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The 5 Principles of Sales Pipeline Management

May 28 2014

salespipeline marketleaderThis post comes to us from the Market Leader blog Market Leader blog:

The key to longevity in the real estate world is never a single deal: It's a disciplined, rational and systematic approach to developing future deals.

You can do that without having had much previous good luck. But it's really hard to do that and stay unlucky! Here's how to build and manage a sales pipeline that should help you generate not just one deal, but a steady stream of future deals.

1. Put a System in Place

The most important thing is to take action now.

In the past, agents and salespeople of all stripes used a variety of paper systems.

A legendary insurance salesperson named Al Granum systematized his lead management system with index cards and a small metal filebox he kept in the front seat of his car. Much of the success of Northwestern Mutual was built on Al's low-tech system and training. Since then, Northwestern digitized their system, which became very widely admired and emulated all over the insurance industry. Al Granum died earlier this year, at the age of 91. But his legacy is immense: The system he developed has become the backbone of many a successful salesperson, both in and out of the insurance industry.

Fast forward to today: Computer programmers have built on the successful OneCard system that Al Granum pioneered in the insurance agency and adopted the sales pipeline concept for their own industries. Naturally, the unique marketing and sales processes of the real estate industry call for their own solution, designed specifically for the real estate business.

Market Leader ProfessionalMarket Leader Professional, for example, is a fully integrated sales pipeline management system designed especially for real estate professionals. Market Leader makes it a snap to input your business contacts and to sort them into the appropriate categories within a fully integrated solution.

2. Feed the Beast

Once you have a backbone in place, it's time to flesh it out with actual contacts from your own marketing efforts. This can be a time-consuming process, because at a minimum you'll want to key in a phone number, an email address, and some notes about how you know this prospect and what you've talked about.

Where are these contacts going to come from?

  • Your own existing natural market.
  • Satisfied clients.
  • Referrals.
  • Online leads.
  • Contacts acquired from your own marketing and prospecting efforts on top of these:
    • Advertising
    • Networking
    • Direct mail
    • Phone prospecting.

You want to have a single, organized backbone to feed all of these contacts into. Eliminate "leakage." Leakage is any name that you struggled or paid for that became a contact and then fell through the cracks. Any leak is wasted time or wasted money.

Yes, there comes a time to delete a contact as hopeless. But you want that to be a conscious process and not leakage in your sales management system.

3. Work Your System

The great part about having a fully developed sales pipeline is that all of a sudden, every day, when you arrive at your office or start your day, you have a track to run on!

Many agents and other sales professionals get overwhelmed by the sheer vastness of the potential market and all the things that need to be done – as well as all the things the agent thinks need to be done that aren't really that important.

Don't get tunnel vision with one aspect of the pipeline. Yes, you should prioritize moving prospects from "qualified" to "paid." That's what will get you operating capital to stay in the business. But you can't spend all your time there. You'll wind up with a few deals paid and no idea where your next commission check is coming from. You have to spend a substantial amount of time adding new names to the pipeline through prospecting and marketing.

Remember that it will probably take at least 10 appointments to get to three proposals, and of these you may eventually get one sale. The 10:3:1 ratio seems to be fairly constant in all kinds of sales environments. So let that be a guide to how much time you spend on expanding and working with your pipeline.

Another advantage to a well-developed pipeline management program is it allows you to reverse engineer your business to meet target commission earnings over the next year. If you know your average commission rate, and you know you will close an average of 2 to 3 percent of leads, and you have an idea of the average price of homes in your market, you can figure out how many leads you need to have to meet your income goals.

Confused? Don't be. Visit this pageVisit this page and we'll walk you through it.

4. Manage It

This one is for you managers and mentors out there. Insist that your agents put in the elbow grease in maintaining a good sales pipeline document. This can go a long way toward helping you help them. Agents, help your manager help you!

Go down your list. Are there deals that you think are dying? This is where you can get help resurrecting them. Your manager may be able to help you develop a strategy or tool to keep a deal moving forward.

Agents should be prepared to discuss every name in their pipeline. Managers should expect agents to have a plan for every name in their pipeline. Managers should compare their agents' pipelines week-to-week and month-to-month. If there's not much movement, you have a problem. The agent may not have the skills to keep the names flowing, or may not have the will. Either situation requires an energetic response from leadership.

5. Upgrade It

If you're on paper already, or you're using an outdated, legacy CRM program, upgrade as soon as possible.

Struggling agents can quickly have a benchmark to improve against by comparing their early-stage lead capture and appointment metrics to those who are more successful. For example, when you show a struggling agent that they are averaging one appointment per day and compare it with a successful agent's report that shows three kept appointments most days, that can be a powerful motivator and learning tool.

Of course, I'm a big believer in tracking metrics and their trends over time, but these tools are only as good as the effort with which agents input their data into the system. Agents and agencies that faithfully use these systems can significantly reduce their paperwork error rate – and potentially their errors and omissions liability exposure and premiums at the same time.