Last time we talked about how “weighted pipelines” distort reality.
This time we’ll dive deeper into why they do so and what can be done about it?
The simple truth is that a “weighted pipeline” is a really lousy way to calculate projected pipeline value . It simply takes the total $ value you place on a deal and based on the stage you are at with that deal, it assigns a certain percentage or likelihood of you closing that deal.
If for example, the total deal value is $10,000, being in “negotiation” stage means you project a 30% likelihood of closing that deal. This deal will be registered as a $3,000 deal under “projected revenue” on the company CRM for that month/quarter/year’s report.
All salespeople know that closing deals is either “Yes” or “NO”, zero or one. It’s totally binary. Placing any real projected $ value on a deal you are still negotiating is nothing short than crazy. Ask any salesperson or sales manager and they’ll tell you that any deal you don’t feel at least 80% certain you can close is probably well… a lost deal.
So basically you should focus only on your 80% probability deals and not waste time on pursuing any deal short than 80% probability.
But how do you determine which is an 80% probability deal?
That’s the million dollar question!
There are many different answers to that question, affected by the type of product you sell, industry, sale-cycle and so on.
BUT it can definitely be clearly-defined by the salesperson on-the-field or by any sales-manager heading a team.
It really comes down to salespeople and sales teams setting a clear set of parameters they can rely on when determining the REAL probability of a deal being closed.
Only by evaluating your pipeline worth using those clear set of parameters you can expect to assign real value to your projected revenue.
Remember, the company CRM isn’t some dumb repository where sales teams dump detached sales projections into.
Data integrity is crucial for companies in growth-mode (or in some cases – survival-mode), especially when revenue projections is on the line. So having a bunch of assumptions, detached from reality, as your projected revenue can bring you a world of pain..
On the next chapter of “Why should all salespeople wage war on “Weighted Pipelines”? (part 3 of 4)” we’ll talk more about how to drive a systematic approach into your-day-to-day actions once you have your 80% probability deals lined-up.
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