Is your pipeline strong enough to hit and exceed your targets? Understanding your pipeline coverage is the key to unlocking consistent sales success.

In my latest “Fantasy Forecast Fallacy” video, I share a simple formula that accurately assesses your pipeline coverage so you make data-driven decisions that drive your sales success.

But what exactly is pipeline coverage, and why is it critical to sales performance? Pipeline coverage refers to the multiple opportunities in your pipeline over your sales target. If you have a quota of $100,000, 3x coverage would be $300,000. The lifeline keeps your sales engine running and ensures you have enough opportunities to meet and exceed your targets.

However, many sales professionals struggle to determine whether they have adequate pipeline coverage. Often, they overvalue early pipeline opportunities in the discovery and qualification stages of sales, and they aren’t consistent about when a buyer is close to a purchase. They rely on guesswork and intuition, leading to a false sense of security or unnecessary panic. Let’s break down the complex world of pipeline management into three essential points.

It’s all about the math

Just like determining whether you have enough pipeline deals, estimating ample pipeline coverage depends on your personal pipeline math. Use a specific formula to calculate your pipeline coverage accurately, consistent with your definitions of sales stages. Unless your sales cycle is 30-45 days, you will want to distinguish between early- and late-stage opportunities.

The pipeline coverage formula

To determine if you have sufficient pipeline coverage, use the following formula: 

(Current Pipeline Value × Win Rate in Quarter) – Quota ÷ Win Rate in Quarter. 

This will give you your pipeline delta at any given time, indicating whether you need to adjust your coverage.

Here’s an example:

– Sarah’s current pipeline value: $150,000

– Sarah’s quarterly quota: $100,000

– Sarah’s win rate in the quarter: 25%

Using the pipeline coverage formula:

(Current Pipeline Value × Win Rate in Quarter) – Quota ÷ Win Rate in Quarter

($150,000 × 0.25) – $100,000 ÷ 0.25

$37,500 – $100,000 ÷ 0.25

With a win rate of 25%, Sarah’s pipeline delta is -$250,000. This means that to have adequate pipeline coverage to achieve at least her $100,000 quota reliably, Sarah needs to generate an additional $250,000 in pipeline value ASAP.

Some strategies Sarah might consider include:

  1. Increasing her prospecting efforts to generate more leads and potential deals.
  2. Focusing on high-value opportunities that have a higher likelihood of closing.
  3. Collaborating with her marketing team to develop targeted campaigns that attract qualified leads.
  4. Continuously refining her sales techniques and approaches to improve her win rate over time.

Use a calculator

Recognizing that the formula might seem complex, I’ve created a free pipeline delta calculator. This tool provides insight into how much of your pipeline is late stage and likely to close versus early in the buying journey. It makes it easier for sales professionals to assess their pipeline coverage and make informed decisions. I recommend adding a column per week. 

Understanding the significance of pipeline math, utilizing the coverage formula, and leveraging the calculator will help you know where you stand. You can then take control of your pipeline and ensure ample coverage to meet your sales goals. 

#SalesStrategy #PipelineManagement #FantasyForecastFallacy #CurveballCoaching

Previously posted on LinkedIn. Written with assistance from Glasp.co, ChatGPT 3.5, Claude.ai, Grammarly.com and Dante-ai.com.