Understanding Create and Close Pipeline
For many businesses, a material portion of closed-won revenue in any quarter is from pipeline that's created and closed within the quarter. This is especially true for high-velocity sales motions. For companies that average 30 day sales cycles, the majority of closed revenue may in fact be created and closed within the quarter. This reduces the CR (close rate) and pipeline targets needed earlier in the quarter, but it also means that CRs and pipeline targets will be higher as you progress through the quarter.
The tables that follow illustrate how you can determine how much revenue each quarter your company has historically won – from the Day 1 starting pipeline for the quarter and pipeline created through each period based on number of days, with a close date in the quarter. This can be used to calculate CRs and to set targets by the number of days you are into the quarter for Create and Close pipeline.
When you enter each new quarter, you will want to track pipeline created and closed as their own KPIs, against targets, to determine if you are on, behind, or ahead of the pacing required to generate enough Create and Close Pipeline for you to hit your revenue targets.
Many companies don’t specifically determine the historical amount of Create and Close pipeline, or create targets for future quarters, or pay attention to these KPIs during the quarter. Once they realize they are in danger of missing their goals and that additional pipeline is required, they scramble to do anything possible to increase pipeline. This reactive approach generally leads to lower-quality pipeline and not enough time for quality pipeline to close before the quarter ends.
The recommendation is to set monthly goals for Create and Close pipeline and stay focused on pipeline generation each week by reviewing the status of these metrics during weekly forecast meetings. If you are behind in generating Create and Close pipeline in month 1, it is as critical as being behind in the last month. Do not wait to address an early gap, measure it, get ahead of it, get back on track!
For more on Pipeline and additional GTM KPIs, don't miss our free ebook resource: Revenue Growth: The Metrics You Can't Ignore.
