Building a pipeline from scratch is no mean feat - but how do you make it robust enough to scale? How do you keep deals moving and how do you know when it’s time to let them go?
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When I arrived at Cognism, pipeline management was pretty simple. It was simple because there was no pipeline. No pipe, no line. I joined as the first employee and sole salesperson in 2016. But the one thing we did have was a product that was ready to change the world; so to make that happen, there was only one thing to do - understand our total addressable market, and start testing.
I started out slicing off an individual persona, A/B test messaging against that persona, finding out what worked in terms of outbound response rates, and then replicating it with a much larger number of personas in different locations. Then I’d feed the learnings back into the experiments each time to improve the strategy.
We’d set out initially with gut feel but got nowhere; a venture-backed startup that’s just raised money has no place to hide when it comes to growth, and there’s no time to rely on gut feel if it isn’t working. When I analysed the data, the personas that I had expected to generate responses were the polar opposites of those that I’d predicted with gut feel. By analysing on a weekly basis, actioning feedback straight away and using every single conversation with prospects as a datapoint with which to reinforce our approach, we were able to make data-backed decisions that brought results. This is how we built a pipeline from nothing.
“A venture-backed startup that’s just raised money has no place to hide when it comes to growth, and there’s no time to rely on gut feel if it isn’t working”
The self-built sales machine
When it came to the question of where my pipeline should live, I did what lots of early-stage sales leaders do: I spent plenty of time trying to avoid buying Salesforce. I made do with marketing automation tools with CRM functionality, I undertook plenty of research, and I looked for compelling reasons not to fork out for a platform as expensive as the category leader. I tracked everything I did in Word, stored data manually and tried to collect and collate it all in a sensible way.
Ultimately I gave in - Salesforce is not bad at managing leads - and without an implementation engineer or any real tech support, I created all the pipeline infrastructure myself. But it turned out that all the hours I put in under the hood in Salesforce gave me a really robust understanding of how to build an ideal pipeline that scales. The other key tool to put in place for a frictionless pipeline is a digital contract management system, because paperwork blocking closing is not an option. With those in place, it was just about testing, scaling and results.
And the results came. In the first year, we grew 30% month on month in revenue. We went from 0 to 200 customers in 18 months. Cognism’s total revenue growth for the calendar year 2018 was 657%. The focus became pipeline management, and sustaining and accelerating growth.
Defining the stages of your pipeline is crucial; they don’t just help to create momentum and track deals, but they’re often triggers for compensation for members of the sales team. Pipeline stages at B2B SaaS typically progress through opportunity created (10%), demo held (25%), proposal sent (50%), contract/negotiation (75%) and closed won at 100%.
“If you’re serving enterprise clients, having an accurate ability to forecast can be as elusive as it is valuable”
Pipeline review should happen at least weekly and focus on what’s been added, how many have moved through, what’s stuck and why, and how long the current sales cycle is. This is vital for forecasting, which is always difficult for high-growth businesses looking to scale - particularly in the B2B space, where buying can happen slowly and contract values are often large. If you’re serving enterprise clients, having an accurate ability to forecast can be as elusive as it is valuable.
Pipeline management is often a struggle due to a lack of realism on the part of the sales team. When we were building our sales process from the ground up, establishing a playbook and driving growth, we had no process of formalised nurture for prospects that didn’t fit, or who weren’t ready to buy. We had no choice but to force everyone we encountered into one of two directions: either push prospects through the pipeline where possible, or discard them. The upside of this brutal process was that we learned a huge amount from the data, and had no choice but to rapidly improve our ability to find new prospects - and learn to let go of dead opportunities.
Sales teams always struggle where reps’ attachment to deals leads to unrealistic opportunities hanging around in the pipeline and refusing to die. Weekly reviews must pay close attention to opportunities’ current age, versus the average time to close. If an opportunity has been live more than 2.7x the average time to close, research from Heresy shows that it’s clinically dead, and your reps are just wasting their time and polluting their forecasts.
“If an opportunity has been live more than 2.7x the average time to close, research shows that it’s clinically dead”
Research from Heresy suggests that the lack of realism is so endemic in pipeline management that at any given time, as much as 30% of deals committed in a forecasting period are actually dead. Realising this needn’t be the end of your potential relationship with a prospect; manual or automated re-engagement after some time has passed is a worthwhile strategy, and likely to lead to reviving and closing deals in the long run.
But ditching your deadwood and focusing on deals that actually merit their position in your pipeline is a harsh lesson that every salesperson has to learn. It reinforces the headline point about relying on data rather than gut feel: Salesforce found that high-performing sales teams are 1.7x more likely to prioritise their pipeline based on data analysis than intuition. Nonetheless, only a third of teams are taking this approach - meaning there’s plenty of money being left on the table.
New markets: new approach
As Cognism continues to grow at pace, we’ll look to scale our sales efforts and establish in new markets. Planning the launch of our US office is a big focus for me, and when it comes to establishing, managing and growing a US pipeline, it’s important to realise just how different each market really is. If we took our current playbook and rolled it out verbatim to the US, there’s no doubt that we’d fail. The US is a different culture with a more mature sales environment, a different mentality and different problems to solve. For example, Salesforce’s ‘State of Sales’ found that CSAT was the most tracked KPI for UK sales teams, with 82% tracking it; in the US, this figure falls to 69%. Who’s right?
Understanding these behavioural differences is key to establishing pipeline in a new market. We’ll need to start from scratch in many ways, and ensure we have clarity on our team’s goals. Team composition will also be crucial to get right - we have a mantra that we don’t carry passengers, so making sure we identify the right personalities to execute against our US pipeline growth strategy will be key. We’re well known as a business for having a sales team composed mainly of millennials, and my focus as a mentor is on developing empathy and understanding my team’s personal goals. If we preserve this culture as we push into new markets, then I can be confident that our pipeline will grow - no matter how challenging the market.