Smart Pipelines – A Driver for Business Success

For most organizations, a sales pipeline is a list of opportunities that you want to pursue – and the longer the list, the better. The opportunities in the list might have an assigned priority, so they are not all equal, which is a good thing – but not enough. Maintaining a list of prioritized opportunities does not constitute a Smart Pipeline. And keeping a list, whether it is in Excel or a CRM, does not automatically add value to the information. So, what does?

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Maybe the first question to answer is, what is the purpose of your pipeline?

We refer to pipelines as the life-blood of a company. It is what assures your survival, hopefully, but it should be more than that. It should be the engine that drives your growth; reliably, consistently and with a high probability of successfully achieving your revenue target. To do this, it needs to have certain attributes that enable it to perform for you.

Yes, a pipeline is an inanimate object. It will not go into the street, drive to a government office and walk the halls for you. However, if you believe that good planning, strategic thinking, solid decision making, smart resource allocation, focus and accountability make a difference in people’s performance, then you need to think of your pipeline as a tool that is critical to your organizations success.

What does the pipeline need to be smart?

Think of your pipeline, not as a list, but as a data driven analytical tool for decision making. For it to perform this function, it needs certain attributes, starting with a set of performance metrics – KPIs that measure the pipelines health, and your organizations well-being. To build this performance model, you need to recognize the variables that determine what the pipeline needs to be, and how you can manage these. In our BizPipe360 pipeline program, we start with research on the entire US public sector market to determine the scale of your opportunity. Then, matching that against your resources, we determine a reasonable market segmentation approach that will maximize the leverage of your resources. With an appropriate market segment defined, a reasonable growth target can be set – and this is where your smart pipeline starts.

Once you know by how much you can expect to grow (vs. how much you want to grow – we are all optimists) you can begin to construct your pipeline model. It will need to handle the following variables:

  • Current revenue split between prime and subcontracts
  • Percent revenue retention (what part of your existing revenue will you retain for the next planning period)
  • Your target split between prime and subcontract revenue (depending on the nature of your business you should have targets for how much revenue you want from prime contracts and how much from subcontracts – with few exceptions it is never a good idea to be 100% committed to one or the other.)
  • Your win rate for prime contracts and your win rate for subcontracts (they will be, and should be, significantly different – so they become key drivers of opportunity and resource requirements.)
  • These variables will determine how much you need to bid to meet your growth target. But, you are not done if you want to reach that target. To do that, you need to know how many prime and subcontracting opportunities you need to have in your pipeline, how many you need to convert into bids, and what size those bids need to be to produce the revenue you are planning for. So, the next critical variable is:
  • What is your pipeline conversion rate (for every 10 opportunities you place in your pipeline, how many turn into bids?)

Pipelines that are too long are just as dangerous as pipelines that are not long enough.

Now you can determine how large, in terms of annual dollar value, your pipeline needs to be. Going back to your target split between prime and subcontracting, you can derive a pipeline target value for each. But, we need to break this number down into a target number of opportunities for each, so you need:

  • The average size of your prime contracts and the average size of your subcontracts (use your historical data if you have it – if you are too small to have any history you are probably still considered a micro-company, you should plan for average prime bids that equal the current size of your company and subcontract bids that are 50% of your current size.)

With these variables, you will now be able to determine how many prime and subcontracting opportunities you need to bid, and what size they need to be – on average.

Take all of this, cook it into a spreadsheet, and you will have a model for what your pipeline needs to look like. If you want, we will walk you through ours and provide you with your personal pipeline model during a BizPipe360 demo (minus the market research that drives your growth target – we plug 20%.)

Managing these variables means adjusting over time in what you look for, target and bid, so you get the right results. To do this, you will need a system to keep track of progress – something that can generate a dashboard like this:

BizPipe360 Dashboard

BizPipe360 Dashboard

You're not done yet.

Now that you have a set of performance metrics you can manage against, you are going to need a tool that will facilitate the process. A spreadsheet will probably not do the trick – unless you are into self-abuse. Almost any solid CRM will work, if you have the patience to modify it for the government/public sector marketplace. A few key modifications include having scoring criteria for opportunity selection and prioritization, criteria for determining the probability of win, the ability to facilitate the development of win strategies, and a whole lot more to support being smart – smart about resource allocations and accountability, about effective team communication and good decision making.

Remember, a smart pipeline is a data driven entity with attributes that, when managed properly, allow it to guide the allocation of resources and the activities of your business development staff in such a way that your chances of reaching a well-planned target for growth are dramatically enhanced. Once you learn how to use a smart pipeline to your advantage, you can drive growth year after year with confidence.

If you want to see what our smart pipeline system looks like, find out more about the personalized strategy, research, and support services we provide to make it work for you – ask for a demo of BizPipe360.