So what is a sales pipeline?
According to Wikipedia it’s a part of a sales process:“A sales process describes the individual steps salespeople take from initial contact with a potential customer, or prospect, to qualifying that prospect into a lead, and further validating that lead into a sales opportunity followed through the different stages until closed. All sales opportunities arranged along each of the sales steps that make up your sales process is what the sales pipeline represents.”
Ok. So what is a “Weighted Pipeline” or “Weighted target“?
“The weighted target is equal to the sum of the total opportunity values in each sales step multiplied by the probability of closure for that step.” – David Brock.
In other words, you should have 3 times more active opportunities in your pipeline than your actual sales goal. These are all fancy terms but let’s bring it back down to reality for a sec.
As a sales rep you have your leads, right? You qualify those leads. They become prospects which then hopefully turn into opportunities. These opportunities are built of stages which represent the maturity or validity of the deal up to the point of either winning the deal or losing it.
In the “weighted value” game each stage in an opportunity is represented with a certain %. If for example you have 5 stages on your opportunity then each stage is “worth” 20%. Being on step 2 (still around lead qualification mode) means your deal’s weighted value is 40%. being on step 3 (still negotiating with the prospect) means your deal’s weighted value is around 60%.
So if you have 10 deals on your pipeline each worth $10,000 and those deals are all in “negotiation” stage (60% probability) then your total weighted pipeline is 10 X $6,000 = $60,000…
Hmm.. REALLY ?!
If you ever worked in sales, you know this system makes no sense. It is completely upside down. When you have 10 deals you’re currently only negotiating with, then you definitely CAN’T value your pipeline in $60,000. In the real world such a pipeline’s worth would be closer to $0. So what’s missing in this system?
I think is simply missing REALITY !!
A weighted pipeline distorts reality. It distorts reality in a way which seeds unclarity and mistrust between sales reps and their management. But most importantly it turns the whole pipeline concept into a big joke.
An employee monitoring tool rather than a true sales tool empowering sales reps in closing more deals.
So What’s the alternative? That’s a good question.
Unfortunately there’s no single definite proven answer but we’ll try to reach a conclusion together by the end of these 4 parts. On the mean time – always be closing!
About the author: Yoni Dariel is Co-Founder and CEO of ONDiGO. Prior to ONDiGO he Co-founded several start-ups. Yoni has vast experience in Sales and Business development. You can follow him on twitter on @YoniDariel