Throughout my entire career, there has been one unrelenting mantra that remains unquestioned gospel from the mouths of every sales leader to the ears of every salesperson:
"You need 3 times your annual quota in your pipeline"
Surprisingly, it's never 2 times, 4 times, or even 3.5 times.... Always 3 times. We know this by shorthand as the 3X Pipeline. But why?
At a glance, this supposed truism is based on the presumption that salespeople will generally win 33% of the revenue that they put into their sales pipelines. Therefore, if a seller maintains 3 times their quota in their pipeline, then they will achieve their annual quota. It's just math. HOWEVER, it is bad math.
At a high level, the 3X pipeline only works under the following conditions:
In other words, the 3X Pipeline is brilliant and mathematically accurate guidance to you IF you win 33% of the revenue that you put into your pipeline AND your deal cycle length is exactly 365 days.
But if you win less than 33% of the revenue you put into your pipeline... Missed quota. And if you have a sale cycle that is longer than 365 days... Missed quota. Hmm.
So what if you win 20% of the revenue you put into your pipeline, but your sale cycle is only 120 days? Good or bad?
Or what if you win 50% of the revenue you put into your pipeline, but your sale cycle is 450 days? Win or lose?
Or what if you are unfortunate enough to win only 10% of your pipeline revenue, but your sale cycle is a speedy 25 days? What should your target pipeline size be then?
This site is dedicated to the science of the sales pipeline. Here I offer simple calculators to enable you to enter a few pieces of factual data and know with mathematical accuracy how you are likely to perform against your quota. And as a bonus, I include similar calculators to allow you to forecast your likely revenue performance based on your current pipeline characteristics.
(Interested to train your team on how to use these calculators? CLICK HERE to request info)
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