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Pipeline measures the total value of active pipeline deals with a pending outcome.
Any sales team that wants to achieve consistent growth needs to maintain a healthy pipeline. This metric is critical for forecasting revenue and is useful for sales planning. For example, if your pipeline value is high, you might invest more in sales enablement tools or staff to ensure you can effectively handle and convert these opportunities.
Number of Active Deals x Average Projected Amount
To calculate Pipeline, multiply the number of active deals by the average projected amount for each deal.
It's important to check that the pipeline is balanced in terms of the numbers of deals at each stage. A heavily weighted pipeline at the final stage will dissipate quickly whilst a pipeline that's all in the first stage could take a long time to reap rewards. Regularly review and remove dead leads from your pipeline to keep it clean and focused.
Focusing solely on Pipeline value can lead to neglecting the quality of the leads within it. A high Pipeline value inflated by low-quality leads that are unlikely to convert is less valuable than a lower pipeline value composed of high-quality, well-qualified leads. Also, don't expect leads to move through your pipeline at a similar pace; sales processes are complex and nonlinear.
