Less Is More: SiriusDecisions Study Shows Stricter Lead Qualification Driving Improved Sales Results

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Quality counts. That’s the key finding from SiriusDecisions’ most recent study of b-to-b marketing and sales leaders on their pipeline and forecast practices.

Companies that have maintained a tighter pipeline-to-quota ratio are now outperforming their peers.

Based on the findings of SiriusDecisions’ most recent study of b-to-b sales and marketing leaders’ pipeline and forecast practices, top-performing companies are replacing the traditional “more is more” sales pipeline approach with an emphasis on higher-quality leads and more accurate forecasting.

“Pipeline-to-quota ratios are an important tool for sales forecasting and management,” explained analyst Jim Ninivaggi of SiriusDecisions’ Sales Optimization Strategies advisory service. “However, our study showed that companies that increased their pipeline-to-quota ratios during the recent recession in an attempt to hit their sales targets have actually hurt their productivity. Companies that have maintained a tighter pipeline-to-quota ratio are now outperforming their peers. Furthermore, the study indicated that business intelligence and analytics tools, though still in the early-adopter phase among b-to-b sales organizations, have enabled higher-quality pipelines and more accurate forecasting for those early adopters.”

The study findings, based on responses from b-to-b sales and marketing leaders from diverse global industries, revealed that it may be time to revisit traditional approaches to pipeline management:

  • Companies mandating tighter pipelines had a better close rate.

Companies with pipeline-to-quota ratios of three or less had a better conversion rate and considerably less waste in their sales process throughout the pipeline. For example, this group closed 40.5 deals out of 1,000 sales-qualified leads, compared to only 30.6 deals for their counterparts with ratios of four or more. “Less” improves pipeline quality.

  • Companies mandating tighter pipelines had significantly more reps at plan.

Approximately 57 percent of the companies with pipeline-to-quota ratios of three or less reported that they had at least 60 percent of their reps at plan or better, compared to only 37 percent of the “four or more” respondents. “Less” improves sales productivity.

  • Companies mandating tighter pipelines had more accurate pipelines/forecasts.

When asked to specify their greatest forecasting issue, respondents with pipeline-to-quota ratios of four or more said “lack of predictability and accuracy” more than twice as often as the group with lower ratios. “Less” improves forecasting accuracy.

“Ultimately, managing a tighter pipeline depends on a sales organization’s confidence in the ability of its reps to convert a greater percentage of opportunities, along with the integrity of its pipeline and the accuracy of its forecasts," noted Mr. Ninivaggi. "Lacking this confidence, sales and marketing organizations will continue to waste valuable time and resources by playing the pipeline numbers game.”

To learn how your organization can leverage the SiriusDecisions study findings, contact Jim Ninivaggi at jninivaggi(at)siriusdecisions(dot)com.

About SiriusDecisions
SiriusDecisions is the world's leading source for business-to-business sales and marketing best-practice research and data. SiriusDecisions Executive Advisory Services, Consulting Services, Benchmark Assessment Services, Learning and Events provide senior-level executives with the sales and marketing operational intelligence required to maximize top-line growth and performance. The unique combination of thought leadership, benchmark data, analytic tools, best practices and access to a peer and analyst network allow SiriusDecisions clients to quickly receive the critical insight they need to make decisions effectively. For more information about SiriusDecisions, visit: http://www.siriusdecisions.com.

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