As an opportunity moves to the sales pipeline, the value of the opportunity changes, right? The more clarity you get on what the customer needs, when they need it, are they able to pay? Are they able to decide? All those things that go into qualifying a deal, qualifying an opportunity and developing the opportunity through the sales pipeline leads you to have a more accurate view of whether this will become a certain amount of dollar value for the company.
Welcome to episode 52 of B2B SaaS Marketing Snacks. My name is Mike Northfield. I lead go-to-market and product marketing here at Kalingi and T2D3, and I'm together again with Kalungi's co-founder, Stein Hendricks, who is a serial SaaS marketing executive and ex-Microsoft product marketing leader. And in today's episode, we're talking about how you can make your pipeline and sales forecasts a little bit more predictable and reliable.
And there are two themes that kind of show up. The first is this one about grounding your projections in real data instead of feelings and opinions. And so we talk about some best practices that you can use to actually take historical funnel performance and use it to inform your projections and forecasts moving forward. So we talk about that.
And then the second theme is maintaining discrete, specific, and concrete deal stages in your pipeline. And there's a lot of, a lot of specific scenarios that we talk about there and kind of some decision making logic that we get into about how you can actually design those stages so that they are as predictable as possible and as consistent as possible.
So you're comparing apples to apples when you're actually analyzing your sales performance and funnel data. I dropped a few links into the show notes. That will take you to a couple of things: one is an actual template to help you set up and define your life cycle stages in the way that we're talking about here.
So it'll help your marketing and sales team get aligned on the top of funnel. So lead to MQL to SQL, the kind of like conversion into the opportunity stages. And then it also will help you define the exit and entry criteria for the actual opportunity stages once you're in the sales pipeline as well. So there's a template that you can use to individualize it for yourself. That's in the show notes. And then there's also a couple of articles that Stijn has written up about sales management, how to get your sales team aligned on a specific cadence and kind of rowing in the same direction and in working towards the same goals. So a couple of resources in the show notes for you there, if you're interested and I'll stop rambling.
Thank you again for choosing to spend your time with us. We really appreciate you and let's get into it.
So we're heading into the new year. Everybody's got plans and forecasts and they're probably starting to see the results of those things playing out and I think one of the topics that's going to start to come up and has started to come up for even us too is how you make sure that your pipeline forecast is reliable and is actually pretty accurate to, to the work that you're doing and you can kind of see around the corner one, two, three months [ in the future] and, and start to plan for the things that you need to do now to make sure that you have enough in the pipeline to hit your targets and stay on track.
So I know that you have a lot of thoughts around this, and I was just kind of curious to get to your general philosophy, your thinking. Do you have any frameworks behind how people can make their pipeline forecast more reliable?
It's a great, great topic. It's funny how in an executive team, almost everybody in the team is held relatively accountable to predict the future a little bit of the business when you're running in manufacturing company with someone owns like supply chain, you know, you want to know how many pieces of raw material do I need to produce my product next month, right? And if you're in finance, you need to know, "Hey, make sure I have enough cash in the bank to be able to pay people's salaries or to things that are a little more variable," right? To be able to pay people's bonuses.
And it's funny how in sales and marketing, a lot of leaders get away with much less accurate forecasting, not really based on data— a lot of it is based on opinions. Just look at your average sales pipeline and the way it's set up in Salesforce or HubSpot with these arbitrary percentages that are suspiciously rounded numbers— discovery call completed is 20 percent likely to close or 10 percent, demo completed 15 percent likely to close— it's very unlikely that an exact round number like that that is accurately predicting what the value is as an opportunity moves to the The sales pipeline, the value of the opportunity changes, right?
The more clarity you get on what the customer needs, when they need it, are they able to pay, are they able to decide? All those things that go into qualifying a deal, qualifying an opportunity and developing the opportunity through the sales pipeline leads you to have a more accurate view of whether this will become a certain amount of dollar value for the company.
