Chris: Give people an example of that process, from your standpoint. Asking those questions and how to help to prequalify somebody in a solid way that feels good for you as a sales person, to the client at the same time. What’s a good example of that?
David: One of the things that I have my clients do is to put together a lead qualification procedure. And that sounds very sophisticated, but really all it is is a list of questions. It could be three, four, five, seven max, questions that you can ask someone to determine if they’re qualified to buy from you. And if you’re getting yes answers, then they’re probably qualified. If you’re getting no answers, then they’re probably not qualified. A lot of times, people just want to go with, “Hey, do you want to buy this?” And that’s a qualification question, but if they’re not in that mindset, the knee jerk reaction might just be “no” to it. So in a lot of cases, you want to sort of feel your way around a little better and try to get an idea if they would even be open to it at some point.
David: Because again, the goal is not just to target the people who are ready to buy right at the moment. It’s the people who might be ready to buy three months down the line, six months down the line, depending on your sales cycle, it could be longer. But you don’t want to eliminate people who could potentially buy from you just because they’re not ready to buy right now. So by having a series of questions that you can ask people, and a lot of the work that I’ve done has been with people in the promotional products industry. So they’re selling to people who might have various events coming up. And so an example of a qualifying question, there might be, “what sort of events do you have coming up within the next 90 days?” And if they say “no events,” and then someone in the promotional products industry might think, okay, well maybe they want to provide promotional items to thank their employees for good service. And so they might say as a second question, “tell me, what do you do to reward excellence among your employees?” And they might say “nothin’.”
David: Right? And you go, “okay, this person is not sounding too qualified to me. And so you might ask a third question and the answer to that question will steer you in a direction. So simply by having questions about their potential need for what you offer, you can get an idea if they’re roughly qualified or if they’re not. And if it sounds like, “Oh yeah, you know what, actually, that’s something that I was looking at doing. We have a trade show coming up in September” and it’s not quite September. It’s like, okay, well now I know that maybe I need to be talking to them at the beginning of August or the end of July about the trade show they have coming up in September. It also tells me what I need to be talking to them about at the end of July or beginning of August, to be able to say, “Hey, listen, you told me you have this trade show coming up in September. I have a couple of ideas I’d like to run by you. You know, when would be a good time for us to talk?” And then they’ll let you know further at that point, how qualified they are.
Chris: When you think about growing a pipeline, what are the factors that you feel we need to balance in that process?
David: Well, a lot of it, I think is about going back to what we talked about earlier, the types of clients, we want to have the type of customer base we want to have. When we talk about balancing the growth of the pipeline, you don’t want to just pack it full of people who can breathe, right? It’s not just about taking in air on the planet. It’s not about the ability to fog a mirror. It’s about people who actually have the need, the desire, the money, the budget, the willingness to spend. So that’s why the qualification procedure is so important. That’s why you want to have questions and get answers to questions that will allow you to have a much better understanding of the person and their need for what it is that you’re selling. So when we look at balance, a lot of it really goes back to that, making sure that we’re not putting people into our pipeline who have no capacity to buy from us and misleading ourselves into thinking that just because they’re in there, that somehow they’re going to magically convert, because if they’re not qualified, they’re not going to convert.
Chris: It’s a great point. And yet we can easily fool ourselves into believing that we’ve got this great pipeline. But if it’s filled with people that are never going to be qualified, not much of a pipeline, is it?
David: No, not at all. And one of the things that I’ve encouraged sales managers to do, when we work with sales teams and sales managers, is when they’re talking to their salespeople, not just to say “what’s going on.” Cause if you have a conversation like that with a sales person, they’re gonna say, “Oh yeah, I’ve got a bunch of leads in the pipeline. Had a great, a bunch of great conversations, a lot of good stuff coming up” and that tells you nothing. It doesn’t tell the sales person anything. It doesn’t tell the sales manager anything, doesn’t tell ownership anything. And so what I encourage people to do is to say, “okay, look, all you need to find out from your salespeople are how many leads are in the pipeline and what stage of qualification are they in?” How many are ready to buy now, how many have specific dates in mind when they want to buy? How many are generally receptive, open to buying, but just aren’t sure when? How many of them have been disqualified and how many of them won’t get back to them? How many are unresponsive? And with that information, any sales manager, any business owner can have a really good idea of what could potentially be coming in. And it helps everybody. It helps the sales person. It helps the customer, because the customer now knows that you’re interested enough in them to try to find out what they need and when they need it. And a lot of people just don’t bother doing it.
