The £1m Pipeline That Isn't Worth £1m

Something odd seems to be happening with sales pipelines at the moment, and I've had so many versions of the same conversation with CEOs and MDs over the last few weeks that I've started to wonder what on earth is going on.

The pipeline isn't empty. In most of the businesses I'm talking to there's plenty of activity at the front end, because they're being invited to tender, customers are asking for p

roposals, specifications and detailed quotes, and the conversations feel genuine, with people on the other side of the table who clearly want what's being discussed. Sales teams and operational people put real hours into responding, and then, somewhere close to the point of commitment, it all goes soft. The project is delayed, the budget is being held back for now, the decision moves into next quarter, or the customer simply decides not to go ahead.

The other thing I keep noticing is that existing customers are still spending. One leadership team I work with is ahead of budget on turnover while new business stays slow, because current customers are growing with them and new ones are wary of committing to a supplier they haven't used before. I've heard enough versions of that across different sectors to think it's more than coincidence.

So I went looking at the wider picture, because I wanted to know whether the economy was simply telling us to expect this. Interestingly, the data isn't that gloomy. The Office for National Statistics estimates the UK economy grew by 0.4% between April and June, following 0.6% in the first quarter, which is slow but a long way from recession. Money is still expensive, with the Bank of England holding Bank Rate at 3.75% in September and inflation at 3.1% in August as energy prices feed through, so nobody should be planning on a return to cheap borrowing. The behavioural economist Roger Martin-Fagg goes further in his September update and argues that the national mood is considerably more negative than the numbers justify, which he sums up very simply: "There is no crisis."

That's the tension that interests me. The numbers describe a slow, patchy and fairly expensive economy, yet the buyers my clients are dealing with are behaving as though committing new budget is genuinely dangerous. Economists have called this animal spirits ever since Keynes, meaning the confidence, or lack of it, that decides whether people actually act, and it's a useful reminder that buying decisions are made by people who read the same headlines we do and would rather not be the person who signed off the expensive mistake.

I think that last point matters more than we give it credit for. Matthew Dixon and Ted McKenna studied more than 2.5 million recorded sales conversations and found that somewhere between 40% and 60% of deals are lost to customers who say they intend to buy and then never act, which they describe in Harvard Business Review as indecision rather than any preference for a competitor. Their research puts much of it down to fear of getting the decision wrong, and when I think about the conversations I'm hearing, that fits uncomfortably well. The customer still wants what you're offering, which is exactly why it's so frustrating, but somewhere near the end they lose the nerve to put their name to it.

If that's what is going on, a few uncomfortable questions follow for leadership teams, and the first is how much faith to put in the pipeline itself. A £1m pipeline isn't worth what it was a couple of years ago if more deals stall late and the ones that do convert take longer to land. It's worth asking whether the probability weightings in your forecast still reflect how buyers are behaving now, because I've sat in enough pipeline reviews, as a commercial leader and now as a NED, to know how easy it is to leave a deal at 70% because the conversations still feel warm. Everyone in the room wants to believe the big one is about to land, right up until the customer rings to say it's on hold. A simple way to test that optimism is to run a pre-mortem on your three biggest deals, imagining it's six months from now and each one has stalled, and asking the team honestly what got in the way.

The second question is what it's costing you to chase work that doesn't convert. Tenders, specifications and detailed proposals consume senior time, estimating time and often the time of your best operational people, and that cost rarely appears anywhere near the pipeline report. It's worth asking much earlier whether the customer who clearly wants something also has an approved budget, a named person with the authority to sign and a reason to act now rather than in six months. Genuine interest and a genuine ability to buy have always been separate things, and in this market the gap between them seems to have widened.

The third is how you plan capacity when you can see the opportunity but can't trust the timing. Hiring against work that hasn't converted is a risk, but so is freezing everything and then finding you can't deliver when three deals land in the same month. This is where existing customers become much more than a comfort blanket, because they're the most reliable demand you have right now, which is why I've been encouraging leaders to lean deliberately into growing those relationships while being far more selective about which new opportunities deserve a full proposal.

None of this means the work isn't out there, because it clearly is. It does mean leaders probably need to look at their pipeline with a little more honesty and a little less hope, and to have that conversation with their sales teams before the forecast forces it on them.

So here's the question I'd leave you with: if you took every deal in your pipeline and asked whether the customer has the budget, the authority and the nerve to sign this quarter, how much of it would still be there?

If you'd like to think this through for your own business, you can find out more about how I work with CEOs and leadership teams, and there's more of my thinking on the blog.

Nicola Gunstone is an executive coach working with CEOs and MDs of growing businesses. If this struck a chord, you can connect with her and follow the conversation on LinkedIn.