Many of us look to get a strong forecast steer based on a weighted stage model. The idea being that if we have £100k at stage “negotiation” and our weighting is 40% we’re good for £40k, right?
We need to start breaking our pipeline down, not by stage but by category, and then understanding what proportion of each category we typically win in a month.
The categories are:
- Primary Pipeline – Fresh new pipeline booked for the month
- Pushed Pipeline – Pipeline that was scheduled for last month but got pushed back to this month
- Plodding Pipeline – Pipeline that has been pushed back several times and that we now carry in the current month
Now, let’s say that the proportion of our monthly revenue on average comes from each as follows:
- Primary Pipeline – 50%
- Pushed Pipeline – 35%
- Plodding Pipeline – 15%
Let’s also suggest that our win rates for each are as follows:
- Primary Pipeline – 20%
- Pushed Pipeline – 18%
- Plodding Pipeline – 10%
When assessing pipeline, it’s crucial to understand what proportion of each category you have available. Many Leaders focus on “coverage” like 5x and so on. So, what if this 5x is 50% plodding, 30% pushed and 20% primary. There is no way that if you apply your stage weightings this results in the same outcome.
This is one of the primary reasons forecasts are inaccurate.
So, if we can compare our live pipeline category proportion vs. our average, what can we do with this information?
- Get a more realistic forecast
- Spot all the “plodding” opportunities
- Challenge your salespeople’s commits
- Create primary pipeline generation targets
- Clean up your pipeline and work from a more reliable data set
Give it a try.