Pipeline Math

Most founders track sales by what closed. By then the quarter’s work is done. The number to watch is how many first conversations you’re starting, and what share move through each stage.

Stages are events

Define each stage by something that happened and can be counted, not by a feeling about the deal. The same rule makes a journey map useful, as The Journey Map argues for customers. Four stages are enough for most founders:

First conversationA meeting or call held, with someone who fits your customer profile.
QualifiedThe buyer has stated a need, the people who decide are named, and there’s a date by which they want to decide.
ProposalYou’ve sent terms: prices, quantities, dates.
WonA signed order, contract or term sheet. Lost deals are marked lost, with a reason, not left open.

Twenty closed deals give rough rates for each stage. Update them monthly.

Work backward

Say a brand wants $240,000 in new first-year wholesale revenue this quarter, and its average new account is worth $15,000 in the first year. It needs 16 new accounts. If 35% of proposals are won, it needs about 46 proposals. If 60% of qualified buyers get a proposal, about 76 qualified buyers. If half of first conversations qualify, about 153 first conversations: nearly 12 a week for thirteen weeks Derived.

Run your numbers

How many conversations does the target need?

Example numbers from the worked example above. Replace with yours, from your last twenty closed deals if you have them.

New first-year revenue target

Average first-year value of a won deal

First conversations that qualify

Qualified buyers who get a proposal

Proposals won

Weeks to do it in

First conversations you can hold a week

won deals needed

first conversations needed

first conversations a week

a week, if your weakest stage gains 10 points

Deals are rounded up to whole deals; the stages before are not rounded. This ignores the lag between a first conversation and a win: conversations held in the last weeks of the period will mostly close in the next one, so start early or count on the next period’s target.

With the defaults, the target needs 16 won deals and 153 first conversations, about 11.7 a week, against 10 the team can hold. Adding 10 points to any stage helps, but the biggest gain is at the weakest one: winning 45% of proposals instead of 35% cuts the need to about 9.1 a week, within reach Derived. The same gain in points is worth most at the stage with the lowest rate.

Do this

List your last twenty closed deals, won and lost, with the furthest stage each reached. Work out the three stage rates, put them in the calculator with next quarter’s target, and put the weekly number of first conversations on the wall. Count against it every Monday.

This is one chapter of One to Many, which is free and readable in full on a single page with no form in front of it.