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Bottlenecks in the sales pipeline? Push through with incentives for salespeople

By March 27, 2018January 16th, 2023No Comments

When companies report declines in revenue, they are likely to point to needed improvements in their sales model as the solution. All components of the sales model – from the sales pipeline to the staff – need to be in sync for firms to hit their revenue targets and stay on track for growth. However, when companies discover problems in their sales pipeline, they may neglect to see the obvious. Since salespeople are one of the main drivers for whether companies achieve their quotas, sales staff need to look for the sources of bottlenecks in the pipeline and give staff the tools they need to accomplish their sales goals.

Signs of bottlenecks
With clogs in the system, companies are losing out on money. But do they know just how much? In monitoring signs of bottlenecks in sales pipelines, companies should track the sales effectiveness metrics that could highlight issues with employee motivation and engagement, which are significant factors in sales success.

Companies could look at metrics like average sales per customer. Any drops in this measure could show firms that they need to reevaluate their sales model, such as reconfiguring their pipeline and restructuring their sales incentive compensation program.

Another sign is a poor conversion ratio, indicating that salespeople may not be hitting all of their customers’ pain points or clearly communicating the benefits of the firm’s products or services. With a disappointing conversion ratio, managers should continue to coach their workers on targeting their major demographics and the techniques necessary to turn leads into customers.

Unclogging bottlenecks in the system
After recognizing there are flaws in the system, companies should then look to how they can boost performance to meet their goals. When companies are not performing as well as they forecast, it might be time to revamp their sales incentive compensation plan. Since job satisfaction is often tied to pay for salespeople, companies should determine whether their top performers and even their middle-of-the-road staff are getting the right amount of incentives.

Looking at sales performance data, companies are more likely to see the connection between the effects of sales incentives on productivity once they know the right metrics to measure for their organization. Consider whether short- or long-term incentives will be more effective in rewarding employee behavior that is essential to generating revenue for the company and keeping customers for life.

An important step that shouldn’t be skipped is clearly communicating any changes to incentive compensation and reinforcing the values and skills that are important to the company. Improvements to incentive compensation will only be felt by the firm once employees understand what they stand to gain in meeting performance targets. Incentives in the form of bonuses, commissions or other rewards are options employers can use to re-ignite motivation among the sales workforce. Giving employees access to this information through feedback and performance reviews could also be critical in keeping workers productive.

Importance of data for pipeline management
After instituting any changes in your sales performance management, track the effects to your sales pipeline through analytics. The impact of incentive compensation takes time to manifest, making sales analytics integral to monitoring these effects. Evaluate your key performance indicators, such as revenue per customer, in evaluating the effectiveness of the modifications. Through measuring this information, companies know when they are on the right path to achieving their sales targets or have the insight necessary to correct employee behavior.

If employers find their sales staff are still not able to accomplish forecasts, it’s time to evaluate the quality of the workforce and impact of management on salespeople.

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Ballast Point Ventures

Ballast Point Ventures is a later-stage venture capital fund established to provide expansion capital for rapidly growing, privately owned companies in diverse industries, with a particular emphasis on companies located in Florida, the Southeast, and Texas. The BPV partners have more than 70 years of combined experience investing in and building high-growth companies in a number of industries, including healthcare, business services, communications, technology, financial services, and consumer goods. BPV has $200 million under management and seeks to make equity investments ranging from $3 million to $10 million.

Harbert Management Corporation

Harbert Management Corporation seeks to generate superior returns for their investors by identifying and investing in the most promising early growth stage companies in the Southeastern U.S. HMC seeks to capitalize on what it believes are compelling regional dynamics, such as a strong and fast-growing economy, significant research and development activities, and an established entrepreneurial community. The HMC team combines substantial investment, advisory, and operating experience with capital and networking contacts to support great entrepreneurial teams in successfully executing their growth plans. With offices in Birmingham, Alabama; Richmond, Virginia; and Gainesville, Florida, it’s well positioned to partner with entrepreneurs throughout the Southeast.

KBH Ventures

KBH Ventures was an early investor in Iconixx Software. KBH's investment philosophy plays a significant role in the firm's successful track record. KBH believes in running businesses to be cashflow positive and profitable every month. Startups and companies in a startup mode, such as one that has been purchased in distress, are expected to generate revenue within the first six months and reach profitability within the first 12 to 18 months. KBH also only invests in or acquires companies that are in the startup phase or have less than $20 million in revenues. KBH targets technology companies that offer business-to-business services.

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