Everyone wants to know what business closed today. Or this week. Or this quarter. But is that really all we should be asking?
Make no mistake. These are all critical key performance indicators (KPIs). It’s worth noticing, though, that what closed today, this week, and this quarter all are lagging indicators. Arguably more important in terms of an organization’s long-term stability of revenue production are the forward-looking KPIs – the leading indicators, one of which is pipeline health.
Yes. What is happening today, this week, this quarter, is important. But we also need to ask: Which KPIs will give us a glimpse of the future, so we can see what business results will be taking place well down the line, and plan accordingly? One of these critical KPIs is pipeline health.
The Sandler Research Center recently surveyed sales professionals and asked about the health of their pipeline, posing the question: How healthy is your pipeline of current opportunities for a typical major account? The health of one’s pipeline corresponds to the level of income, in comparison to the target, that can be reliably predicted into the future, based on both historic sales cycles and the demonstrated fulfillment of a proven sales process.
The results were that 29.6% of respondents replied that the pipeline was healthy. 29.3% of respondents replied their pipeline was not healthy.
Comparing those two groups of respondents gives us a chance to examine other survey replies to determine best practices. The data indicates that those who reported having healthy pipelines were:
- 1.5 times more likely to maintain open communications with their major accounts.
- 1.7 times more likely to have access to key clients for frequent interactions.
- 2.2 times more likely to effectively share knowledge mutually with their major accounts.
- 2.5 times more likely conduct joint planning sessions with their major accounts.
- 1.9 times more likely to have a comprehensive understanding of their major account’s industry.
- 1.6 times more likely to feel that their typical major accounts are satisfied with the relationship with their organization.
- 1.5 times more likely to have a strong level of trust between their organization and the typical major account.
There may not be a direct correlation between the perception of the health of your sales pipeline and these other elements of customer interaction. But what the numbers do point toward is the need for a holistic approach to client relations. Each of these elements of the relationship contribute to client retention. And of course, the knowledge that a key account is well cared for could lead to greater confidence in the health of your sales pipeline.
It is worth noting that this question gathered the largest number of ‘neutral’ replies – 41.1% – of any question on this survey. The fact that nearly half of respondent were torn and could answer neither “healthy” nor “unhealthy” about the status of their pipeline suggests that, at many organizations, there is cause for concern when it comes to pipeline health. Not knowing how healthy your pipeline is means that there is no confidence in this measure as a leading indicator, and also that a piece of valuable sales intel is not available.
Learn more by downloading the complete Sandler Research Center survey, “The Critical Elements of Proactive Client Retention,” at www.sandler.com/research.