The key to success in Professional Services is understanding and predicting your pipeline. Get it right and your consultants and clients are happy. Get it wrong and either you start eroding margin or you’ll be unable to satisfy demand.
But getting it right, now that’s a challenge … no matter how many sales techniques or questionnaires you introduce into your sales process you are still at the mercy of human nature. Sales Pipeline predictability is often about people being Optimists or Pessimists.
In our customer experience solutions we have a number of techniques for optimising your Dynamics CRM sales pipeline predictability
One of which we’re covering here the calculation of Weighted Pipeline. (Which we calculate as “Opportunity %” x Expected Revenue).
So using an opportunity percentage to generate a weighted pipe is nothing new – only it’s essentially flawed. Its flawed by human nature itself.
We’ve discovered that at slicedbread our sales team are broadly optimists .. and generally very optimistic .. by almost 100% in some cases. We consistently over estimate our deal sizes and over estimate our % chance of closing them. What this means in practice is that for every £100K of revenue at 50% of a sales, rather than expecting £50K we will typically generate £35K instead. Of course this varies by sales person .. and there are pessimists also.
So within our CRM solutions, weighted pipeline calculations attempt to take into account human nature. We apply an factor based on individual sales persons pessimistic or optimistic score. So month by month our predicted revenue is getting closer to our actual achieved.
Our journey doesn’t end there however and in the backlog are some more advanced sales analytics and forecasting to enable us to better predict someone’s optimistic score.
Of course the pessimistic/optimistic factor is just one part of the sales pipeline predictability puzzle … but that’s a subject for another blog!