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CVC Guide: Channel Sales Pipeline Management 1

A CVC Guide

Channel Sales

Pipeline ManagementMeasuring and Managing Sales Cyclesto Sustain Cash Flow and Profitabilityin Technology Products and Services

July 2010

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CVC Guide: Channel Sales Pipeline Management 2

www.channelvanguardcouncil.c

CONTENTSOverview

...............................................................................................

3

PipelinePerspectives............................................................................ 4

BuildingPipelines.................................................................................. 5

5StagesofthePipeline......................................................................... 6

Stage1:ProspectstoQualification.................................................6

Stage2:TechnicalWin.................................................................... 7

Stage3:Proposal............................................................................ 8

Stage

4:

Business

Win

.....................................................................

9

Stage5:Closing............................................................................... 9

PipelineManagementinPractice.......................................................10

AbouttheChannelVanguardCouncil.................................................11

Supporters........................................................................................... 12

Copyright 2010 Channel Vanguard Council All Rights Reserved. No part of this documentmay be copied or republished without prior written consent of the Channel Vanguard Council.

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CVC Guide: Channel Sales Pipeline Management 3

Ifcashisthelifebloodofeverybusiness,salesistheheartthatkeepscash

flowingthroughthesystem.Salesismorethanwhateverdefinitionis

appliedtosalesmanship.Itsmorethanfinesse,morethanslick

presentationsandmorethanmarketingcollateral.Salesisthecombination

ofsellingskills,product,marketingmaterialsandmessaging,customer

relationshipsandultimatelyvaluethatisboundbyaprocessthatensure

a

business

is

maintaining

an

adequate

sales

volume

for

sustenance

revenue,

profitabilityandreinvestmentcapital.

TheITresellerchannelhas

amixedperformance

recordonpipelineand

salesmanagement.

Dependingonthesizeof

anorganization,structure

andmanagementmaturity,

salesmanagementcould

produceaccurate

projectionsofaresellers

businessperformanceor

couldleadasolutionpro

vidertoafalsesenseof

securityinrevenueand

profitabilityplanning.

Understandingtheessentialelementsofsaleslifecyclemanagementiscrucial

fornotjustknowingthehealthofabusinessatanygivenmoment,buttheabil

itytomeasureperformanceovertimeandknowanorganizationsabilityto

withstandcash

flow

disruptions

and

plan

for

future

growth

and

investment.

TheChannelVanguardCouncildevisedthissetofdefinitionsandbestpracticesforsalesmanagement.Throughthisextensibleframework,ITresellers,solution

providersandtechnologyservicescompaniescangainabettersenseoftheir

financialhealthasitrelatestosalesandhowtotrulyprojectcashflowand

progresstowardfinancialgoals.

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CVC Guide: Channel Sales Pipeline Management 4

PIPELINEPERSPECTIVESSalespipelinemetricsareakeyperformanceindicatorinthehealthand

viabilityofanysalesorganizationand,ultimately,abusiness.Whatmakessales

pipelinemanagementinthechannelchallengingisthatthehealthofeach

organizationspipeline

is

areflection

of

their

companys

fiscal

health,

as

well

as

thefiscalhealthofeverypartnerintheirvaluechain.

Inthissection,wellreviewthecriticalityofsalespipelinemanagementfrom

thedifferentsegmentsoftheITchannel.

SolutionProviders:Astheendpointinthechannelvaluechain,solutionprovidersholdandmaintainadirectrelationshipwiththeircustomers

andprospectsinthefield.Thesolutionproviderssalespipelineisthe

lifebloodofitsorganizationsfinancialperformance,providing

intelligence

on

the

effectiveness

of

its

sales

campaigns,

field

engagementsefforts,leadgenerationprogramsandothermarketing

activities.Thesalespipelineperformanceisaleadingindicatorforcash

flowandfiscalhealth.

Distributors:Beyondtheirownfiscalhealth,distributorsusepipelinemanagementandintelligenceasaleadingindicatoroftheeconomic

healthoftheirmarketplace.Thisintelligenceiscriticalinmanaging

supplychains,logisticsandinventory.Adistributorspipeline,insome

regards,isanaggregationofthesalespipelinesofalltheresellersand

integratorsintheirnetwork.Transparencyofsalespipelineactivity

providesdistributors

with

the

information

they

need

to

order

parts

and

products,stockwarehousesandperformbalancedlogistics

management.Pipelineintelligencegivesdistributorsatoolfor

demonstratingtheirvalueandstrengthtotheoriginalequipment

manufacturers(OEMs)andsoftwarepublishersindeliveringsales

throughthechannel.

