Drip. Drip. Drip.
Every drop of potential revenue that leaks from your sales pipeline can create a ripple effect, impacting your bottom line in ways you can’t afford to ignore. Understanding and effectively addressing pipeline leakage (also often referred to as revenue leakage or leaky sales funnel) is extremely important for any business.
The findings from a 2020 research conducted by Boston Consulting Group, which revealed that 45% of business leaders consider revenue leakage to be a systemic problem, send a resounding message: it is crucial to address this issue proactively.
In this article, I will share a few tactics that I have seen to be effective in combating pipeline leakage and driving B2B sales, with a particular focus on pipeline leakage post-opportunity creation and qualification (“active pipeline”). While many of these strategies extend beyond the role of marketing, I firmly believe in the power of collaboration to ensure maximum revenue generation, rejecting the notion of tasks being fully “beyond a department’s scope.” Revenue (along with customer satisfaction) should really be everyone’s priority!
Furthermore, marketing teams are now being increasingly measured based on their impact on revenue. A fundamental shift is happening where marketing is not just concerned about creating awareness and delivering leads but is involved in the entire buying journey ( and even post-sales retention and advocacy – but that deserves its own article!). Marketing teams begin to focus on maximizing conversions at the bottom of the funnel, which traditionally was the full responsibility of the sales teams.
What is pipeline leakage?
In this article, the primary focus will be on pipeline leakage within the active pipeline, that is where qualified opportunities with a probability of 10% or more fail to progress to the next stage of the sales process. It is a common challenge faced by organizations, the fact is, no funnel is immune to leakage. Converting opportunities into customers, particularly for big and complex deals, is inherently very difficult.
Why do Pipelines Leak?
Understanding the causes behind pipeline leakage is the first step to formulating effective strategies to mitigate the issue. Granted, some factors leading to an opportunity falling out of the pipeline are within our control, while many aren’t. Understandably, I am focusing on the causes that are within our control (as a company). Let’s explore some of the most common causes of pipeline leakage that I have personally witnessed throughout the course of my career:
Poor Processes, Visibility, and Cadence
Insufficient sales and marketing processes can lead to immediate pipeline leakage. The effectiveness of the sales funnel heavily relies on well-established processes. Without proper lead qualification, follow-up procedures, communication protocols, technology utilization, referral management, network leveraging, and data tracking mechanisms, identifying and addressing problems becomes extremely challenging. While in the past as a marketing leader, I have been appointed as the ‘Chief Pipeline Officer’ for the region, and have seen Sales Leaders in charge of the overall pipeline cadence, this role should be reserved for the Revenue Ops team. “Since they have no emotional attachment to any particular area, they are able to look objectively at what’s working and not working in the organization” (From the book by Sangram Vajre and Bryan Brown entitled “MOVE: The 4-Question GO-TO-MARKET Framework”). Here is where revenue operations establish a shared source of truth, ensuring accuracy and consistency in data analysis across the funnel.
Failing to Prioritize Opportunities
Failing to prioritize opportunities is one of the most common causes of pipeline leakage. When businesses don’t properly assess and prioritize their opportunities, they risk missing out on opportunities with key customers and losing out on important high-value deals. It is essential to make informed decisions on how to allocate time and resources wisely. This includes identifying the most promising opportunities, determining which ones to pursue, knowing when to persevere, and recognizing when a shift is necessary. Opportunity prioritization is not solely the responsibility of the sales team but should involve collaboration from all team members to ensure alignment and achievement of common goals.
Not Tracking Data or Not Tracking the Right Data
Effective revenue operations involve tracking the right data. When businesses fail to properly track pipeline and customer data, they miss out on valuable insights that could enhance their understanding of customer needs and enable more informed targeting of the right buyers. Ultimately, this lack of accurate data not only impacts sales and marketing but also customer success.
Without precise and up-to-date customer information, companies struggle to follow up with prospects effectively or nurture opportunities through the buyer’s journey. Poor data quality results in a decrease in qualified leads and opportunities in the sales pipeline, negatively affecting conversions and revenue.
Having no effective lead nurturing strategies in place
Neglecting to implement a proper lead nurturing program can result in missed opportunities and revenue loss. Without a systematic approach, valuable prospects may be overlooked or not followed up on in a timely manner. The lack of lead nurturing prevents prospects from receiving essential follow-up communication and the relevant information needed to progress further with your company.
And this is not the sole responsibility of marketing. Teams should collaborate, and actively participate in the customer journey.
Tactics to Minimize Pipeline Leakage
Ensure Processes are Clearly Documented with Robust Tools
Effective pipeline management relies on utilizing various tools, including a robust CRM system. Optimize for:
- Accurate Data Collection including tracking and capturing customer interactions.
