As we discussed in KPI Series #1 Leading vs Lagging KPI’s, there are leading KPIs that sometimes get missed or simply don’t get enough attention.

The first one I want to dig into is pipeline coverage.

Before we go any further, let's make sure we're speaking the same language. Pipeline coverage is really just asking: Are you working enough qualified opportunities to have a realistic chance of hitting your sales goal?

Sounds simple, right?

Over my 24 years of coaching salespeople, I have learned one thing: salespeople tend to be VERY optimistic. Every good conversation is (and I quote) “going to lead to a sale.”

Sales leaders, you know exactly what I'm talking about and sales reps, if your honest with yourself, you will probably agree.  “I had a GREAT conversation with them. They're going to buy.”  I'm not from the South, but sometimes my response is simply… bless your heart.

I actually love that optimism. Great salespeople need it! You need the ability to hear “no,” pick yourself back up, and believe the next conversation could be the one. But let's also be realistic. Most conversations do not result in a sale. And they certainly don't result in an immediate sale. If they did, well… everyone would be in sales.

So, let's go fishing.

Imagine dinner tonight depends on you catching three fish. Would you cast your line three times and assume you're going to catch a fish on every cast? Of course not. You'd make a lot more than three casts because you know some casts will produce nothing. You might get a bite and lose it. You might hook one that gets away. And hopefully, after enough casts, you end up with the three fish you needed for dinner.

Your sales pipeline works exactly the same way.

If you need $1 million in closed revenue and your average win rate is 25% (don't worry, we'll talk about win rate later in this series) having $1 million sitting in your pipeline isn't enough. You need more opportunities than the amount you ultimately need to close.

You need enough casts. Because every opportunity isn't going to become a customer. That's pipeline coverage!!

And when you evaluate it correctly, pipeline coverage can tell you pretty quickly whether you,  or your sales team, have enough opportunities moving to realistically get to the number. So, what does that look like?

So, what earns the right to be in your pipeline and how do you measure it?

First, your pipeline needs stages (typically outlined in your CRM). I typically use a six-stage pipeline. It may look something like this:

Qualified Lead → Business Need Identified → Solution Evaluation/Demo → Negotiation → Proposal Review → Contract Sent

Your stages may look a little different depending on your business, and that's okay.

The critical part of pipeline coverage isn't just whether you have enough conversations happening. It's whether those conversations are actually moving opportunities through the sales process.

Let's go back to our $1 million goal.  Just because you have identified $1 million worth of potential business doesn't mean you're going to close $1 million this month. Where are those opportunities? If the majority of that $1 million is sitting in Qualified Lead or Business Need Identified, you probably don't have $1 million that's ready to close. You have $1 million that might close eventually.

Big difference.

Understanding where every opportunity sits in the sales process gives you a visual of what's coming down the road and helps you determine whether you have enough coverage at each stage to ultimately hit your number.

Now, here comes the math.

I've worked in organizations where we needed to maintain 2x - 4x pipeline coverage. Find your number!

In simple terms, if you need to close $1 million,  and you are running a 2x pipeline, you would want at least $2.0 million in a qualified pipeline working toward that goal.

Your number may be different. Your win rate, sales cycle, average deal size, and business model will all play a role in determining what healthy pipeline coverage looks like for you.

The important thing is: know your number.

Here's why I consider pipeline coverage a leading KPI.

Remember, the entire point of a leading KPI is that it gives you information while you still have time to do something about it.

If my goal is $1 million this quarter and I get to the end of the quarter with $700,000 in sales, that's a lagging KPI. It tells me what happened.

Useful? Absolutely. But I can't go back and change it.

Pipeline coverage gives me a warning before I get there. If I know I need 3x coverage to reliably hit my number, and I look at my pipeline today and only have 1.5x, I have a problem.

But more importantly, I still have time to do something about it.

That's the power of a leading KPI.

Now you can ask:

• Do I need more prospecting activity?
• Am I having enough conversations?
• Am I converting those conversations into qualified opportunities?
• Are opportunities getting stuck in one particular stage?
• Do I have plenty at the top of the funnel but not enough moving toward proposal or contract?
• What activity do I need to increase right now to change the outcome 30, 60 or 90 days from now?

This is why I don't believe pipeline reviews should simply be, “Tell me what's going to close this month.”

That's forecasting.

A good pipeline review should also ask, “Do we have enough coming behind it?” Because if the answer is no, that's when you coach the activity, not after the rep misses the number.

And if you're a sales professional reading this, don't wait for your leader to tell you that your pipeline is light. Know your own number. Look at your pipeline. Know your coverage. Pay attention to where your opportunities are sitting. And if you see a gap, increase the activity today that can change your results tomorrow.

One free tip before I go...

A healthy pipeline only works if you're having the right conversations along the way.

Throughout my career, I've used methodologies including MEDDPICC, MEDDIC and SPICED, and eventually developed my own methodology called SCIENCE.

I'm less concerned about which methodology you use and more concerned that you use one consistently.  If you don't know much about these methodologies, reach out to me!   I can help you find one that works. 

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