Our goal as sales people is to help our customers move through their buying process. We want to help them move as rapidly as possible to making a decision (hopefully for us). From our point of view, as sales professionals, we monitor this as progress through the funnel or pipeline. Ideally, on a monthly basis, we want to see new deals flowing into the pipeline, deals closing and moving out of the pipeline, and deals moving from stage to stage within the pipeline.
A couple of months ago, I wrote about Pipeline Flow/Velocity. It’s one way of looking at whether things are moving through the pipeline or funnel appropriately. Another simple way of looking at this is by looking at the % of Opportunities Advanced.
We measure the % of Opportunities Advanced by looking at the Total Number Of Opportunities That Have Moved To A New Stage Of The Sales Process as a Percentage of Total Opportunities In The Funnel. (# of Opportunities Moved/Total # of Opportunities). As a side note, you’ll notice that to be able to measure and track your performance you have to have a strong sales process in place and you have to be using it. Without this, the number is meaningless, it gives you no clue of where you are or whether you are making progress (but if you don’t have a sales process, you probably aren’t making progress!)
For example, if we have 50 opportunities in our funnel, and 10 of those have moved from to a later stage in the sales process, the % of Opportunities Advanced is 20%. But be careful in looking at this number, it can be deceptive. For example, if you disqualified and abandoned a lot of opportunities, the % of Opportunities Advanced might be very high–but this number is actually a false positive. You might think you are moving things through the funnel, when actually you are moving things out of the funnel. Some organizations manage this by looking at progress through the pipeline only after qualification (but then if you abandon opportunities you have the same problem).
Whenever you look at any of these numbers, remember the number is just an indicator, you need to drill down and look at what is causing the number to be what it is.
If the % of Opportunities Advanced is decreasing or below your target level, look at the opportunities that are stalled or stuck. What’s causing them to be stalled or stuck? What can you do to get them moving? Are they still real opportunities?
To get things moving, put together a strong deal strategy. Look beyond the next step, but look at the next several steps. Look at what calls you need to make, on who, to move the deals forward.
We get busy with all sorts of activities. Sometimes we’re busy, but not making progress. Make sure your opportunities are moving forward, measure the opportunities advancing.
In my experience you need to immediately provide a breakdown of the indicator for % of opportunities advanced otherwise people will reach the wrong conclusions. As Dave mentions, the indicator can provide very deceptive numbers due to abandoned deals, large volume of new opportunities, etc. Anything that influences the fraction (# of Opportunities Moved/Total # of Opportunities) heavily without really implying progress leads to deception.
A breakdown might look like:
# of Opportunities Moved/Total # of Opportunities over period
New Opportunities this period
Won Opportunities this period
Lost opportunities this period
Abandoned opportunities this period
Moved opportunities this period
Stalled opportunities this period (e.g no move in this period)
Stuck opportunities this period (e.g. no move last 2 periods)
Only by providing the breakdown can you prevent wrong conclusions. The way the Indicator is computed is also important: do new opportunities count as moves? Does abandoning an opportunity count as a move?
I have experienced a situation where the indicator for pipeline movement for a business unit went down dramatically. It turned out that they had put in hundreds of leads (which were not counted as moves) after a marketing campaign, thereby increasing the total number of opportunities but not moving much.
A month later they had abandoned about 85 % of the leads after serious qualifying (not counted as moves), and the pipeline indicator was a lot higher, as the 15 % was advanced, some of the other opportunities had been advanced, but most importantly the total number of ooportunities went down.
The indicator fluctuations made senior management worry, while bottomline the unit had done a great job of lead generation.
What I hopefully have made clear:
.be careful when you define the formula for # of Opportunities Moved/Total # of Opportunities (you need to be clear on what is a move, which opportunities do I count, when should leads be entered into the pipeline, …)
.always provide a breakdown
.make sure that those that will interpret the Indicator are aware of the pitfalls, provide some explanations, examples of special situations.
Ron, this is outstanding! Thanks for drilling down another level. As I mentioned in the post, it’s important to understand what the number really means. You’ve outlined it in a very comprehensive manner! Thanks for joining the discussion with such a great contribution!