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.
One of the areas I’ve analyzed for clients is something I call “pipeline dynamics.” It looks at the ebb-and-flow of deals, or opportunities, in the pipeline and the attributes about them, as well as the final outcome – did you win or lose? With one client, deals that were created and dispositioned in the same quarter had a win ratio of ~50%, while those that had ‘pushed’ a quarter or two had a win ratio ~15%. The results were remarkably consistent from quarter-to-quarter.
One principle in sales is that a deal that is still ‘open’ is at risk – risk from competitors swooping-in, risk from market shifts, and a risk of changing investment (budget) priorities. With the aforementioned client, we found that for ‘in-quarter’ wins, the customer was more likely to have a compelling event, an earmarked budget, and the sellers were talking with key decision makers. ‘Out-quarter’ deals were less likely to have those attributes, especially the assigned budget one.
In terms of pipeline dynamics, some of the key categories include:
- New opportunities in period
- Wins/Losses in period
Most of the above are self-explanatory, but moved in/out refers to whether the close date is changed to be within-the-quarter or moved-out a quarter or more, while written-up or down refers to the overall deal size – whether it increased (written-up) or decreased (written-down). You can also have a combination of written-down and moved-out or some other mix. In general, if a deal moved-in and was written-up, that was a very good sign that the client would win and that their customer had a sense of urgency to close.
The message in all of this is that there is significant sales intelligence to be gained by closely analyzing the dynamics of your pipeline. By looking at real-time changes, you may be able to ‘save’ a deal or put more resources on one that is providing favorable signals. The intelligence also helps your sellers’ qualification efforts. In the client example mentioned above, the sales professionals began to really drill-into a customer’s priorities and budget, while fully understanding how choices were made around their allocation of funds and resources. One applicable quote that I’ve seen lately on LinkedIn is that “You either win or you learn.” I bet your pipeline is trying to teach you something.