Sales Capacity and Pipeline Velocity

Scaling Sales Capacity and Pipeline Velocity

If you think of each sales representative like a manufacturing plant, then each person on your team has a measurable capacity.  A sales rep can “manufacture” X number of phone calls, leave X number of voicemails, send X number of emails, have X number of conversations, and so on.

Likewise, each sales opportunity has a sequence of such activities. Some sequences work better than others.  In some cases, an activity itself is missing, unnecessary, or inadequate.

Obviously, sales people attempt to reach many prospects who do not buy from your organization.  So, by definition, those sequences don’t work.  Then there are those sequences that take longer and/or result in less revenue than you generate from your best customers. In some cases, in fact most cases, the starting point was wrong. That is, the sales person engaged an account that was unlikely to buy or that was going to take more work to sell.  In other cases, the sales rep used the wrong sequence of activities or has sub-optimal activities within the sequence.  The rep talked when he or she should have listened.  He or she didn’t ask what she should have asked.  He or she used the wrong language.  He or she invested too much time with the wrong people in the account.  And so on.

Yes, reps have different skill sets and different talents, but can we all agree there is an optimal sequence of the right activities for each solution and segment? If sales leaders took the time to map out a hypothesis of the right activities in the right sequence, then sales could run experiments to test alternatives and gradually optimize sales production.

Optimizing the Top of the Sales Funnel

One such area ripe for experimentation is the front of the sales process.  This activity is time consuming and the yield is low.  An eight-hour day of dialing typically results in just a few phone conversations. Unlike manufacturing plant, the capacity and yields of sales people are not constant. Minor improvements in this resource-intensive, low-yield activity can have significant benefits on revenue production.

Sales leaders who looked at this activity in the high-tech industry designed numerous experiments using new technologies and divisions of labor.  In essence, one group of reps was optimized for finding opportunities and another group was optimized for closing them.  The benefits were enormous: time to revenue, lower expense to revenue ratios, better market coverage and therefore more rapid revenue growth, and, in the best companies, a deep bench of talent ready to step into opportunity harvesting roles.

The Looming Power of Big Data on Sales Production

Such experiments began over twenty-five years ago at high-tech leaders like Oracle and have been refined and improved many, many times by numerous companies.  Now, the next wave of sales innovation is coming.  Forward looking sales leaders are marrying big data to improve targeting and relevance on the front end with the use of technology and low-cost labor to unleash unprecedented levels of sales production.

Big data is removing many of the time-consuming burden of researching accounts and buyers.  The new possibilities with social media while promising can also be overwhelming for individual reps and very time consuming. Big data is now harvesting that unstructured data and looking for patterns to help sales and marketing target their efforts on the most likely buyers and use messages that are more likely to resonate.  At the same time, technology and low-cost labor is reducing the cost of dialing phone numbers, navigating IVRs, talking to receptionists, leaving voicemails, sending emails.  The result, instead of talking to four to eight prospects in a day, a sales person can now talk to that many people in an hour.  When I think of these two powerful forces coming together, one phrase comes to mind: pipeline velocity.

Tell me about experiments that you have done in this area.