Why Pipeline? Because that’s your balance sheet’s start line 

For your company, the sales pipeline is more than just a forecast number. It’s where the balance sheet begins. 

Tall claim?  Consider this. If you have no idea how much you will sell next year, how would you fix your production targets, how much cash you will need and what other resources to line up?  That granted, what can you do to get better at forecasting your sales pipeline? 

What goes into a dependable pipeline forecast?  

Three things make up the sales pipeline:  1) Enquiries generated,  2) Enquiries received and   3) Offers made. 

But that isn’t quite the whole story. All sales enquiries are not equal. Each of them is at a different milestone on the roller coaster journey from being a lead to becoming a converted deal. 

Crossing each milestone would increase the probability of conversion. So, simply adding up the money values of all enquiries will not give you a dependable forecast. 

On the other hand, your sales pipeline should be the aggregation of potential probable total value of all enquiries, allowing for some inevitable conversion failures. That is where your sales forecast should start. 

Putting it to practice – The How 

3 Forecasting strategies for different types of pipelines 

Sales pipelines can typically be one of three types. For each of them a different approach will work as shown below:

• a. Pipeline of several small sized enquiries - The purchase journeys of small sized deals being relatively short, milestones can be assigned to each enquiry based on the probability of winning the order. You could have, say, 4 milestones defined to mean 60%, 70%, 80% and 90% chances of conversion. Multiplying each potential order value by the % factor at that milestone and aggregating for all enquiries on hand, should give you the probable total value sales forecast for the pipeline 

• b. Pipeline of a few large sized enquiries –The purchase journeys are longer in large sized enquiries. So, you need a different approach here. You will need to monitor the probability of success at almost every point of the journey and not just on 4 milestones. Large value enquiries are more complex as they involve decisions on where you should invest your efforts to accomplish the desired outcomes. For this to happen, you should have a good idea on the relative probability of success for each deal. This is where the Tactical Checklist method can help you. 

• c. Pipeline combines both (A) & (B) – This would call for an enquiry specific approach applying both milestone and continuous assessments depending upon the enquiry size

Master Class Takeaway

Working diligently towards getting your pipeline forecasts right will push you to monitor your pipeline consciously. You will then choose actions necessary to nudge the leads along their journey towards closure.  You will also review your progress frequently, all of which will add up to better sales results