How’s your pipeline looking?
“Dry as a bone…”
For anyone familiar with sales lingo, you’ll certainly understand the meaning behind these two (polar opposite) phrases.
One response indicates that a salesperson has several warm connections that have expressed interest in their product or service. 🤑
The other means the salesperson had better gear up for a lot of cold calling. 🥶
The issue with these types of descriptions, however, is that in modern sales, they aren’t precise enough to be helpful. If you use a binary categorization of your pipeline—good or bad—it’s not clear exactly what your next action is to fix (or take advantage of) your situation.
If you can use sales pipeline metrics to specifically describe the state of your contact list, you can examine the areas that need improvement and focus your actions there.
Metrics, of course, are how we measure things, but it takes more than just lead volume to know if your pipeline is truly healthy. Let’s say that you do have more detail about your pipeline besides just “jacked” or “dry.” You actually have some numbers to support your description. But are they good enough?
For example, which is a healthier sales pipeline?
- Total opportunities: 22
- Average deal size: $1,785
Trick question! It’s impossible to tell which is a healthier pipeline (and even less possible to plan your next action) with the data provided.
The point of this little exercise is to illustrate that there are nine key metrics that you want to have on hand at all times.
- Average deal size
- Stage conversion rate
- Qualification rate
- Opportunity creation rate
- Pipeline coverage ratio
- Sales cycle length
- Pipeline velocity
- Win rate
- Future revenue (forecast)
By having a deeper level of analysis of your sales pipeline that’s actually backed by data, you’ll be able to spot bottlenecks as well as review feedback on things that are going well. You’ll notice if your pipeline is top heavy, or if you have a lot of deals that are near the finish line that just need a nudge. Point is, armed with that type of data, you’re able to prioritize and plan your activity for maximum efficiency.
In this infographic we’re going to provide a reference to these nine key sales pipeline metrics and their formulas so you can visualize where they belong in your workflow.
So we’ll ask you one more time: How’s your pipeline looking? 😎