Pace and Progress
What Do We Really Want to Know?
Aside from the raw numbers, the focus of every sales forecast discussion revolves around two aspects of each deal in our sales funnel: “Are we on track to close?” and “Are we winning?” In other words, pace and progress provide the best indications of our current performance and the velocity of that performance. These are the important things.
Getting to this Understanding
How do we measure these somewhat subjective topics? How can we convert these subjective positions to an objective understanding of the timing of our deals and our likelihood of winning them?
As it relates to the current quarter's deals, we know the five questions that need affirmative answers to determine likely success or disappointment. MOIC's Pipeline Grader is how we can algorithmically determine likely near term success (i.e., are we going to hit the quarter?), but what about mid funnel and earlier stage opportunities? After all, we need accurate, objective answers to determine on which deals we should invest resources. This is the essence of "scale".
So What is this "Essence"?
Many CRM systems allow for the incorporation of sales stages to categorize our pipeline. Many systems also allow for there to be a number of days to be allocated by sales stage; however, that’s generally as far as they go. Exactly where do your number of days estimates come from and what are they based upon? What if you are going from mid-market to upmarket?
MOIC's Sales Engine color codes deals by sales stage, both on a deal and an aggregate forecast basis — consequently, we know our deal status at any time, so we can determine what the bottleneck is in our deal (if yellow), potentially kill our deal (if red) or go full throttle on the green status deals. Thus, we can make these determinations based on objective evidence (how long our deal has been in a sales stage) versus subjective “feel”.
What is This Worth to Me?
As the adage says, “Bad news early is good news”, since we can try to mitigate the situation or cut our involvement in it. While deluding ourselves with regard to the health of a deal and our likelihood of winning it may artificially make the pipeline look strong, it is fool’s gold. We estimate that the value of getting this right not only (a) materially decreases your current cash spend on sales resource to hit bookings (think a decrease of 33% of W-2 spend on base by reducing total required sales resource per period), but also (b) increases that value of an entity's equity by more than $3 million per rep over a three-year period (we are assuming conventional enterprise software company valuation parameters [5x SaaS, etc.]). These are big numbers.
Pace and progress are the two factors that we monitor across early, mid and late stages of our deals. Would you rather depend on subjective “feel” or objective facts? The choice is yours.
If you struggle with measuring the pace and progress of your pipeline, please ask Virtual Dave for assistance or email dave@moicpartners.com.
Virtual Dave is an AI-based virtual sales support tool trained on 40 years of enterprise software sales experience, available 24/7 to enhance sales process consistency.
