I’m no Mozart, but over the years I’ve learnt a thing or two about the importance of deal composition in the sales pipeline. In particular, when it comes to submitting a credible and reliable forecast to the powers that be.
Initially, there are three key considerations when looking at sales pipeline composition:
- Deal Value – Too many big risky deals in the pipeline and we’re all set for a nervous finish
- Deal Age – Faster moving deals have a higher likelihood of winning, so we can’t be relying on too many golden oldies
- Salesperson – There’s more variance here than you might think. For example, if your hopes are resting on the rookie, then you better get stuck in and help
How do we do this?
Let’s cast aside salespeople for now as calculating their individual win rates is easy enough. Deal Value and Age on the other hand require a little more work.
Looking at the last 12 months+ worth of data, what have the largest and smallest deals been that your team have won? Remove any outliers. Now, we have a range which could be say £5,000-£70,000.
Next, use good judgement to split this range up into groups. For example, £5,000-7,500 (possibly your busiest range), £7,500-15,000, £15,000-30,000 and £30,000+. For each category, work out the win rate. When looking at current pipeline, you can now quickly identify if you are carrying too much risk or are well within your comfort zone.
The exact same works for age, enabling you to spot if you are carrying too many old deals, and should this be a bad thing, how this might impact your forecast.
If done right, this will help you spot opportunities and threats in your sales pipeline well in advance of close day.
Read my guide to sales pipeline management for more sales pipeline tips.