{"id":369,"date":"2012-11-22T23:05:23","date_gmt":"2012-11-23T06:05:23","guid":{"rendered":"http:\/\/bobbacon.net\/blog\/?p=369"},"modified":"2014-02-14T15:07:34","modified_gmt":"2014-02-14T22:07:34","slug":"sales-pipeline-stage-definitions","status":"publish","type":"post","link":"https:\/\/bobbacon.net\/blog\/archives\/369","title":{"rendered":"Are Your Sales Stages Effective?"},"content":{"rendered":"

\"\"It\u2019s not often that a sales manager gets to design new sales pipeline stage definitions used by an organization.\u00a0 It usually occurs in smaller organizations when a new sales leader is appointed and in larger organizations when a new sales methodology is adopted.\u00a0 Establishing optimal sales stages is a prerequisite for accurate\u00a0pipeline metrics and, to a lesser extent, for more accurate forecasting.\u00a0 Here are some simple guidelines to help you optimize the design of new sales stages.<\/p>\n

Sales stages should be directly linked to your sales methodology.\u00a0\u00a0<\/strong>It should go without saying that your sales methodology\u00a0should be aligned with the buyers methodology.\u00a0 If you employ separate sales methodologies for direct vs. channel sales or distinct product categories (e.g. license, SaaS or services) then\u00a0separate sales stages should be employed.\u00a0 One challenge of having multiple sets of sales stages is that you need a sufficient quantity of transactions managed under each methodology for statistically significant pipeline metrics.\u00a0 Insure you’ve got\u00a0enough wood behind the arrow\u00a0for your\u00a0various GTM strategies.<\/p>\n

Number of stages is determined by importance of the milestone.\u00a0 <\/strong>While six sales stages are fairly common there is no one correct answer for all circumstances.\u00a0 Again, you need to link the stages to the major milestones of your methodology.\u00a0 Highly complex or technical sales involving multiple resources from different teams within your organization or company could have more sales stages.<\/p>\n

Each stage should have clearly defined exit criteria.\u00a0 <\/strong>In order for stages to have meaning all of the users must be able to accurately classify their opportunities.\u00a0 Having defined and documented exit criteria that must be met before the opportunity can be moved to the next stage is essential for the status of an opportunity to be universally understood.<\/p>\n

Exit criteria should generally be based on the customer taking some action or providing feedback.\u00a0 <\/strong>To reduce the risk that a sales resource might misrepresent or misunderstand the status of an opportunity, base the exit criteria on milestones from the perspective of the customer.\u00a0 For example, the exit criteria could be the handoff from the business buyer to the purchasing department, or it could be the buyers agreement to the definition of success in a pending product evaluation.\u00a0 Some would assert that the entire sales methodology should be derived from the customer\/buyer\u2019s perspective so this should not be difficult task.\u00a0 The trap to avoid is linking the sales stages to internal activities (e.g. contract sent to Legal or business terms approved by Finance.)<\/p>\n

Attainment of the final stage should be determined by a department other than Sales.\u00a0 <\/strong>Use this approach as a way to leverage your CRM system to communicate back to the field the coveted \u201cbooked\u201d status thus giving your sales resources another reason to integrate\u00a0the use of CRM into their daily routine.\u00a0 This will also increase your confidence in reports from your system regarding the amount of closed business in the current period.<\/p>\n

Stages early in the process revolve around leads, leads nurturing and may include a sales development organization to further qualify the lead.\u00a0 The sales development team may also be\u00a0tasked to close the smaller dollar opportunities.\u00a0 I will enlist the help of\u00a0some friends in Marketing and focus on that aspect of the funnel in a future post.<\/p>\n

For a direct, B2B software or SaaS sales organization I\u2019ve listed below some possible sales stages and exit criteria as examples of the guidance provided above.\u00a0 As I mentioned earlier, this is just an\u00a0illustration and probably not the optimal choice for your organization.<\/p>\n

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Example of B2B Sales Stages<\/p><\/div>\n

Are you in the process of redesigning your sales stages or methodology and what do you hope to achieve?<\/p>\n

Are your current sales stages designed with these guidelines in mind?<\/p>\n

Would you suggest any additional guidelines?<\/p>\n

Feel free to post your response and suggestions below!<\/p>\n

Cheers!<\/p>\n

Bob Bacon
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