- Insightful Analysis that allows you to better understand your customers and evaluate your pipeline.
- Seamless Collaboration for smooth information sharing within your team to work together efficiently and exchange relevant information effortlessly.
- Compatibility and Integration with other software systems in your business. APIs (Application Programming Interfaces) have made it easier to connect multiple systems, enabling efficient data exchange and reducing manual efforts.
- Automated Data Capture to collect valuable customer information.
- Data Transparency with AI Insights to analyze vast amounts of data, generating meaningful insights that help in uncovering patterns, trends, and potential opportunities within your pipeline.
Regularly Analyze Your Data
Identifying and measuring pipeline leakage allows you to diagnose the underlying issues, plug the holes, and assess the impact of the leakage on your business’s revenue. This becomes especially critical for SaaS businesses, as the recovered revenue can be utilized to fund customer service, innovation, research, and growth initiatives.
While it’s true that all funnels experience leakage, having visibility into where, when, and why the leakage occurs empowers you to regain control over the problem. Understanding the size of the leaks, identifying the specific stages in the funnel where the leaks happen, and determining the reasons behind lead attrition are all key questions that need to be addressed.
Calculating revenue leaks begins with reviewing your revenue operations systems and procedures and identifying where expectations and reality don’t align. It’s all about spotting risks early. If you have visibility into what’s happening in your pipeline, you can manage that risk and address problems.
Revenue teams should regularly review deals in their pipeline to prevent deal slippage, looking for signals of whether they are healthy.
Benchmark yourself against your peers for every stage of the opportunity and identify where you fall behind, e.g. is it during Needs Analysis, Value Proposition, or Price Quote, for example? It is also worthwhile to look into patterns by region, AE, solution, CxO, overall engagement within the customer account, and so on.
Be very clear on the processes and cover all possible roadblocks. Streamline communication and improve handoffs. The entire revenue team needs to work together to move a prospect along the sales funnel. This requires excellent communication and seamless handoffs. Everyone from marketing to sales to customer success needs to be on the same page, looking at the same information. Automation helps ensure that deal information is accurately updated in real-time. Tools that gather this information and present it in a single, unified format across teams are critical for promoting effective communication and collaboration.
Run Metrics-Driven Nurturing
As highlighted under the causes of pipeline leakage, opportunity nurturing is a key driver of sales success in B2B. Nurturing is a team sport and would not be the sole responsibility of the marketing department. To maximize your lead nurturing efforts and achieve positive outcomes, consider the below points:
- Complete and Accurate Contact Data: Ensure you have comprehensive contact data for the entire buying committee within the target accounts. Don’t just focus on decision-makers; include all relevant stakeholders who influence the purchasing process. This comprehensive data enables personalized and targeted communication. Ensure your CRM is continuously updated throughout the entire buyer journey. Harness the power of automation to maintain data integrity. With the help of the powerful tools available today, you can also automatically capture sales activities and data from various communication platforms and seamlessly integrate them into your CRM. This automation ensures your CRM is up-to-date and complete.
- Segmented Content and Information: Tailor your content and information to resonate with different segments of your audience. Consider factors such as line of business, level, industry, geography, company size, and persona. Additionally, look into how they have historically engaged with you. By delivering high-value content that addresses their specific needs and pain points, you can establish credibility and build trust. The aim is to delight the leads with your communications.
- Regular Multi-Channel Touchpoints: Maintain regular touchpoints with your leads to stay top of mind. Utilize multiple channels, such as email, social media, and personalized messaging, to engage with your prospects. Consistent communication ensures that your leads remain engaged and nurtures the relationship over time.
- Keep Opportunities Warm: Continuously nurture your opportunities to keep them warm. Offer relevant and authentic content, industry insights, case studies, and success stories that demonstrate the value of your product or service. By providing ongoing support and nurturing, you increase the likelihood of converting opportunities into customers.
- Free Training Offer: Consider offering free training sessions to potential users. In my experience, value-added offerings can be particularly effective in nurturing leads. It allows prospects to experience firsthand the benefits and capabilities of your solution, building their confidence and trust in your brand.
- Track and Measure Metrics: Implement a metric-driven approach to lead nurturing. Track key metrics such as engagement rates, click-through rates, conversion rates, and sales pipeline velocity. Analyze the data to gain insights into the effectiveness of your nurturing campaigns and make data-driven optimizations to improve results.
Secure an Executive Sponsor once a Large or Strategic Opportunity is Created
When dealing with large or strategic opportunities, it is a great idea to assign executive sponsors to them. I have seen this create such an impact in deal wins, that I included it as a key tactic in my book.