And the reality is that in your CRM system, if you've been in business, let's say, more than three months, you have actual data. You know exactly, if 20 deals made it to a demo, how many of those became a customer? Maybe it's two, right? That means 10 percent conversion rate, right? Of your, of your demos delivered how many became customers. And you can literally calculate that for each stage of the funnel. Why not use that for your actual forecasting? And always when I work with sales leaders and marketing leaders, I always ask them, "Hey, make sure that those percentages that you tie to a certain stage in the sales funnel or in the marketing funnel. are based on real data if you can. And a lot of of companies don't have that data. And the biggest reason why companies often don't have that data is because they keep changing definitions, especially when you're early stage you maybe change your sales pipeline stages like every year. Which means the data is not consistent.
And on that there's a lot of nuance in terms of how, I think one of the questions that often comes up is how far back should you be looking at that data to take the insights, right?
So let's say you've got a year's worth of data in HubSpot' s sales pipeline data. Let's say the definitions haven't changed. It's all consistent. It's apples to apples. Should you take the full year of data to calculate your conversion rates down the funnel? Or is it maybe make more sense to do, let's say, the last quarter of data.
Obviously, it should depend on your sales cycle, like the length of how long it takes for someone to come into your pipeline and then close and make sure that you're not including data points in there that haven't gone through the full cycle yet. But do you have any thoughts on how to kind of think about the rolling date range that you should use?
No, it's hard. It's hard because you're, especially when you're a fast-growing company, those numbers are going to change over time because your pipe is growing, right? And then the numbers will get more accurate, but they will also become different because your ability to sell maybe is improving, right? So maybe going back too far will not give you an accurate insight into the state of the business right now. If you go back three years, maybe that first year of those three was really different from what you're doing today.
So maybe a year, you know, is enough. Of course, the data set has to be big enough for it to be meaningful. If you've only had four or five deals close in that year period, then it's probably not large. So then you may have to get two years' worth of data just to get some significance. Data volume, but I think that's kind of a little, that's where feeling and gut feel comes into it a little bit, but use more data, use as much data as possible, use more data than you need for it to start feeling mathematically significant, but not so much that you're kind of predicting the future based on a past that is really behind you, that is not really reflecting where you are today.
Sure. It's not relevant anymore. Yeah. And to your point about, I think, making sure that the funnel stages are apples to apples, right? I think this often happens when you have any change in who's leading marketing or leading sales. That typically is when the sales funnel stages tend to change. Definition or how they're calculated.
You just make one change to a filter, and suddenly, all of your numbers are different.
The data is not relevant anymore.
Do you have any thoughts on how people can keep the data clean and prevent stages from changing? Any advice on how to, yeah, keep it consistent? Do it right the first time?
Fair. It's not rocket science, right? There's a couple of best practices and how do you organize the sales funnel stages. Don't have too many stages. have only stages that are meaningful, that give you a meaningful change in the state of a deal or an opportune deal. What HubSpot calls an opportunity. And then in Salesforce, it's usually hubs, opportunities.
So when you have a stage that is going from 16 percent likelihood to close to 17 percent likelihood to close, maybe that's not really needed, right? So good. Just, just be, be thoughtful about how many do you need? Five to 10, somewhere in between that range, probably. What you see when you have more than 10 stages or more than eight or nine is that people may have created stages that are actually meant to do something different that you may not have to do in your sales funnel.
Things like having a parking lot where you put opportunities that are not moving along anymore. Or you don't want them to pollute your funnel too much so they create a separate stage that is kind of yeah they didn't show up for the call but maybe at some point they will and you have a separate stage that says Didn't show up for the discovery call— that's not a sales funnel stage. That's a property that you use to do nurturing, to do follow up, etc. So that's sometimes a reason why you see too many stages. Another one could be like an activity mistaken for a stage. And the other one is that there's a lot of granularity because people maybe want to track things at a very granular level that you really should track in your notes or in your activities as well.