Chris: And, if I am able to show, and alternatively, to help my sales people, to find prospects that are either receptive, that they’ve got a date to buy, or they’re ready now, and I’m focused on helping my salespeople to have that part of the pipeline really populated, I’ve got a sales guy who loves his job. Don’t I?
David: Yeah, because they have some idea of what to expect, and many salespeople don’t.
Chris: Alternatively, how long should people stay in the pipeline? Can they be in there forever without ever buying? How do you kind of manage that? End of it?
David: Yeah. It seems like some are, sometimes. There is a tendency of salespeople and business owners (and I certainly count myself among them,) who hesitate to eliminate prospects at any point. If they still seem generally interested, if they still seem open to it, we want to be able to include them. And so, getting back to the idea of what we talked about previously, as far as a drip campaign, if you’ve got a drip campaign in place where you can continue to drip content out to those people until they are either ready to buy or have a specific date in mind or become generally receptive, then yeah, they can stay in there for a long time. It doesn’t mean that you’re going to be contacting them all the time. You’re not going to be picking up the phone, necessarily, and calling them every week. You’re not going to be stopping in to see them, necessarily. But they can stay in there. But I think the only reason that you’d want to keep them in there is if it’s somebody that you really like, that you really think has an opportunity to work well with you. Because if not, if you’re not sure, or if you don’t get a great vibe from them, I’d say toss them out and don’t look back.
Chris: I think that’s the key isn’t it? If I have an automated system that’s regularly dripping emails to these people, I don’t care how long they’re in my pipeline. If part of my process is calling these people all the time, that’s a whole other world, isn’t it?
David: Yeah. And even what we’re doing here with the podcast, every week, we put out a newsletter and a podcast, and there’s a percentage of people who listen to it and they’re interested and they say, “Oh, that sounds good. Maybe someday I’ll do something.” All right. So those people are in the pipeline for “maybe someday.” But every week there’s somebody, and there are some people who listen to the podcast who say, “wow, that sounds good. I’m going to schedule a strategy session and see if that makes sense for me.” So there’s always a segment of the market who’s ready now. There’s always a segment of the market who knows when they want to buy. And there’s always a segment of the market who’s generally receptive. Similarly, there’s always a segment of the market who has absolutely no interest, and no ability to spend money. And when those people, whatever, opt out or say they’re no longer interested, that’s not a bad thing, because now you’re keeping your pipeline clear for the people who could actually spend money with.
Chris: Right. And I think about it, and kind of wrapping up, it seems to me like one of the things that you can do the best, is to really look at where people are in the process. I love your five steps of, you know, I’m ready to buy, I’ve got a date to buy, or I’m receptive. If you just look at that as part of your pipeline, and your goal is to just get that part of your pipeline, really moving, I think you’re going to have a lot more success. Don’t you?
David: No question, because you know what’s going on. You have some reasonable understanding of exactly where people are. And it doesn’t require a whole lot of thought, really, because everybody’s going to fall into one of those five categories. And the sooner you know which category they’re in, the sooner you know exactly what to do with each person.
Chris: And when you’ve got them in those lower categories, you know, toward the bottom of the funnel, because they’re receptive or they’re ready to buy, you are in a whole lot happier place as a salesman. And if you’re a sales manager and you’ve got a bunch of people with that part of the pipeline nice and full, it’s a great place to be.
David: No question.
Chris: Okay, David, what’s coming up in our next podcast?
David: Right Chris, next time we’ll discuss the idea of maintaining control of the sales process.
Chris: Ooh, I like control.
Chris: Okay. In the meantime, if you need help growing your top line sales and bottom line profits, go to TopSecrets.com/call to schedule a strategy session and find out if David and his team can help you. That’s TopSecrets.com/call.
David: Thanks for listening to the podcast. Right now, I’m working with a small group of private clients to get things going in their businesses again. So if you’re no longer willing to settle for unqualified prospects and unpredictable clients, and you’re ready to start this week, then head over to TopSecrets.com/call. We’ll get on the phone with you and make sure you’re crystal clear on 3 things: 1.) The market or markets you need to start dominating right now to accelerate your results, 2). What’s kept you from doing it so far and 3.) What’s broken or missing? Remember, in this business environment, sitting around, waiting for things to get better is NOT the answer. And if you knew what to do, wouldn’t you have done it by now? To see if we’re a good fit to work together, go to TopSecrets.com/call.