For a company’s executive management and all members of the sales team, a CRM system proves its value by improving the quality of the sales pipeline and the efficiency of closing those deals. Sure, a CRM’s contact and account information are valuable to management — but those pale in comparison to the value of deals that will (or won’t) make the quarter. If a CRM system helps win just one more deal every quarter, it more than pays for itself.
Unfortunately, too many sales pipelines are just baloney: wishful thinking about deals that will never close (or, worse, that don’t exist at all). There’s also the opposite problem: Big deals that may well close, but don’t show up in the system at all until they do. These “miracle” deals are never harmless surprises, and can be downright dangerous if you have a long supply chain.
The good news is that there are several metrics you can use to validate the pipeline health. But simple numbers need to be supplemented by policies, automation, and business processes that provide incentives for good behavior. Let’s look at some examples of policies that should be in place:
If a deal isn’t in the CRM, it doesn’t exist
This is really basic, but many companies still have some deals that aren’t in the CRM pipeline, and some others that are pretty badly misrepresented. To keep things consistent, it’s best to create synthetic deals that represent all the corner cases (such as “run rate” business, distributor/reseller deals, renewals, etc.). Make sure that these deals are clearly distinguished from standard ones using record types or other flags that prevent confusion in reporting and other business processes.
Incorporate automatic deal dupe detection, particularly across channels
This will require some fuzzy logic, but makes sure that you’re not double or even triple-counting deals in the pipeline.
All deals have realistic close dates and amounts
Again, basic … and way too often violated. The key is the enforcement of the word “realistic,” using criteria such as the following:
- How many stages does the deal still need to go through?
- What’s the average number of days required for each stage?
- At the later stages of the sales cycle, is the amount field substantiated by line-item quotes?
- Do the quoted line items make for a coherent order, or do they appear to be random entries designed to fool the system?
- Are those quoted items available on schedule for the deal?
- How often has the deal record been updated?
- Does the latest update cause the deal to shrink in value, move out in time, or go backwards in the sales cycle?
- How many completed activities have been done for the deal, considering its stage in the sales cycle?
- How many open activities need to be completed before the deal can close?
- As discussed in this article, the criteria for the above bullets will have to vary depending on vertical industry (e.g., government vs telecomm vs financial services) and country (e.g., US vs UK vs Japan). To avoid confusing/meaningless criteria, you have to split data modalities and follow the edict of that 50’s song, “Beware of the blob.”
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