From a recent survey I ran, the overwhelming result was that pipelines and targets had plenty of room for improvement. So if you want to set sales pipeline targets for your consultancy you can be confident in, I’ve written this blog post for you. I’m going to outline how to plan your sales pipeline and set valuable targets for your consultancy.
This post was first published 14 October 2020 and updated 14 April 2021.
If you’re tight for time, bookmark this page and come back to it when you’ve got a spare 10 minutes to truly digest the information in this post.
Let’s get stuck in. Here’s what we’ll be covering in this post:
- Why sales pipeline targets are important for your consultancy
- Your customers' journey
- Typical steps in the sales pipeline
- A recommended sales pipeline
- Setting your 12-month target
- Creating staged targets
- Next steps that you can take
Why are sales pipeline targets essential for your consultancy?
With the uncertainty of recent times, I've seen many consultancy owners questioning the value of targets. However, these are people who would have been advocating their benefits not long before the uncertainty hit.
It's a bit like when you're going on a journey; you have a clear destination and ideal arrival time. This clarity makes it much easier to work out your method of travel and the route you're going to take.
Let's say you're driving by car; you’ll probably work out the ideal route on Google maps and then enter it into your sat nav. If there turns out to be unexpected delays on your chosen route, you'll pull over and check out some alternatives that will get you to where you need to be on time. (Or even better, your sat nav will work it out automatically for you).
Now compare that to not having clarity on your destination and your desired arrival time. Of course, you might end up at the same place at the same time, but it would be much less likely.
Good targets give you focus and a time frame that leads to clarity. This clarity helps you set your route and adjust it if things unexpectedly get in your way.
When you approach targets in that way, they become a positive force to help you achieve your business goals. Few things in life are certain, but you certainly won’t achieve them if you don't have targets.
Your customers' journey
Every one of your clients goes on a journey when buying the product or service you provide. In marketing circles, this is called the customer journey or buyer journey.
The typical customer journey, described as the general stages a customer goes through on their buying journey, looks a little like this:
Awareness (Aware that they have a problem that needs fixing)
Consideration (Researching and considering options to fix their problem)
Decision (Making a decision on which option to choose)
Delight (Ideally being delighted with the purchase they have made)
You can describe the customer journey in other ways too. However, you describe it, the most critical aspect when looking at the customer journey is to put yourself in your customers’ shoes and look at the questions they’ll be asking at each stage of their journey.
By doing this, you’ll develop a much deeper understanding of your customers’ experience, which will make it much easier to see where you can make improvements for them.
Typical steps in the sales pipeline
Another way of looking at your customer is the journey they take with you from the perspective of your business. Here are some common steps for a consultancy business:
- New website visitor.
- Subscriber - they subscribe to content that you create with an email address.
- Lead - they take an action that means they meet the criteria where you would consider them to be a lead or prospect.
- Marketing Qualified Lead - they meet the criteria that mean they are ready to have a sales conversation with your sales team.
- Sales Qualified Lead - they meet the criteria that your sales team considers a good fit and sales-ready.
- Opportunity - you have an active opportunity of doing business with them.
- Customer - they are an active customer of your business.
- Evangelist - you’ve delighted them, so they are happy to recommend and advocate your business to others.
This perspective of your customers’ journey is what we call the sales pipeline. It’s your customer's journey with you from the perspective of your business. It won’t mean anything to your customers, but for you, it’s crucial.
A recommended sales pipeline
Your sales pipeline will typically start when you know who the prospect is, which will be when you have some contact details for them. Including their name and an email or a telephone number, you can contact them on.
It’s ideal to have visibility of how your pipeline performs from as early a stage as possible.
If you know how many website visitors you need to generate the leads required to achieve your sales targets, you’ll be able to see from an early stage if you’re on track to achieve them. If you can see that you’re not, you’ll be able to plan other activities that will increase your chances of achieving your goals.
While website visitors or new subscribers may not strictly be part of your sales pipeline, including them in your reporting provides a useful leading indicator of your future performance.
I recommend that the sales pipeline for your consultancy includes the following steps:
- Website Visitors
- Marketing Qualified Leads (MQLs)
- Sales Qualified Leads (SQLs)
Website visitors, leads, subscribers and marketing qualified leads will all be the responsibility of your marketing team. Still, it’s a good idea to include them in your sales pipeline reporting, as it’ll give you a complete picture of how everything is flowing and whether you have blockages at any point in the pipeline.
As well as recording the actual numbers you want to achieve, including the conversion rate as a percentage between each stage of your pipeline, provides you with a metric that provides an accurate comparison of performance over time.
Setting your 12-month target
Start by asking the following questions: Where do you want your new business to be in 12 months? What is your goal?
Let’s say that your revenue is currently at £750k, and you want to break the £1m mark. That means you need to generate £250k of new business in 12 months.
You’ll need to build your pipeline to achieve this target and to continue your growth trend into your next financial year. Here are a few things that you’ll want to work out to help you with your targets; I’m also going to include answers to the questions that I’ll use in my example sums below.
