Managing Your Sales Pipeline
Managing a sales pipeline is important because it allows a broker to monitor and assess potential deals and appropriately allocate time and resources to them. Brokers should have a very intentional pipeline management process, and the following tips can help build one.
Let’s begin with the premise that using data effectively enables better decisions. Without data, brokers make gut decisions, and while the subjective is important, it needs to be balanced. The more data captured, the greater the possibilities.
To manage a pipeline, an ongoing list of active, potential deals must be created. The list, which can be managed in a CRM or a spreadsheet, should include the address, size of the deal, the stage the deal is in, its potential timeline and the probability it will close. By tracking and assessing deals in a database, brokers can more effectively manage their time and effort.
Brokers should create a simple system for categorizing stages or use the one their CRM offers. Stages may include lead, listing, offer out, handshake, contract out, hard contract and closing scheduled. By breaking deals up into stages, a broker can quickly identify the potential tasks associated with moving the deal forward.
Probability of closing is simply the likelihood that a deal will actually close and that the broker will receive a commission. Obviously, probability of closing is a subjective assessment and may include factors such as how “hairy” the deal is, seller/buyer motivation and pricing. I suggest tying this into magnitude of success to get a fuller picture.
Magnitude of success is simply an objective measure of the size of a deal. For example, if deal “A” with a $1 million commission has the same probability of closing as deal “B” with a $100,000 commission, the broker’s magnitude of success on deal “A” is 10 times greater than that of deal “B.” Often, the assessment is not as clear-cut, but you get the idea.
Armed with the data above, the next step for the broker is to actively prioritize his pipeline. In the worst-case scenario, brokers will choose to spend their time on the squeaky wheel and change their focus whenever the phone rings.
Instead, brokers must assess the likelihood of every opportunity moving forward and work on the deals that have the greatest potential magnitude of success. Deals can be split into three or four categories such as A’s, B’s and C’s. This allows brokers to quickly sort and assess their deals.
The purpose behind pipeline management is for a broker to focus his or her scarce resources on the best opportunities and not waste time on deals that are unlikely to occur or are too small to warrant attention. Once these best opportunities are identified, brokers should examine the critical activities necessary to move each deal forward.
One of the biggest time wasters for brokers is working on deals that will never happen. Pipeline management limits that from occurring. Not working on a deal with little chance of happening opens your time up to identify more potential deals and to spend more time on deals with a high probability of success.
The more data you put into your pipeline management system, the more robust your learnings can be. For example, by including the source, property type, size and location of each deal brokers can really begin to identify how to streamline their prospecting activity as well.
Intentional pipeline management is the best way brokers can take their businesses to the next level by focusing their scarce resources on the best opportunities.