Consulting firms usually have two things on their minds: capturing leads and closing deals. But that's only the beginning and end of the revenue process. What defines a firm's long-term success is how well the entire pipeline is managed end-to-end. That's how you retain clients and add new accounts.
Firms that understand how prospects enter the pipeline and their journey throughout it are less likely to lose or skip over opportunities due to pipeline mismanagement.
Consulting firms tend to be loosely structured, consisting primarily of executives who oversee financial operations, account managers who are assigned client accounts, sales representatives to prospect and sell those services, and any necessary support staff, such as human resources, IT, or marketing.
Given different roles and priorities across the firm, the sales pipeline management process can become siloed or disjointed. As a result, contract renewals are at risk, business stalls, and finding people to staff projects becomes difficult. Account managers responsible for producing deliverables may miss opportunities to upsell, and salespeople who lack visibility after handoffs don't know when to either.
This disjointed process leads to instability, poor visibility, and a few unavoidable pipeline management pitfalls. That's no way to do business.
The most common pipeline management pitfalls that consulting service companies fall into
Just like the number of members in an early 2000s boy band, there are usually five common pitfalls consulting companies fall into.
1. Failing to regularly review and update sales pipeline
For a consulting services company, this leads to neglect. Nobody follows up with potential clients or stays in touch with existing ones. This can lead to lost opportunities and a decrease in business over time.
The fix: Keep momentum with prospects and clients by scheduling regular check-ins. Establish a system for categorizing by color coding the status of each prospect or account and have a standing meeting among all stakeholders each month to review. Setting up simple workflows ahead of time for communications to be sent to clients can simplify the process and ensure each account in the pipeline remains hot with regular touches.
2. Neglecting to track key metrics and performance indicators
Without tracking metrics such as number of leads generated and conversion rate, you'll struggle to understand the effectiveness of your sales and marketing efforts and make necessary improvements.
The fix: Establish clear key performance indicators (KPIs) and track how each account in the pipeline performs based on its current status. Digest data and produce insights that are easily understandable across business functions.
3. Ignoring early warning signs of a strained pipeline
Missing red flags and early warning signs of at-risk pipeline decreases leads and increases deal slippage. Failing to address these issues early on can result in inaccurate forecasts, which has a detrimental impact on the rest of the business downstream, including revenue leak. Revenue leak represents the dollars that your team works hard to bring in, but never ends up capturing.
The fix: Once a color-coded system has been established, you can flag accounts that have entered the yellow zone before they turn red. Also, set up auto alerts so the right stakeholders know the account's status change.
4. Failing to adequately qualify leads
Consulting companies need to ensure that potential clients have a genuine need for its services and are a good fit. Otherwise, time and resources may be wasted on projects that are unlikely to be successful. For the most part, leads are vetted and qualified on a qualitative basis instead of a quantitative basis, which is shaped largely by bias. Leads should be assessed by both quantitative and qualitative methods.
The fix: Consulting firms should not only use the judgment of their managing directors, who are engaging with executive teams of both current and potential clients, but also some form of a scorecard. What percentage of companies of a similar size have converted in the past? Of those, what were the most common titles of the main decision-makers? These metrics should all be part of your scorecard when determining the quality of a lead.
5. Not seeking out new opportunities
Consulting services companies should continuously look for new clients and projects to ensure a steady stream of business and revenue. Failing to do so can lead to a protracted lull in business and compounding revenue loss.
The fix: Create referral programs to incentivize and amplify word-of-mouth. Reward reps who conduct outreach that lands them a meeting. And invest in top-funnel strategies such as hosting virtual or in-person events, free downloadable content like white papers or ebooks, as well as paid ads.
Do some quick math. Assume only 3-5% of your unqualified leads will convert into clients. With this rate in mind, you will know how many unqualified leads should be entering the pipeline through marketing efforts and how many prospects your sales teams need to create to hit your forecasts.
The pipeline management game-changer for consulting firms
Avoiding the five biggest pitfalls for consulting management firms and other professional service companies is vital to ensuring long-term business growth. Whether performed through an all-in-one automated solution like Clari or through extensive manual coordination, addressing these common mistakes leads to more revenue growth. Failing to do so always leads to the opposite.
To achieve all of this in one out-of-the-box solution, the answer is the Clari Revenue Platform.
To learn more about how Clari can help you set and forget your sales pipeline management, schedule a demo today.