- What is your average new customer worth to you per year? (£10k)
- How many customers do you lose on average per year? Customer churn (20%)
- How many opportunities do you need to generate a new customer? (4)
- How many SQLs do you need to generate an opportunity? (2)
- How many MQLs do you need to generate an SQL? (2)
- How many leads do you need to generate an MQL? (4)
Imagine that you have these example figures; feel free to swap them out for your numbers if you want to.
Using this example, you need to generate £250k of new business this year and account for a 20% loss of customers, which is another £150k.
Factoring this customer churn means that in total, you need your pipeline to generate £400k of new business to achieve your target of £1M revenue.
You also want to continue the growth trend into the following year. So you’d probably want to increase your 12-month pipeline target by another 25% to be confident that you will go into the following 12-month period with a strong pipeline.
Adding these together gives you a 12-month pipeline target of £500k, which is 50 new customers, of which you’ll need approximately 40 to convert in the current 12 months.
Now you’re in an excellent position to create our staged pipeline targets.
Creating staged targets
There are two parts to creating staged targets:
- Part 1: Targets for each stage of the pipeline.
- Part 2: Targets for different stages of the journey to getting achieving your primary target. You can set these targets weekly, monthly, two months or quarterly - whichever works best for your business. At LexisClick, we find that two months works well.
Let’s start with the targets for each stage of the pipeline.
Let’s start with the targets for each stage of the pipeline.
To get these targets, you’ll also need to answer another couple of questions:
- How many subscribers do you need to generate a lead? 4 (25% conversion rate)
- How many website visitors do you need to generate a subscriber: 100 (1% conversion rate)
Using these examples, your pipeline to reach a goal of 50 new customers would look like this:
Target customers: 50
Opportunities needed: 200 (25% conversion rate)
SQLs needed: 400 (50% conversion rate)
MQLs needed: 800 (50% conversion rate)
Leads needed: 2400 (25% conversion rate)
Subscribers needed: 9600 (25% conversion rate)
Website visitors needed: 96000 (1% conversion rate)
Depending on where you stand, these numbers might look a bit overwhelming, but don’t be alarmed as the next step is to break them down.
Looking at this total pipeline, five new customers a month would represent a reasonable growth rate. Building a reliable pipeline to generate five new customers a month from month 13 onwards would generate 60 new customers or 600k in new revenue, which is a great platform to build on.
Now it’s time to break down the entire pipeline into a monthly pipeline.
Target customers: 5
Opportunities needed: 20 (25% conversion rate)
SQLs needed: 40 (50% conversion rate)
MQLs needed: 80 (50% conversion rate)
Leads needed: 240 (25% conversion rate)
Subscribers needed: 960 (25% conversion rate)
Website visitors needed: 9600 (1% conversion rate)
Now hopefully, those targets look a lot less overwhelming. When you look at this, you might also decide that some targets look on the high side. You may also decide that only a percentage of your new customers will be directly attributable to the website. If that’s the case, you can adjust your pipeline targets accordingly. I’ll leave that to you, as it’s beyond the scope of this post.
Now, if your pipeline is currently underperforming, it’s improbable that you will fix all the problems overnight. So, it’s time for part 2 of the staged targets to build up to where you want to be over the 12 months.
I’m going to break it down using the 2-month cycles that we use at LexisClick:
- Month 1 & Month 2 - (1 & 2) 3 customers
- Month 3 & 4 - (4 & 5) 9 customers
- Month 5 & 6 - (5 & 6) 11 customers
- Month 8 - (6 & 7) 13 customers
- Month 12 - (7 & 7) 14 customers
I hope that you found that was pretty easy :-) These staged targets allow for growth in each two-monthly cycles, to arrive at the target of 50 customers in total.
I’ll give you the entire pipeline that we’ll be targeting for month 1, which you can use as the pattern for the rest of the stages.
Target customers: 1
Opportunities needed: 4 (25% conversion rate)
SQLs needed: 8 (50% conversion rate)
MQLs needed: 16 (50% conversion rate)
Leads needed: 64 (25% conversion rate)
Subscribers needed: 256 (25% conversion rate)
Website visitors needed: 2560 (1% conversion rate)
Now you have your staged targets and, most important, your first stage target; you’ll want to identify the blockages in your pipeline that are holding you back from achieving these targets.
And we’ve built a free Pipeline Score tool that will help you. All you need to do is answer a few questions, and in under 10 minutes, you’ll have your score and recommendations on the main areas you need to improve.
So there you go - that’s how to set your pipeline targets and how to identify what’s holding you back from achieving them.
Want a proven system to scale your consultancy?
Scaling the output of an owner-managed consultancy is tough. There's no doubt about it.
For the owner, scaling the consultany often entailes years of:
- Creating products/services that don't sell, or can't scale without their expertise.
- Managing a team that is constantly demanding their time in order for projects to be completed.
- Trying and failing to leverage digital marketing to create predictable, high quality leads.
In total, Stephen (LexisClick's Founder) has spent 12 years and over £250,000 to find a repeatable system that worked to scale his owner-managed consultancy.
You could say he knows the pain of scaling a small consultancy...😅
Unfortunately, almost all owner-managed consultants will face these issues when scaling. It's just the nature of the beast.
However, it doesn't mean you can't solve them faster and cheaper.
Join Stephen on a live webinar this Wednesday where he'll be sharing his story, challenges and solutions to scaling an owner-managed consultancy.