Beginner's Guide to Pipeline Coverage
September 30, 2020 •DJ Team
Marketing leads that generate sales will make or break a business, however critically important for marketers is to fully understand the process of a sales and marketing pipeline. Turning a lead into a customer is what generates revenue however if a sales team paid attention to every lead that came through their sales funnel they would waste time dealing with prospects who aren’t in the market to buy now.
While every lead in a sales pipeline deserves attention, some leads need more attention than others depending on their potential to buy now.
What Is A Sales Pipeline?
A sales pipeline is a visual representation that tells marketers where prospective customers are in the sales process. Unlike a sales funnel, a sales pipeline details a series of steps that move a lead into a paying customer which is the lifeblood of business-to-business (B2B) growth. The sales pipeline is a theoretical depiction of a buyer’s path to purchase. A sales pipeline defines specific actions marketers should take at each stage of the buyer’s journey leading to a sale.
The sales pipeline allows marketers to assess what the average sales cycle is and identify at which stage of the sales pipeline they may be losing prospective customers. The sales pipeline tells marketers and salespeople which leads are in the process of purchasing, how many open opportunities there are that could lead to a purchase, and what they need to do to close the sale.
What are the Stages of a Sales Pipeline?
The sales pipeline is a visualization of each stage of the buyer’s journey and includes five basic stages:
1. Lead Generation
Lead source attribution is the process of analyzing which channels and marketing campaigns are sourcing leads across all stages of the sales pipeline. This helps marketers identify what channels drive the most closed sales allowing them to drive more effective marketing campaigns in the future. Using an organized lead source attribution model like a multi-touch lead attribution model, marketers instantly know what is driving their success.
2. Lead Nurturing
The purpose of lead nurturing is to attract and engage prospects through marketing campaigns. When prospective customers make an inquiry - their contact information is captured then used for future campaigns.
3. Marketing Qualified Lead
Businesses benefit from a marketing qualified lead (MQL) to ensure that sales teams are pursuing high-quality leads with a high likelihood of closing the sales which ultimately leads to increased productivity and conversions.
Marketing attribution allows marketers to accurately track, report, and understand the effectiveness of their marketing campaigns which is what DemandJump excels at. Marketing attribution provides marketers with a clear picture of a marketing qualified lead because it tracks web activity, completed forms, downloaded content, along with the identification of offline channels such as events, phone calls, and more.
4. Sales Qualified Lead
A sales accepted lead (SAL) is generated from a MQL that has been reviewed for how likely the lead will become a customer before being passed on to the sales team. A sales qualified lead (SQL) is a prospective customer that has been researched and vetted firstly by the marketing team then by the sales team and is deemed ready to go to the next stage in the sales process.
An SQL represents a quantifiable business opportunity to close the sale because the prospect is ready to make a purchasing decision.
5. Closed Deal and Post Sale
When everything goes well, the lead makes a purchasing decision and becomes a customer which converts to revenue. It is easy to think that a closed sale is the end of the sales pipeline, however, retaining that customer means taking the relationship beyond just a single sale. This is where marketers and sales teams can increase their ROI by continuing to engage with existing customers and adding value to their customer experience.
What Is Pipeline Coverage?
Sales pipeline coverage (SPC) is a ratio used by marketers to measure the coverage they have in their sales pipeline and how many qualified leads they need to close to meet their quota. The formula for determining a sales pipeline coverage ratio is as follows:
Pipeline/Sales Forecast = (Average Sales Days/90 Days) x (1/Close Rate)
For example, if the average sale takes 90 days to close and the close rate is 20%, this means the sales pipeline coverage ratio is 5:1. Marketers and sales managers then understand that the opportunities in the sales pipeline should be worth five times the quarterly sales forecast in order to hit their quota.
Traditionally it is thought that sales pipeline coverage should be a 3:1 ratio of potential value in the sales pipeline to a sales quota. However, using sales attribution and lead attribution models marketers find this ratio will vary.
Ensuring Adequate Sales Volume in My Pipeline
To manage a healthy sales pipeline, there are four key metrics to improve sales and marketing operations.
- The number of deals in the pipelines.
- The average size of deals.
- The average percentage of closed deals.
- Average time for closing deals
Using these metrics tell marketers how many leads they need in their sales pipeline to meet their sales projections.
Using Multi-Touch Attribution In Your Sales Pipeline
It is vital for marketers to attribute the success of a sales pipeline using a sales pipeline attribution model or a deal attribution model to determine the value of each touchpoint a prospect has with their brand on their path to purchase. Attribution models provide marketers with greater insights into what is really driving the performance of their sales pipelines. Understanding the parts of the customer journey they can’t see help identify exactly which marketing touchpoints lead to conversions.
To be effective, marketers need to analyze, track and optimize their sales pipeline consistently because how they manage marketing leads will have a direct impact on reaching growth targets and sales projections. Start your free trial now and see how consumer insights will improve your ROI and fuel customer growth. Tap into our expertise in data analysis and marketing attribution to give your sales pipeline an instant boost.
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