So yeah, I think just keeping it to a limited number is one. Second I think best practice is to make sure that they are very discreet. Like the way you define a stage is really, there's only a zero or a one, you know, probability of whether an opportunity should be in that stage or not, right? The demo completed language is better than "demoing," "we are demoing to this," no, you're not demoing. You either have the demo completed or not. You have presented the proposal or not. As soon as you see these stages that are called proposal preparation or something like that, right? Which is really not that helpful because you don't know what that actually means.
Right. They're pretty mushy as opposed to having really clear milestones like their threshold that somebody passes through or a deal passes through, and then you move on to the next one.
And then, yeah, most CRM systems, you can even make that those those mandatory, let's call them checks, right?
You have to move from stage, let's say discovery call completed to goal setting call completed. You need to actually fill out four or five different. properties at the deal level or opportunity level, right? If you don't have an amount for the deal filled in, maybe you cannot move beyond goal setting called completed, right?
Because you better know right now with relative accuracy, you know, what the size of this opportunity is likely to be, right? So, yeah, that can help you. Get it right early on so you don't have to keep changing.
Yeah, I think one example of that maybe is something that you've brought up in the past, which is like having, if you install MEDDPICC in your sales process, having certain discovery of different components of that acronym at different stages being a, like a requirement to go past that.
MEDDPICC is very powerful. MEDDPICC does two things. MEDDPICC has, it's kind of a qualification methodology. It's also a methodology that helps you train and develop the capabilities of your sales team. There's many things you can do with MEDDPICC, but one of the things you could do is to say, "Hey, there's certain, one of these letters is, for example, the paper process, or another one is decision criteria, right?" You could make some of the sub questions that are behind those letters mandatory, right? Do you know what are going to be the key decision criteria for this prospect, right? One could be does it fit a certain budget, right? Or is it adhering to a certain, let's say, an IT standard? Or all those things could help you create those gates, if you will, those properties that have to be set for opportunity to move from one stage to another. The very clear ones that usually come early in the funnel are, is the economic, economic buyer identified, right? The E in, in MEDDPICC , or do you know what the competition is? Who are you competing with?
That's a literally a yes no question that could make it possible for you to move from, because can you actually present a proposal unless you know who the competition is, right? And so there's these things that you can really. MEDDPICC to make it possible to to make those gates. There's one tricky thing with that, Mike.
Some of these things, a funnel can never move backwards, right? Once you've presented the proposal, once you've delivered the demo, you cannot un present the proposal. You cannot un So, we've talked about this in the past, that a, that a funnel is a one way street. The problem with some of these attributes that you can use as gatekeepers is that those actually can move backwards, right?
But if you've identified them early in the process if that person leaves the company and you're still working on this opportunity, this opportunity might be later in the sales funnel now, you've presented the proposal, you may have even, you know, you may even have a quote that was presented and sent to them, but it hasn't been signed yet.
And now the person who you thought was going to sign the quote leaves the company, right? They, okay, what happens now? You cannot un-present the quote, you cannot undo the demo, un-present the proposal, so things don't move back in the funnel. But the weight factor, the likelihood of disclosing has definitely changed, now that the person who was going to sign that quote actually is no longer there.
But it has to become kind of an, either a disqualifier of the opportunity. You basically say, hey, we lost this opportunity because we don't know actually if someone's actually going to be able to sign this. Then it just goes back to the early stages of the funnel as a new opportunity that now has to go to the gates , and it can go through the gates very quickly because if all those other things are still true, right, you know what their pain points are, you know what the metrics are they're going to measure for success, you understand the decision criteria.
If all those things are still true, you could move it very quickly, but it's a new opportunity, so you don't, you don't pollute your data. Move it quickly, and it may not go as fast as far as quote presented, because you cannot present the quote unless you know who the new economic buyer is. But that's kind of how you do that.
And so MEDDPICC it's kind of tricky if you add those gates. You gotta solve for that problem that MEDDPICC should not cause you to have opportunities to like move back in the funnel, because that should never happen. That's another way to get your percentages completely messed up.