ITVendors/Suppliers:Oneofthegreatestchannelmanagementproblemsvendorsfaceisgainingtrueinsightsintotheirpartners

pipeline.Somewillarguethatasolutionproviderssalespipelineis

proprietary.Perhaps,

but

vendors

need

partner

pipeline

intelligence

for

gaugingfieldactivityformarketsalesandsupportcoverage,product

launchplanningandtheirownsalesforecasting.Vendorsoftenallocate

incentivesandpreferencebenefitstopartnersthathaveconsistencyin

salesperformance.However,manyarewillingtoassignextraresources

topartnerswhobuildstrongpipelinesandneedhelpconvertinga

businesswintoasaleswin.Vendorsalsospendbillionsofdollars

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CVC Guide: Channel Sales Pipeline Management 5

annuallygeneratingsalesleadsthatarepassedontochannelpartners.

Throughpipelineintelligencevendorsmeasuretheeffectivenessof

partnerstoactonleadsandgaugethesuccessoftheirownmarketing

efforts.Ultimately,thestrengthofthesolutionproviderspipelineis

areflection

of

the

vendors

health

and

one

of

the

leading

economic

indicatorsusedbyinvestors.

BUILDINGPIPELINESManagementguruPeterDruckeroncesaid,Thepurposeofbusinessisto

createandkeepacustomer. Themeaningofthisquoteisofteninterpreted

asacustomeriscreatedbyabusinessmakingaproductthathewantstobuy.

Makingmoneyisaderivativeoftheprocessofmakinggreatproducts.But

makinggoodproductsdoesntmeanthatacompanywillbesuccessful.The

euphemismbuilditandtheywillcomerarelyworksinthebusinessworld.

Building

a

business

requires

sales

and

marketing,

and

the

result

of

those

activitiesisthesalespipelineorthecumulativereportofsalesprospectsand

customerrelationships.

Theprocessofbuildingasalespipelineisoftenreferredtoasleadgenera

tion.Leadsaretheproductofmarketingeffortsthataredesignedtoidentify

andcapturetheinterestofqualifiedsalesprospects.Qualifiedisanimportant

notionsincemarketingeffortswilloftengeneratetremendousinterestranging

frompeoplewithatrueneedandabilitytobuyaproducttoenthusiastswho

aregenerallyinterestedintechnologiesbuthavenointentorabilitytobuy.

Marketerscraftprogramsthataregearedtowardspecificcustomersegments

forwhich

aproduct

or

service

is

designed.

As

noted

above,

IT

vendors

spend

billionsofdollarsannuallyonleadgenerationprogramsandpasslongmanyof

thoseleadstosolutionproviderpartners.However,leadgenerationisa

responsibilityofeveryorganizationinthechannel.

Regardlessofifyoureavendororasolutionprovider,creatingaqualifiedsales

leadisnotrivialmatter.Leadgenerationisexpensiveittakestime,money

andeffort,andnooneactivitywillgenerateaqualifiedlead.Infact,ittakesa

consistent,recurringprocesstoproduceleadsatvaryinglevelsofqualification.

TheChannelVanguardCouncilhasdeterminedthatbuildingasalespipelinewith

qualified

leads

follows

this

general

rule:

10X

10X

3X.

10coldcallsarerequiredtoproduceasoftlead 10softleadsarerequiredtoproduceaprospect 3touchesorsalesengagementsarerequired

toturnaprospectintoabusinesswin 3businesswinsarerequiredtoconverttoonesaleswin

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CVC Guide: Channel Sales Pipeline Management 6

Asyoucansee,thismeansanorganizationssalesandmarketingteammust

reachouttohundredsofpotentialcustomerstoachieveahandfulofsales.

Naturally,theactualscaleofprospectingandleadgenerationactivitywillvary

onthesizeofanorganization,geographicsalesandservicearea,andthe

densityof

the

market

opportunity.

Smaller

organizations

particularly

smaller

solutionproviderswontnecessarilyhavetoundertakeamassivelead

generationprogramtoachievesalessuccess.However,theratiosarerelatively

consistentacrosstheentirechannelcommunity.

Pipelinebuildingisoftenthoughtofasahuntersalesactivity,ortheexercise

offindingnewcustomers.However,thissameprocessisapplicabletotheside

ofsalesknownasfarmertheartofexpandingtherelationshipwithexisting

customersbyintroducingnewproductsandservicestotheaccountorestab

lishingrelationshipwithdifferentdivisionsorteamswithinanexistingaccount.

