Your Quota Quality Depends on Pipeline Potential

pipelinepotential

When you trip a breaker or, tragically, have restricted blood flow, you have a problem – one certainly more serious than the other. But the fact is, demand is not being met. The same holds true for your sales funnel. If the quality of your prospects is low, the revenue potential of your leads is poor and the advancement of the sales timeline is stalled, you will NOT make budget. Consequently, your sales team’s forecast is inaccurate and revenue projections are unobtainable. You need a precise analysis of your pipeline potential to grow your business.

Determine your pipeline potential

Confidence in your revenue projections begins with an accurate read of your sales pipeline. Many companies simply apply a top-​down percentage across all opportunities to close this month. However, Gary Smith provides a way to measure opportunity conversion rates that adds flexibility and timeliness to forecasts. Smith suggests using a dynamic calculation that compares the number of deals won in a month against the deals lost in the same month. Consequently, deals that did not close play no part in calculating the conversion rate. Using this method, pipeline potential excludes the deals that are typically pushed month-to-month.

Measure conversion rate by value and number

Smith further recommends recording the metrics of the number of deals (count) and the value (amount) of the deals closed. This method reveals when high value opportunities are closed versus lower value deals. In addition, sales managers can compare quantity to value. Most importantly, managers can assess salesperson performance to determine coaching opportunities. Reading further into the data, leaders can determine whether salespeople are sandbagging or over-​inflating their pipeline contributions. Maintaining the purity of pipeline potential allows short-​term forecast accuracy and long-​term sales team performance.

A deeper dive into the pipeline

Sales executives gain a deeper understanding when they probe the pipeline. Danny Wong, writing for Salesforce lists several insights that strengthen and support managers when they study the sales funnel. You can increase pipeline potential when you consider these issues:

Better use of resources — Some sellers spend too much time courting low-​value prospects while ignoring those with greater revenue potential.

Length of the sales cycle – Over the past two years, sales cycle length has changed. Managers need to understand how these changes affect forecasting and adjust accordingly.

Identify choke points – For example, prospects who require custom quotes can hold up the deal. Managers should involve sales support to free up sellers and facilitate the process.

Detect coaching opportunities – Learn from high performance sellers and share the wealth of their skills. Managers need to eagerly assist sellers of all skill levels to get their numbers on track.

Expanding your pipeline potential

Wong makes several recommendations for building a stronger and more robust pipeline. For instance, he suggests that you look critically at how companies find out about your business and determine the revenue generated from each lead source. As a result, you may benefit from an aggressive marketing campaign directed to the higher value source. Similarly, target the industries from which you make the most revenue. Another suggestion is to further segment your customer base by decision-​makers and deal size. Find out what works and do more of it. Conversely, use your CRM platform to isolate the activities that are less productive.

Meet revenue demand with pipeline management

You need to design and manage your pipeline to be visible and flexible to accommodate a vibrant and ever-​changing business environment. Your sales managers must take an active role in understanding the source and contents of the entire sales funnel. Moreover, they need to leverage the data to the advantage of the enterprise. Much of the intellectual yield will inform your manager/​coaches of the steps needed to improve sales performance for the long-​term health of your business.

To learn more about expanding your pipeline and improving sales performance download SalesFuel’s free whitepaper, Managers as Coaches.

Photo by Erlend Ekseth on Unsplash

Tim Londergan

Tim Londergan

Tim is a research contributor at SalesFuel and he writes for SalesFuel Today. Previously, he worked as a Sales Development Manager, representing products such as AdMall and AudienceSCAN. Tim holds a B.S. from the E.W. Scripps School of Journalism at Ohio University.