Executive summary:
Pipeline coverage = Total sales pipeline/Total quota for the same time period
But what’s the optimal ratio here? Read on to find out.
Sales teams pay attention – this is your ticket to quota-crushing success. Think of it this way: your pipeline is your offensive line, and you're the quarterback aiming for those consistent wins. Pipeline coverage is your key player, ensuring your pipeline is full and brimming with valuable opportunities at various stages.
It's not about quantity alone; quality matters, too. This metric gives you the insights needed to determine if you're geared up to exceed your quota.
This metric is all about giving reps and leaders a clear snapshot of where they stand and how well they're doing.
Picture it like a compass guiding you through the sales wilderness. It's a simple ratio or percentage that measures the relationship between the total value of opportunities in your sales pipeline and the total quota set for the given period.
If you're thinking, "Aha, that's cool, but why should I care?" Well, a low pipeline coverage ratio is like a caution sign on the road – it indicates you might be steering off course. Early detection of a weak ratio allows you to adjust your strategy and steer back on track to hit that target dead center. It's your proactive roadmap to success!
How to calculate sales pipeline coverage?
Now, let's roll up our sleeves and tackle the pipeline coverage calculation head-on. It's as easy as pie: just divide the total value of your pipeline by the total quota and boom, you've got your pipeline coverage ratio.
For instance, if your quota is $1 million and your current pipeline stands at $4 million, your pipeline coverage ratio is 4:1 or 400%.
But wait, is this pipeline coverage ratio a thumbs-up or a red flag?
Well, it's not a one-size-fits-all answer. Think of it like a puzzle with a few missing pieces. The win rate is the secret sauce here.
If your win rate is around 25%, then a 4:1 pipeline coverage ratio is like a sweet spot for hitting that quota.
Of course, a slightly higher ratio would be the cherry on top, but if your coverage drops below 4:1, there's a serious chance you might be singing the "missed quota" blues this quarter.
Calculating this ratio is a piece of cake, and you've got options! The manual way involves extracting data from your trusty CRM and plugging it into spreadsheets. It's like a digital math workout.
CRMs like Salesforce and HubSpot have got your back – they offer built-in tools to do the heavy lifting and calculate the ratio on your behalf.
But, if you're part of the big leagues, you'll probably want to flex with specialist software that's tailored for this task. Think of it as upgrading from your bicycle to a turbocharged engine. These tools crunch the numbers and give you some serious analytical insights to play with.
How frequently should you calculate pipeline coverage?
It's like hitting the gym – the more consistent, the better the results.
Picture this: the cream-of-the-crop sales teams are on it every single day, keeping a hawk-eye watch on those numbers. It's like having your finger on the pulse, giving you real-time reality checks.
These daily check-ins help set the expectations right and keep the ship sailing smoothly. And let's remember the superpower of quick correction.
If there's a dip in your coverage, you're not waiting for the stars to align – you're jumping into action pronto.
But daily can be intense. So, if you need more time to get ready for that full-throttle commitment, once a week is your golden ticket.
Wrap Up
If you’re a small or mature team with multiple pipelines, calculating, monitoring, and managing your pipeline is a sure-shot way of hitting your quota and raking in those commission cheques.