5STAGESOFTHEPIPELINEIfasalespipelineisabusinesssmainartery,cashandcreditgeneratedbysales

isitslifeblood.TheABCsofsalesAlwaysBeClosingisaniceadage,butthe

realityisthatvendorsandsolutionprovidersneedasteadyflowofsalesactivity

andwinsalongmultiplepointsofthesalespipeline.Otherwise,theremight

notbeanotheropportunitytoworkonwhenthelastdealclosesasasale.

TheChannelVanguardCouncilhasidentifiedfivecriticalstagesofhowsalesflowthroughapipeline.Theyare:

Stage1:ProspecttoQualificationStage2:TechnicalWinandAgreementStage3:ProposalStage4:BusinessWinStage5:Closing

Understandinghowsalesflowthrougheachofthesestagesandhowto

measureprogressionofprospectstoclosuresiscriticalinproperpipeline

managementandensuringasolutionproviderorvendorisprocessingenough

salesactivity

to

meet

expenditure

obligations

and

profitability

expectations.

Stage1:ProspecttoQualificationAsthenameofthisstageimplies,ProspecttoQualificationistheactof

identifyingpotentialcustomersandqualifyingthemontheirneedfora

productorservice,theirabilitytoacquire,thepropensityoftheiracquisition,

andlikelihoodoftheireventuallybuyingandatwhatlevel(salevalue).

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CVC Guide: Channel Sales Pipeline Management 7

Inthe$1.7billionbusinesstobusinesstechnologymarketplace,nearlyevery

businessfromaFortune500enterprisetoasoleproprietorMainStreetshopis

aprospectivecustomerforsometypeoftechnologyproductorservice.

However,theirneed,ability,willingnessandlikelihoodtoengagewithavendor

orsolution

provider

is

what

qualifies

them

as

aqualified

sales

prospect.

Somepeoplemayarguethatqualificationisafunctionofmarketingasmuchas

sales.Perhapstheyarecorrectsinceleadgenerationcampaignsareoften

multitoucheffortsdesignedtonotjustfindprospectsbutengagewith

prospectsonseverallevelstouncovertheirlevelofqualification.Salesmanage

ment,however,mustengageincustomerqualificationonanongoingbasis

especiallywithexistingcustomers.Salespeopleplayacriticalroleinuncovering

netnewopportunitiesorexpansionofrelationshipswithexistingcustomers

throughaqualificationprocess.Forsalespeople,theprospecttoqualification

process

is

how

they

determine

which

prospects

and

accounts

are

worth

ex

pendingtimeandeffortoncultivating,andthosewhichshouldbereprioritized

toavoidwastingpreciousresources.

Metricsforthisstageinclude: Numberofnewprospectsenteringthequalificationprocess

Leadgeneration Referrals Accountexpansion

Numberofprospectsevaluated Numberofqualifiedprospectspassedtothenextstage

Stage2:TechnicalWinAqualifiedprospectdoesnotasalemake.Customersrarelywillsignapurchase

orderwithoutfirstgoingthroughacertainamountofduediligencetheir

processforassessingtheirneedsandhowtheproposedproductsand/or

serviceswillresolvethoseneeds.IntheTechnicalWinstage,thevendoror

solutionprovidersjobistoconvincethequalifiedprospectthattheirproposal

isthebestsolutionfortheirparticularneeds.

Forvendorsandsolutionproviders,attainingaTechnicalWinisnotrivialtask,

especiallywhen

dealing

with

more

sophisticated

businesses

and

organizations.

Manylargerorganizationswillhavesteeptechnical,operationalandperform

ancerequirementsforanyproductorservicetheyconsider.TechnicalWins

mayrequireeffortsrangingfromdemonstrationsandtrialuseperiodsto

competitivetesting.Somebusinessesespeciallylargeenterprisesmay

contractthirdpartyexpertstoreviewtechnicalproposalsandconsulton

systemdesigns.

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CVC Guide: Channel Sales Pipeline Management 9

Stage4:BusinessWinABusinessWinisthepenultimatestagewhenthebuyerhasagreedto

purchasegoodsandservices,andhasexecutedacontract.Thedealis

essentiallydoneatthisstage,butthereisstillroomformodifications.Its

duringthis

stage

that

vendors,

solution

providers

and

buyers

align

their

activitiestoensurethatthedealcanproceedsmoothlytoclosing.

SinceProposalsrarelytranslateunchangedtoaBusinessWin,thescopeof

workandvalueoftheengagementsoftenchangeatthisstage.Itsduringthe

BusinessWinstagethatthemonetaryvaluegrossrevenue,costofgoods

andservices,netprofit,businesscontributionisdetermined.

