Understanding the Connection Between Your Sales Pipeline and Sales Goals

When setting sales targets and building your sales pipeline, it can be a daunting task to determine the right amount of activity needed to achieve specific sales goals. This article aims to provide a clear methodology and insights into how to balance your sales pipeline with your sales goals, ensuring optimal performance and maximizing your returns.

Sales Pipeline Targets

Bottom-line sales targets are often associated with monetary goals such as revenue income and net profit. Establishing these targets is crucial for setting realistic expectations and guiding your sales team's efforts. However, to truly understand what goes into achieving these targets, it is necessary to break down the process into more manageable segments.

Lead Generation Targets and Activity

Once you have your bottom-line sales targets, the next step is to focus on lead generation targets. These targets should focus on the number of appointments and activities needed to qualify leads into genuine sales opportunities. By combining these two aspects, you can reverse engineer the target revenue number and determine how many leads need to be placed at the top of your funnel.

By utilizing known historical conversion rates at each stage of the pipeline, you can build a robust model that accurately predicts the level of activity and leads required to achieve your goals. This approach not only helps in understanding the necessary effort but also in optimizing the process for better returns on investment.

Applying the Sales Velocity Formula

The TAS group has developed a framework to help sales teams better understand and optimize their sales pipeline. This framework, known as the Sales Velocity Formula, provides a simple and effective way to calculate the necessary elements of a successful sales strategy.

Introducing the Sales Velocity Equation

The Sales Velocity Equation, as developed by the TAS group, can be summarized through the following formula:

Expected Pipeline Value Sales Goal / Conversion Rate

This can be further detailed to:

Expected Pipeline Value (Number of Leads(Expected) × Average Value per Lead)

To better illustrate this, let's assume a conversion rate of 10% and a sales goal of $10,000 in a month. To achieve this goal, you would need an expected pipeline value of $100,000. This value can be divided into various segments, such as 10 leads each valued at $10,000 or 20 leads where 10 are valued at $5,000 and the remaining 10 at $10,000, among other combinations.

Further Resources and Insights

For more detailed insights and practical applications, here are some relevant reading materials:

The Sales Velocity Equation: Making Sales Teams Smarter, Faster, and Better The TAS Group - Sales Velocity How to Grow Sales with the Sales Velocity Equation

These resources can provide you with a comprehensive understanding of how to align your sales pipeline with your sales goals, ensuring that your efforts are directed towards achieving the most significant impact.

Conclusion

By carefully balancing your sales pipeline with your sales goals, you can enhance your sales performance and achieve more significant results. With the Sales Velocity Equation and a strategic approach to lead generation, you can optimize your sales process and maximize your returns on investment. Utilize the insights provided in this article, and the additional resources listed, to refine your sales strategy and achieve your targets more effectively.