Same Old Song and Dance

Pipeline. The sum of all deals that a rep could potentially close at a future date (this month, quarter, year, etc.).  It’s the lifeblood of B2B sales. No pipe, no chance of hitting the year. Too little pipe, same result.  Why? Because reps can’t close what they don’t have, and the reality is that reps won’t win every deal they go after. 

A-player reps understand this completely. They never stop seeking new deals to work. The ranks of your Bs, Cs, and Ds are filled with reps who set themselves for failure by undervaluing the importance of generating new deals and actively fine-tuning a healthy pipeline. So, the rule should be to create as much pipeline as possible, right?  Just can’t get enough of it? 

Actually, no. A rep only needs to maintain a certain amount to boost their success of hitting quota — and the number has a direct relationship to the ARR dollar value of that quota. Put simply, a rep’s pipeline coverage multiple is typically a single-digit number (2, 3, 4, etc). Multiply this number times the quota amount to get the rep’s required amount of pipeline.

A Change Would Do You Good

Here’s a practical way to calculate pipeline coverage multiples:

• Calculate: How do you know how much is enough, or which multiple to use?  Start by taking a look at your win percentage for the year. Also, take your organization’s selling trends over the past 6, 12, 18, and 24 months into consideration. Assume that momentum will continue, and use your judgment for new products.  Take your win percentage and divide 1 by that number (ex. a win percentage of 25% would mean a coverage multiple of 4  —  1 / 25%). That’s your coverage multiple. Tip: Reps might have different pipeline coverage multiples based on what they sell. Be sure to filter by any meaningful territory or product segments that apply to each rep when calculating their multiple.
• Limit: Beware of coverage multiples that are too high. Too much pipeline can mean that a rep is sitting on too many parking lot deals–deals that sit at future dates while the rep pays attention to other deals. This might be a sign that it’s time to add another rep to your team. Just be sure to take a close look at the rep’s deals. Some of them could be aged out or have been pushed too many times to be real.