Pipeline Math: How Many Active Prospects Do You Need?

The Sales Pipe May Not Be As Full As You Think

Are you overestimating the value of your sales pipeline? It may not be as full as you think.

Sales skills: calculate your pipeline the right way

Photo by olly/dpc

“The ball don’t lie.” – former NBA great Rasheed Wallace

Sales Pipeline Math: A Story Problem

This comes from Jeb Blount’s new book Fanatical Prospecting:

Becky has 30 prospects in her pipeline. Her closing percentage is 10%. She closes one deal. How many prospects remain in her pipe?

At first glance, the answer seems easy – she had 30, remove one, now she’s got 29? Right?

Wrong.

As Blount points out, the real answer is 20.

Here’s the math. Becky has a 1 in 10 probability of closing a deal. That means on average she will close only one deal out of 10 prospects she puts in her pipeline. The net result is when she closes one deal, the other nine are no longer viable prospects. This means her pipeline will be reduced by 10 prospects rather than one. She must now replace those 10 prospects to keep her pipeline full.

This is why when you get on a hot streak and close a bunch of business in a month, you wake up the following month with nobody left to close. Your prospect pool has suddenly evaporated, and you wonder where everybody went.

Closing a sale creates new responsibilities: credit apps, production forms, creative meetings, collections. It is easy, when you are busy, to put off prospecting. You take a look at your pipeline, figure you’ve got plenty left, and stop making new business calls.

Here’s the problem: making a sale doesn’t just take one prospect out of the pipeline. It takes that one, multiplied by the number of active prospects you need, on average, to close one sale.

The next time you have a quiet moment, do some calculating.

  • How many proposals does it take, on average, to close a sale?
  • How many proposals do you have under active consideration right now?
  • How many prospects will each sale take out of the pipe?

The ball doesn’t lie in basketball, and the math won’t lie on your prospect list. Run the numbers, and then get on the phone.

Question: What’s the biggest struggle you have in keeping your sales pipeline full? You can leave a comment by clicking here.

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Categories: Phil Bernstein, Sales, Sales call in a box
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