When Referrals Aren’t Enough: The Math Behind a Good Sales Pipeline
One of the biggest mistakes we see in the managed services space is that they rely almost exclusively on referrals to grow their businesses.
Referrals are important, but they can also be a crutch.
They are safe.
The prospect is often warmed to the point that the sale is almost guaranteed, and even in less warm scenarios, you have to do far less work to convince the prospect that you are trustworthy and an expert in your space.
If you want explosive, exponential B2B growth, you have to drop the crutches and build a better pipeline.
Most business-to-business industries are intensely competitive.
Not only do you have other businesses vying for the same opportunities, but the sales process itself can also be challenging.
Closing a single sale can require consensus from multiple decision makers within the business, and the time from initial engagement to final sale can be lengthy, with B2B opportunities sometimes taking a full year or more to mature.
For businesses in the technology space, the sales process can be even more intense, as business owners are hesitant to move away from what they have for fear of creating more problems for their teams.
This is especially true in cases where they don’t fully understand what they need and what opportunities they are missing.
The foundation for consistent growth in circumstances like these is a well-rounded sales pipeline.
Yes, your sales process and the quality of your products and services are important, but you need a baseline of steady activity to drive a reliable uptick in new business.
Most business owners and salespeople agree with this concept on a fundamental level but few actually do the math on how much activity they need to acquire the new clients their business needs.
Let’s say that your goal is one new sale per quarter.
We can work backward from that number to determine just how much activity you need.
To close one sale a quarter, you may need to meet with 10 prospects.
To meet with 10 prospects, you probably need to set 20 appointments.
To set 20 appointments, you might need 250 leads.
And to generate 250 leads, you likely need to get in front of 500 or more businesses that meet your criteria.
This perspective gives you the context to build an effective sales pipeline and I hope that you can see how these numbers would be impossible to hit under the power of your referral crutches. That pipeline, given the value and volume of prospects you are after, will need multiple components to function efficiently.
For example, you might inject new prospects into your pipeline with:
- Educational seminars or client events
- Networking with industry and business organizations
- An appointment setting firm engaging businesses on your behalf
- Referral relationships with other industry experts
- Online advertising and lead generation
Once you have prospects in your pipeline, you will need to:
- Nurture long-term engagement with a drip marketing system
- Regular phone follow-up with prospects who were not ready to buy
- Execute a sales conversation that sets you apart from your competitors
And then when you close the sale, you should:
- Survey clients on a regular basis to identify new service opportunities
- Request referrals from your most engaged clients
- Market additional services and offerings to retain and increase revenue from current clients
- Refer clients to partners (with whom you have a profit-sharing agreement) for services you do not offer
Every stage of your pipeline hinges upon the success of the first.
Most businesses are competent at service and do an acceptable job of retaining the clients they acquire.
Where most businesses struggle with growth is in getting in front of the right prospects.
As you look at your own pipeline, devote extra attention to that stage.
Get aggressive about your approach and start trying new ways to connect with more prospects.
That’s the only way you’ll tap into your explosive growth potential.
Brad Stoller is manager, Business Development at PT Services Group, which provides appointment setting and data collection.