Show notes
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,