Alright, let’s step back to Sales 101 for a second. Picture your sales pipeline. Got it? Good. I bet you were visualizing it in one of two ways — either in terms of how many opportunities it contains or in terms of how much $ value it contains. The odds are, though, that you were not visualizing it in both ways.
But you should be.
For some reason, sales managers confine themselves to using only one of these two options, but the truth is that for a complete picture of your pipeline, you must use both.
Why?
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Opportunity values can be too subjective. If you’re analyzing your pipeline by $ value, you should always keep one thing in mind: opportunity values have a tenuous connection to the truth (at best). Assigning values to opportunities depends on your reps’ instincts and your prospects’ intentions — in other words, things that can change at any moment and are often misguided. If you rely too heavily on $ value when analyzing your pipeline, there’s a good chance that it will look a lot different at the end of the quarter than it did at the beginning.
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Who cares about opportunity number? Analyzing your Pipeline by value may be dangerous, but at least it means something. Your CEO (and your Board, for that matter) doesn’t care about how many deals you win. They care about how much money you bring in. Period. Who cares if you close a thousand deals this quarter if they’re all tiny?
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Value analysis can be distorted by big opportunities? Of course, the opposite is true, too. Showing your CEO a huge pipeline (in terms of $ value) is great, but only if that value is accurate. Sometimes, a few huge opportunities (that close less often than average deals, remember) can skew a pipeline and fill people with false hopes. Always temper a $ value pipeline analysis with an opportunity # one to make sure you’re not hanging all your hopes on a few huge but unlikely-to-convert ‘whales’.
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