A few years ago, I used to manage a sales team part-time.
Every Friday afternoon at 3 pm, we’d have our weekly forecast meeting where all the reps would go through their sales pipeline for the following week.
I would unfortunately come out of those meetings more confused than from a Christopher Nolan movie.
Not even taking into account whether the pipe matched the sales targets and each rep’s personal quotas, here are a couple of things that were wrong:
- Each rep used a different template
- Some reps had way too many opportunities in their pipes, and some had none
- Most of the probabilities and insights were not aligned with what I’d find in the CRM
- Some reps had a tendency to accumulate pending deals created over a period of weeks or months without closing or killing them
The short conclusion?
Their pipes were built on gut feeling, not data. And while some people have great instincts, many don’t.
In fact, that’s why at least 24% of forecasted deals go dark.
Have you encountered any of these issues in your own forecast meetings?
Read on if you want to see how to make these wrongs into rights.
It’s crazy and frustrating how much energy it takes for a team to learn how to use the right template. Or the same template. And to fill it out properly.
Admin is definitely not a sales rep’s best skill. And as a sales manager, I would definitely prefer a sales rep that can close but has bad admin skills than vice versa.
However, to get a true idea of your team’s sales pipeline, it’s critical that the data align. So whether you use a spreadsheet template, take the data directly from the CRM, or use a sales pipeline management tool, make sure your reps do their admin in time and correctly.
It will make it easier for a sales manager to see the whole picture.
Sales projections are based on reps’ gut feelings.
They’re also based on their own calculations. They know that the more they put on their sales pipelines, the more likely a sales manager is to increase targets halfway through the month or quarter.
I’ve seen reps close deals in what seemed to come from out of nowhere, but when checking in the CRM afterward, I would find these deals had been open for quite some time and should have been forecasted.
Therefore, trust between a manager and the team is really important. It’s a win-win situation if every potential deal is actually forecasted:
- The sales manager has a true picture of the sales pipe.
- The sales rep can get support on any of the potential deals he or she might need help with.
This is the heart of pipeline management. Unfortunately, forecasting is still based on gut-feeling for too many sales reps.
There are four sales benchmarks that winning teams used in 2021. One of them is pipeline coverage.
You don’t want to realize too late that you don’t have enough deals in your pipeline to meet your monthly or quarterly goal.
Pipeline coverage, or the ratio between existing deals in the pipeline and the quota needed to close, is an important benchmark that allows sales leaders to strategize and plan for hitting their targets.
Pipeline coverage often depends on the company’s win rate: 3 or 4 times an average win rate would mean robust pipeline coverage for most sales leaders.
That doesn’t mean pipeline coverage is a “set it and forget it” metric, though. Sales leaders should be prepared to adjust their pipeline metrics down as the company grows.
Here’s a list of other metrics you should consider:
- Opportunity Win Rate (%) - how many deals do you win of those you create?
- Average Contract Value ($)
- Sales Cycle length (days) - how long does it take someone to go from lead to closed won?
- Conversion rate per sales stage (%) - how many leads move from lead to opportunity, then to proposal & finally into contract stages?
- Sales efficiency (score) - total revenue divided by the cost of sales & marketing. The higher the number, the better :)
- Average Quota attainment (%)
- Sales Team Happiness (NPS score)
- Collateral usage (count) - how many times do reps access & send helpful materials in the sales process?
I still have very vivid memories of those forecast meetings I ran. I remember one rep who would list every single deal she ever closed in her forecast, week in, week out. As if to remind me, even when she had a poor pipe or a poor sales month, that once upon a time, she had been a closing queen.
In the end, forecasting will never be an exact science. But it should never be a guessing game, either. There’s so much data available these days that every organization, small and large, should take it more seriously.
Make sure to check out our sales engagement ultimate guide to get actionable tips and improve the closing phase of your sales cycle.