When people say “sales is a science,” they are referring to the stringent processes and careful analyses that make up selling best practices. One of the most important analyses in sales science is sales pipeline history analysis.
Before you can analyze your pipeline history, you will need to know all about your sales pipeline. This means implementing a CRM system and a concrete sales process. Once these are in place, your sales reps can track their sales activities with every opportunity they pursue.
The volume of data from these activities grows gradually into a comprehensive pipeline history record, allowing you to see how opportunities trend over time, forecast more accurately, and coach your reps based on hard data.
(For even more detailed information on pipeline management, check out our FREE eBook: The Definitive Guide to Pipeline Management.)
What does it mean to analyze my pipeline history?
To analyze your pipeline history, keep track of all the metrics involved in your sales pipeline as it evolves over time. These metrics include the number of open opportunities in your pipeline, average dollar value and age of closed-won opportunities, and lead-to-conversion ratio (the average percentage of opportunities that close-win based on historical data).
Pipeline history analysis is great for:
- Evaluating the overall growth of your business. Analyze the number and value of opportunities in your pipeline from month-to-month and quarter-to-quarter to see whether overall business is growing over time.
- Tracking open opportunities. Pipeline history analysis is the best tool for reviewing and managing open opportunities. Don’t just adopt the industry standard of a 3x pipeline-to-deal ratio – this number may not apply to your specific business and team. Study historical pipeline data and conversion ratios over time to gain more accurate insight into how much pipeline is necessary for your sales reps to hit their quotas.
- Analyzing opportunities over time. Your pipeline history allows you to assess opportunities over multiple selling periods. Review what has changed from the previous selling period. How is your opportunity count trending so far this quarter? Did you have more opportunities this month than you had last month? How about compared to 2 months ago? This analysis will also reveal which pipeline stages have trended well over time.
- Forecasting. Without taking historical pipeline into account, sales reps tend to forecast based on intuition. Don’t just blindly accept your reps’ forecasts – clean them up using hard data from their pipeline history. Has an opportunity been in the pipeline for 65 days but your average sale cycle is 30 days and your rep hasn’t touched the opportunity in 3 weeks? It probably does not belong in the forecast unless there is a good reason. This kind of pipeline history analysis improves forecasting accuracy dramatically.
- Evaluating your sales reps. Use pipeline history reports to evaluate how your reps’ pipelines have evolved over time to help you understand whether your reps’ efforts are resulting in pipeline growth. You need to be able to identify which stage(s) in the pipeline your reps struggle with so you can coach based on specific weaknesses shown in the data, rather than relying on intuition.
Analyzing your team’s pipeline history is an important way to drive smart sales decisions. Does your team analyze their pipeline history?[contentblock id=34 img=gcb.png]