Understanding Pipeline Coverage: What It Is and Why It Matter

Yes, you do use a sales pipeline for better managing your qualified leads! But do you analyze your pipeline coverage to enhance your sales performance?

Surely a sales pipeline does help you keep track of your leads’ journey as they move from awareness to decision. It does equip you to make better decisions based on your potential customer’s journey.

But these are just representations! Do you have numbers to tell you whether you are on the right track or where you need to focus? 

Then it's high time you start calculating your sales pipeline coverage. 

This article gives you a brief overview of what is pipeline coverage, how it is calculated, what benefits it provides to a salesforce, the best practices to improve your pipeline coverage, and why pipeline coverage analysis is so important.

So delve into this article for more. 

What is pipeline coverage?

Sales pipeline coverage refers to the ratio between the sales opportunities in a salesperson’s pipeline to their sales quota. 

 Sales pipeline coverage= Total revenue in the pipeline/ sales quota

According to the traditional sale thumb rule, the ideal ratio of a sales pipeline coverage is 3:1. But salesforce is always advised to have twice the sales opportunity in their pipeline compared to their sales target to be on the safer side. 

For example: when a salesperson has sales prospects of $40000 in their pipeline and their sales quota is $10,000 then their pipeline coverage is calculated as 

$40000/$10000= 4:1

So according to the pipeline coverage ratio, the salesperson is rich in his pipelines. This also means that they must focus on strategizing conversation rates as the lead generation is already taken care of, supported by valuable insights from a robust Sales pipeline calculator.

While a person with a lesser pipeline coverage, says a 1:1, must focus on lead generation to improve their ratio. 

Hence, consistently calculating your sales pipeline coverage helps the salesforce to keep track of their efforts, understand where they need to improve, prioritize the potential leads in the pipeline and strategize personalized and effective sales plans for better closing of deals. 

What are the best practices to improve pipeline coverage?

There are several ways in which a sales team can enhance your pipeline acceleration tactics. Some of these key tactics are: 

• Keep track of your pipeline

Consistently keeping track of your pipeline helps you understand the effectiveness of your efforts better. Having clarity on who is a better prospectus with a higher conversion rate helps strategize sales plans accordingly to increase your conversion rate. Knowing where you stand in the competition better equips you to improve your pipeline coverage ratio. 

• Understand areas of improvement

Introspection on where you fall back and what are your strengths helps work towards improvement. The pipeline coverage formula provides a clear idea of where you need to focus. A lower pipeline coverage ratio means you need to work on lead generation and a higher ratio means focus must be on conversion rates. 

• Personalize sales strategize

Randomly sending sales campaigns to potential leads only lowers your chances of conversion. Qualified leads can be impressed by mail that is addressed to them and contains content that catches their attention. Hence, personalized strategies improve your sales pipeline and coverage ratio. 

• Stay competent 

The need to stay relevant, skilled, and competent in the industry is very crucial in sales. Upskilling yourself regularly, staying up-to-date about the market changes, and being well informed about the competitors help in better sales pipeline performance. 

Why is pipeline coverage analysis important?

Any tool and technique that helps a salesperson to improve their work must be taken into account with utmost importance. And a sales pipeline is one such tool that ensures efficient and seamless tracking of one’s progress in sales performance management. 

Hence, regularly keeping track of your sales pipeline and maintaining a pipeline coverage analysis only better the performance of the sales team to understand their productivity as well as have clarity in their sales compensation plan. 

Pipeline coverage gives salespeople a better understanding of their incentive compensation by the end of the quarter and where they need to work to improve for better results. By incorporating a reliable saas commission calculator, you can streamline the process and ensure accurate compensation management.

But simply following the pipeline doesn't ensure clarity and transparency in the way incentive compensation is managed. For such an experience in sales management automation is the best choice. 

Kennect runs your sales compensation management  in cruise mode and automates your incentive compensation plans to create transparency & achieve operational efficiency. To know more BOOK A Demo Now!

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