When most of us think of “Sales Pipeline”, we tend to think of the classic funnel view. We categorize opportunities as Qualified, Proposed, Negotiate, and Closed Won or Lost. We expect the largest number of opportunities at Qualified and the number of opportunities to diminish as we migrate towards Closed Won or Lost. This blog post will explore why most Sales Pipelines are not actually a funnel at all, and will provide a list of metrics to help you check the health of your sales pipeline.
This view is valuable, especially when you look at the number of opportunities by stage over time. It provides great insight into the number of days and the value of opportunities as they move from stage to stage within the funnel. This type of measurement build the foundation for measuring Sales Velocity, which will be a topic for a future blog post.
As dominant as the classic sales funnel appears in literature and websites, our experience at ORM shows that many companies have a very different Sales Pipeline composition. Most of the Sales Pipelines we observe are shaped like a vase. There are more opportunities in the Proposed stage than the Qualified stage. The primary reason for this is that opportunities enter the sales pipeline at the more advanced stage of Proposed or Negotiate, instead of Qualified. There might be good reasons for this, but many times it is Opportunities that are being worked prior to them being entered in your CRM. Unfortunately, as a sales manager, opportunities that are being worked outside of the CRM deny you visibility and the ability to predict how long it takes to move an opportunity through the sales process.
Based on seeing Sales Pipelines of many shapes, we have created a Sales Pipeline “Health Check.” You can use it to help understand your Sales Pipeline and make sure you have the visibility into your business that you deserve. The 16 metrics outlined below should be evaluated weekly and compared through time to understand if your CRM quality is trending in the correct direction.
Data Quality Metrics
The following are standard CRM metrics to measure the overall quality and completeness of your opportunities. Reviewing these metrics weekly helps you catch anomalies early.
- Total open opportunities in the CRM
- Opportunities without selling stage designation
- Opportunities with missing or no products
- Opportunities with zero value
- Opportunities missing a value
- Opportunities with expected close date before the opportunity create date
- Opportunities with past due close dates
Stage Transition Metrics
The following metrics are based on Closed Won or Lost opportunities. These are analyzed separately from the rest of your Sales Pipeline. They allow you to determine if your selling process is utilizing all of your stages and if opportunities are migrating as you expect. In addition, when reviewed over time, they will help you determine if your team is progressing in the direction you desire.
- Total opportunities Won and Lost
- Opportunity stages Qualified to Won/Lost
- Opportunity stages Proposed to Won/Lost
- Opportunity stages Negotiate to Won/Lost
- Opportunity stages Qualified, Proposed to Won/Lost
- Opportunity stages Qualified, Negotiate to Won/Lost
- Opportunity stages Proposed, Negotiate to Won/Lost
- Opportunity stages Qualified, Proposed, Negotiate to Won/Lost
- Opportunity straight to Won/Lost
ORM specializes in sales and marketing predictive analytics and optimization. You can leverage our CRM Health Check to find out the shape of your Sales Pipeline. Do you have a funnel, vase or a hexagon? Has the shape changed over time? If you would like to answer these questions, or if you would like information about ORM Technologies, please let us know at email@example.com.