OnceaBusinessWinisinplace,solutionproviderscanorderproductsfrom

distributors,marshalprofessionalservicesresourcesfordeployments,

calendar

a

timeline

for

execution,

and

begin

coordination

exercises

with

the

buyertoensurethescopeofworkisexecutedeffectivelyandefficiently.

Metricsforthisstageinclude: ConversionrateofProposaltoBusinessWin GrossvalueoftheBusinessWin CostofgoodsandservicesassociatedwiththeBusinessWin NetprofitoftheBusinessWin

Stage5:ClosingClosingisthestagewherecelebrationshappen;whensalespeoplestandup

fromtheir

cubicles

and

proudly

ring

the

sales

bell.

From

abusiness

perspective

ofthevendorandsolutionprovider,Closingisastageforbothrecognitionof

revenueandensuringcustomersatisfactionwiththegoodsandservices

delivered.

Closingisaninaptlynamedstagesinceitsreallyanewbeginningforthesales

cycle.Onceaprojectiseitherexecutedorcompleted,thevendorandsolution

providershouldimmediatelyrestartthequalificationprocessofthecustomer

basedonintelligenceandobservationsmadeduringtheengagement.

Atthesametime,vendorsandsolutionprovidersshouldmeasuretheir

customerssatisfaction

with

the

products

and

services

delivered

during

the

engagement.Buyershaveatendencytocontinuepurchasingfromknown

suppliers,especiallywhentheyvehadamoderatetogoodexperience.

Ensuringcustomersatisfactionisalsoagoodwayofkeepingthesalespipeline

flushatalowercost;thecostofnewcustomeracquisitionisoften10timesthe

costofacquiringanetnewcustomer.

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ABOUTTHECHANNELVANGUARDCOUNCILTheChannelVanguardCouncil,aneutralcollaborativecomprisedofleadersfromthetechnologyresellerchannelestablishedin2009,formalizeditscharterandresolvedtofulfillingthe

missionofcreatingstandardsthatwillresultinthematurationofchannelbusinesspractices

forvendors,

distributors,

solution

providers,

services

organizations

and

value

added

resellers.

CVCservesasanadvisorygrouptoCompTIA,theleadingassociationofITprofessionals.

CarolynAprilDirector,IndustryAnalysis

CompTIA

PeterCannoneChiefExecutiveOfficer

OnForce

JohnJ.ConveryExecutiveVicePresident ofVendorRelations

andMarketing

DenaliAdvancedIntegration

RonCuller,Jr.CTO/ExecutiveVicePresident

Secure

Designs

GregDonovanFounderandCEO

AlpheonCorporation

SpencerFergusonPresident

WasatchSoftware

GaryFishFounderandCEO

FishNetSecurity

NancyHedrickFounder,PresidentandCEO

CSITechnologyOutfitters

JayKirbyExecutiveVicePresident,SalesandMarketing

Troubadour

LesterPierreChiefExecutiveOfficer

WallStreetNetwork

JoeQualgiaSeniorVicePresident,U.S.Marketing

TechData

FernandoQuinteroVicePresident,ChannelSales,Americas

McAfee

JanetSchijnsSeniorVicePresident,

Training&KnowledgeManagement

MotorolaEnterprise

Mobility

Systems

SamJ.RuggeriPresidentandFounder

AdvancedVisionTechnologyGroup

LaneSmithCEOandPresident

DoITSmarter

KenToturaChiefChannelOfficer

AwarenessTechnologies

ManuelVillaPresident

ViaTechnologies

TriciaWurtsPresident

WurtsandAssociates

LawrenceM.WalshExecutiveDirector,ChannelVanguardCouncil

PresidentandCEO,The2112Group

ToddThibodeauxPresidentandCEO

CompTIA

CVCMembers

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CVC Guide: Channel Sales Pipeline Management 12

SUPPORTERSTheChannelVanguardCouncilissupportedbythefollowingorganizations.

CompTIA(www.comptia.org)isthenonprofittradeassociationadvancingthe

globalinterestsofinformationtechnology(IT)professionalsandcompaniesin

cludingmanufacturers,distributors,resellers,andeducationalinstitutions.

The2112Group(www.the2112group.com)isanindependentstrategicadvisory

serviceproviderthatspecializesincommunitybasedmarketdiscoveryandre

searchforthedevelopmentoftechnologyproductandmarketingstrategies.

www.channelvanguardcouncil.c