Don’t postpone establishing a strong relationship with the customer’s C-level leadership; do it promptly right after an opportunity is created. A simple direct email from an executive to the customer’s leadership can be the differentiating factor that sets you apart from your competitors. Following that, encourage regular communications between your executive sponsor and the customer’s leadership to address any potential concerns or roadblocks.
Additionally, executive involvement also opens doors for the necessary resources and support to deliver on customer expectations.
Implement a Mutual Action Plan with the Customer
While this practice is more associated with sales, marketing can greatly contribute to certain actions defined within the plan. Implementing a Mutual Action Plan (MAP) consistently sets top sales performers apart in their collaboration with prospects. This can transform a mere possibility into a signed deal and ensures mutual value realization.
The strength of MAP lies in the collaborative effort between the customer and the sales team. By aligning goals, responsibilities, and timelines with the account, you create a shared roadmap to success. You establish a clear understanding of expectations, mitigate potential obstacles, and foster a stronger partnership. I have seen remarkable benefits from implementing a well-structured MAP, including higher close rates, accelerated sales cycles, reduced deal slips, an enhanced buying experience, and improved forecasting.
Note: It is a given that targets and dates will slip. It is quite a powerful exercise to show the impact of the slippage to the customer to their business quantitatively, for example, missed opportunities, loss of revenue, and so on.
The effectiveness of Account-based marketing (ABM) is not to be questioned. It is, however, a high-effort endeavor and should be reserved for high-priority accounts and opportunities, and where the Account Manager is committed to fully collaborating. ABM can often be a part of a MAP.
Let’s explore some key steps for a successful ABM implementation to optimize conversion and minimize pipeline leakage.
- Contact Gap Analysis: According to Gartner, a typical business-buying group consists of six to ten decision-makers. When implementing ABM, consider all executives who can benefit from your product offering, beyond the traditional decision-makers. I would go further and include the end users and influencers as well. Gather comprehensive data on the complete buyer committee to ensure effective engagement.
- Stakeholder Mapping and Analysis: Map out and analyze the stakeholders within the target account. Understand their roles, responsibilities, and motivations. This insight will help you tailor your approach and build an effective Account Plan.
- Account Plan Development: Create a detailed Account Plan that outlines your strategies, goals, and tactics for engaging with the target account. This plan should align with the overall ABM strategy and address the specific needs and priorities of the account.
- Tailored Assets and Campaigns: Develop assets and campaigns that resonate with the C-suite executives, influencers, and users within the target account. Craft messages and content that address their pain points and demonstrate the unique value your offering brings to their organization. Establishing peer-to-peer connections can further enhance engagement and build credibility.
- Value Alignment: Identify the sweet spot where your solution offering aligns closely with the priorities of the C-suite executives. Highlight the value and benefits that directly address their strategic goals and challenges. This alignment will strengthen your positioning and increase the likelihood of success.
- Cultivation Strategy: Implement a well-structured cultivation strategy with systematic touchpoints throughout the buyer’s journey. These touchpoints should include a mix of business-focused interactions, social engagements, and “soft” touchpoints that delight and surprise. Consistent and personalized communication will help nurture relationships and keep the account engaged.
- Value Engineering Workshop: Consider conducting a value engineering workshop with key stakeholders from the target account. This workshop aims to demonstrate the quantifiable value and return on investment your solution can deliver. By showcasing the impact and benefits in a tangible way, you can further solidify the business case for choosing your offering.
Develop Powerful Sales Assets: Battle Cards and Objection Handling
To boost sales effectiveness, develop robust assets that equip your sales teams and support functions with the tools to handle objections and competitive challenges. Two key assets that can make a significant impact are Battle Cards (According to Crayon, businesses that utilize Battle Cards report an increase in win rates by 71%.) and an Objection Handling guide.
To make your Battle Cards and Objection Guide even more powerful, base them on detailed win-loss analysis specific to territories, buyer personas, industries, and company sizes. Analyzing past lost deals provides valuable insights and lessons that can inform your assets and sales approach. By holding team debriefs and learning from these experiences, you can identify areas of improvement and ensure your sales funnel processes are optimized and leakage is minimized.
Leverage on Referral and Partner Networks to Drive Opportunities Forward
Often overlooked, leveraging referrals and partnerships in moving your opportunities forward can be highly effective. It drives revenue growth and enhances the customer experience.
Referrals come with a built-in endorsement, expediting deal velocity and contributing to increased revenue. Leveraging partner relationships allows businesses to access decision-makers and valuable customer data.
Finally, Keep Testing and Measure Outcomes
You need to constantly experiment with your strategies, tactics, and processes — in a controlled way while tracking your results at each iteration. This will help you understand what works and what doesn’t. Sometimes it’s the tiniest things that are the most significant.
The sales process is dynamic. You should constantly adapt your strategy to new data, to changes in the environment, etc., and compare the results. This will ensure that you are always improving.