The sales pipeline, or funnel, gets a lot of attention, from CEOs to sales professionals and everyone in between. The CEO often gets asked about the pipeline on analyst calls, while sales managers are constantly looking at their sellers’ pipelines to see if they have the right size, shape and speed. In some ways, the pipeline equals potential, and almost everyone, from investors to athletic scouts to employers, wants to figure out how to realize the potential of someone or something.
About 12 years ago I consulted with a Vice President of Sales who worked for a large Fortune 50 financial services firm. He was having, like many VP’s of Sales, an issue with his pipeline yielding enough so he could hit his number. If you know anything about business-to-business (B2B) sales, you know that the sales pipeline is constantly scrutinized to ensure a seller has enough pipeline opportunities to hit quota or goal.
In general, most companies assume sellers will win one-quarter to one-third (a win ratio) of their pipeline value, all things being equal. Thus, in a lot of cases, the pipeline value needs to be 3 or 4 times the quota.
As you take sales cycle time into the equation – for example, it takes 90 days to close an average deal –the pipeline math can be a bit more complicated.
Regardless of your own answer to the question let’s face the facts. If you stop everything you are doing right now and call 100 sales reps across a diverse industry pool and ask the following questions you WILL get the following answers: