As a commercial real estate professional, you need to have a brokerage grasp on what’s ahead to maximize your success. But, as the old business saying goes, “You can’t manage what you don’t measure.” And there are few places where this is more applicable than your organization’s pipeline.
When you have a better understanding of the steps it takes to push a deal forward, you can better allocate the right resources at each stage to make those deals happen. And the more profound your insight into these processes, the better you can avoid inaccurate projections, overstretched resources, and a burnt-out team. Instead, you’ll enjoy a more regular cadence of closings and a better idea of what you can expect from each month, quarter, and year.
And that’s just the beginning.
Today, we’re delving into why pipeline management matters and what it can do for your brokerage.
A deal pipeline tracks the lifecycle of every deal. It’s a visual representation of the path a prospect takes from their first contact to the moment they become a client (or not). At first, tracking your pipeline seems straightforward, but as you add more and more prospects—each at a different stage, with their own unique needs—it becomes more complex.
That’s when pipeline management comes in handy. It’s the practice of taking all of those various prospects at their various stages and plotting them out, so you know which deals need what sort of attention when. By segmenting your dealmaking process into different stages, you can more accurately measure your progress toward each deal—or where it’s getting hung up.
Assisted by a reliable commercial real estate-focused CRM, you can keep up with all of your active deals and ensure you’re engaging with your prospects in the right way at the right time. Additionally, you can review all the efforts your team has taken so far to move the opportunity forward toward closed won.
From a deal management perspective, this is also helpful for creating revenue projection reports, identifying which reps are on track to hit their goals or need coaching, and what sorts of common roadblocks are emerging. Armed with this insight, you can begin making changes and course correct before it’s too late. In other words, pipeline management helps you focus your energy and resources where they’ll make the most significant difference.
All of this sounds good in theory, but what does it look like in action?
Here are three ways pipeline management will support your CRE goals:
At a foundational level, pipeline management provides a clear visual of how many deals you can close based on how many prospects are currently in your pipeline. Instead of basing projections on previous quarters alone, you can base your estimates on real, active, current numbers—such as how many deals are in each stage of the sales process. This allows you to determine the resources necessary for moving leads closer to closing. (For example, do you need to focus on prospecting? Or should you have more resources dedicated to end-stage support?)
Over time, you can even more accurately assess how likely a deal is to close or not close based on its position in the process, the length of time it sits in each stage, and other factors.
For example, you may discover your brokerage closes 25% of the deals that reach the proposal stage and 35% of the deals that reach the listing stage. Using these numbers, you can calculate your potential revenue at each stage. In other words, if you have $10,000,000 of potential revenue available in the proposal stage, you can expect $2,500,000 from the deals that have reached that stage.
Additionally, you can project an upcoming dip in revenue based on a shortage in an earlier stage. This allows you to make adjustments and boost projected revenue back up to your original target.
Think of your deal pipeline like an obstacle course at a gym—and you’re the designer. At first, people flock to the course and seem to make it pretty far, but then you discover most people give up at a certain point and leave in search of a less laborious exercise.
So, you decide to monitor the course. While observing, you notice even some of the best athletes give up after attempting the rock wall because it’s too steep. How would you handle this? Would you bring in more people hoping sheer volume will work in your favor? Or would you re-engineer the rock wall so it’s more accessible and allows a larger percentage of people to finish the course?
Pipeline management allows you to observe your deal process and identify the exact stage where you begin losing people. This way, instead of simply increasing the number of leads at the top of the funnel, you can fine-tune your process on the back end. By diagnosing the issue causing opportunities to go cold, you can set about creating a smoother process that ensures more prospects make it through to the next stage.
Just in case you need a refresher, your win rate is the percentage of prospects that reached the final stage and became clients, divided by the number of total deals in the pipeline. For example, if you have 500 deals in the pipeline and close 225 of those deals, you have a win rate of 45%.
Pipeline velocity refers to the speed at which prospects move through your pipeline—whether they become a client or not. It’s calculated by multiplying the total number of opportunities, the average closed deal value, and win rate and then dividing that number by the average length of the deal cycle.
When you have a handle on your pipeline management, you can calculate these metrics more accurately.
Pipeline management itself won’t drive revenue increases or fix the issues holding your team back, but it will arm you with the insight you need to take action. By managing your pipeline with a robust CRE-focused CRM, you’ll have access to the intel you need to streamline your deal process and close more deals.