A couple of things that I would add to the The topic of making your pipeline forecast more reliable, one is like, I think just general discipline in terms of data hygiene, filling in information that helps you analyze retroactively if companies were a good fit or look for patterns in, in the companies that are raising their hands to get a demo or talk to you.
I think it's one thing that. I don't mean this to be reductive. It's just an observation. Many sales folks tend to be coin operated and they tend to be...
Lazy! I knew the words you were looking for. And the best ones are the laziest ones.
Sure, yeah. It's the path of least resistance. How can I do as little as possible to, you know, get as many deals.
And in many cases, that means not being really diligent with filling in extraneous or like extra information. So even simple things like what's the company's headcount, what's the revenue size, how many people are on their marketing team? Do they have a marketing leader? Those types of things that maybe.
You use to define your ICP and will be helpful to look back in the future. Like, what is the information that you wish you would have had three months down the road? Make sure you're collecting that and being really good about it. Because when you, at the end of the quarter, when you look back on your previous performance and say how accurate was our forecast, you won't be able to make any real decisions off of.
Did we attract the right types of companies? Are we having the right, are we speaking to the right people? Is the person who's raising their hand, the person we want to talk to, or are they mostly interns who are doing research on behalf of someone else? So that. While it is an annoyance for a lot of sales team members, it's something that's really important to kind of hold someone accountable to that data is being collected and stored consistently and accurately.
And then one that you brought up in the past was having really clear ownership. For every stage in the pipeline, so having almost like a, like a RACI , like a, a responsibility, accountability, consulted, and informed chart for every stage in the sales pipeline so that it's really clear who owns a deal at which point and what they need to do to get to the next step.
And hand it off after that, because I think there is a potential if those things are not clear to clearly defined for leakage or a lack of ownership or accountability, or someone says, I didn't know I was supposed to do that. You want to eliminate as many of those scenarios as possible. And something that can be helpful is just simple RACI, installing that, getting everybody to sign off and say, yeah, I get that this is my role in the sales funnel.
Salespeople are going to find the path of least resistance. We see this now because I, as one of the founders of Kalungi, I helped sell some of the times to a Kalungi prospect. And when I am part of the sales cycle, you and Brian, you have a much harder time getting me to fill out everything in HubSpot if you saw the other team members.
And the reality is there's no other solution is just to make it as easy and as reasonable as possible. I think when people are convinced that something is valuable, like for example, is this a, from an ICP fit perspective, is this an actual sales opportunity when it comes to Kalungi, right? Is this a software company? Is this a company that can afford us, right? Those things I think are not hard to sell to a salesperson that are helpful, to enter into the CRM system so that it helps you later to do marketing. You know optimizations to, to analyze the funnel quality over time. I think just making it easy when you have in HubSpot, for example, some of these gates and it pops up a form where you can just pick from a list instead of having to type something, small things like that, like, like the economic decision maker, do you know him, him or her? Yes. No. If you do, can you just click from the contacts that are already connected to the deal, right? Instead of having to type in someone's name, right, if they're already in HubSpot. So making those things super easy, I think, but yeah, you're right. I think, the propensity for marketing people to maybe ask for too many things and then the salespeople do not fill out anything.
It's a challenge. Yeah. There's some compromise there. Yeah. But they're also non negotiables, right? The salesperson gets paid to do a job. And for example, filling out a closed lost reason that is a little more insightful than "price," "they couldn't afford us," or "stopped responding," right? That's not helpful. I think it's totally fine to require salespeople to put a little more effort in typing, let's say, at least 20 words into a field, a close lost reason, right? Where they do a little bit of introspection and say, "Hey, I showed up late for a call. The call wasn't as well prepared as it could have been. There is no match with our ICP. This person could not afford us or this prospect. And this is why," right? Because either the company was too small or the solution, the pain was not big enough, right? But I think, yeah, just be reasonable. But for close d lost, for example, there is a good reason to mandate that people do have to fill out a certain amount of data.
If anybody that is listening to this uses HubSpot in this exact moment, you can check out their sales pipeline rules beta. It actually gives marketers a lot more control over what rules they can set in a way that they couldn't before. So now you can force deals to be created in a specific stage, which prevents salespeople from just kind of creating something and putting it somewhere.
So for reporting, you can force deals to go through. Every single deal stage, so even if it jumps from discovery call held to, you know, proposal presented because someone forgot to update it, it will force it to go through each one. So then your data will actually be clean because it's hit every stage.
You can actually have a dashboard. And you can actually have a good report. Exactly. So just a nice little beta to look into.
What was the second thing you asked? You asked about data density and what was the second question?
Ownership and like having clear definitions for each stage of the pipeline.
Needs to move it along.
Yeah, no, that's a good one. I, I think especially when a sales team is growing, you might have different people who are doing a discovery call and doing the early stages of the pipelines versus the people who are later in the development of an opportunity, writing a proposal and presenting that proposal and maybe following up with the, the invoice at some point.
Right. So ideally, always be one ultimate owner. A sales executive who owns the full pipeline , from deciding this is an opportunity that's worth pursuing, right? Something entering the pipeline, all the way to getting an income paper and ideally payment. But I think in all these separate stages, that might be might be helpful to be really clear on who owns what kind of sub steps.
And then make sure that there's plenty of follow up, that there are triggers if things get stuck, right? If things don't move for a week, two weeks, you know, time kills deals. Right. So I hate when I see, it's funny when you, when you do a data dump of a pipeline and you, you have kind of three shapes where you have the, the typical funnel that is really a funnel.
It's big at the start and then it gets smaller over time, like later in the funnel, but you can have these. Kind of funnel shaped with a big bulge in the middle.
It looks like a snake that ate a tiger.
Yeah, that's kind of, we call that the parking lot. That's the parking lot for opportunities to go to die.
Because there's salespeople who say, Hey, I cannot really sell this thing right now. But maybe they come back in a year from now or three months from now. And I don't want to give up this opportunity to make my commission. I don't, I would hate someone else to, to get on. their hands on this opportunity, they put them on a parking lot, right?
And that's not good. So if it's really close lost, if you're not going to close it in the foreseeable future, it's not an opportunity anymore. You don't have a compelling event. The customer is not expected to act. They're not, they don't really have clarity on whether they can afford this or not.
They don't have enough pain to move fast, right? Then it's really not an opportunity. It should go back into the marketing pipeline as a lead, right? So, so that's one thing. And then the other thing where ownership is really important is just the quality of the data that we talked about earlier. Who do you hold accountable when things are sitting in a funnel relatively late stage and they don't have a dollar value, for example, right?
You can have all these simple rules that show you which opportunities are just not. completely filled out. And it should be really clear who's responsible for that. Because, yeah, if you have salespeople who get a salary, who get not just commission, but they have a job to do every day. And it does involve things like, Hey, making sure that the CRM system is up to date.
And I would even argue that deals tend to sit also at the very early stages of the sales pipeline. And that often happens when there's a poor definition of like, what, to your point. What actually constitutes a real opportunity that is worth a salesperson engaging in a conversation with, instead of it being like, you know, An MQL is not somebody who filled out a form to download an ebook.
An MQL, at least for us, we've defined it as somebody who has actually booked a meeting. On someone on a, on a calendar, right? They fill out a form, they booked a meeting that is an MQL. It's the discovery call. Then the salesperson takes over. So I think also a mushy definition of what an opportunity is can create some issues.
Or like a bulge at the top of the funnel of things that didn't get followed up on. Cool. Thank you. Thank you to Adriano Valerio for producing this episode, the Kalungi team for helping us make this whole thing work, and of course you for choosing to spend your time with us. We really appreciate you. This would be nothing without you.
So, thank you. As a reminder, all the links that we mention in this episode can be found in the show notes. There's a couple of great resources in there about managing your sales pipeline and forecasting opportunities as well. And as always, if you want to submit or vote on a question that you'd like us to jam on, you can do that at kalungi.com/podcast.
All right. Thanks again for being here. We'll see you next time.
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