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Reverse Funnel Math: The Science of Hitting Your Number
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The first commandment of sales is hit your number. Too often, sales reps understand this to mean this quarter’s number. They devise ever-more-creative ways to pull deals forward from future quarters, and sales leaders push them to get that “Hail Mary” deal done, to do the superhuman in order to eke out a win against all odds. “we can close only what is already in play.” Step one in this reorientation is understanding exactly how much pipeline is needed to hit your overall number – doing what is called ‘reverse funnel math’. With the right pipeline targets, coupled with clear and regular reporting, sales leaders can improve forecasting accuracy, more quickly identify issues, and remedy those issues before it’s too late.
In Funnel math
The first commandment of sales is hit your number. Too often, sales reps understand this to mean this quarter’s number. They devise ever-more-creative ways to pull deals forward from future quarters, and sales leaders push them to get that “Hail Mary” deal done, to do the superhuman in order to eke out a win against all odds. “Effort at the top of the funnel – prospecting, qualifying inbounds, and finding opportunities with existing customers – is a big driver of whether your team is gliding to a strong finish a few quarters out, or trying to pull a rabbit out of a hat.” Step one in this reorientation is understanding exactly how much pipeline is needed to hit your overall number – doing what is called ‘reverse funnel math’. With the right pipeline targets, coupled with clear and regular reporting, sales leaders can improve forecasting accuracy, more quickly identify issues, and remedy those issues before it’s too late.
In Funnel math
Closing deals is critical, but in our rush to focus on the current quarter, we forget that we can close only what is already in play. Effort at the top of the funnel – prospecting, qualifying inbounds, and finding opportunities with existing customers – is a big driver of whether your team is gliding to a strong finish a few quarters out, or trying to pull a rabbit out of a hat. “Step one in this reorientation is understanding exactly how much pipeline is needed to hit your overall number – doing what is called ‘reverse funnel math’.” Let’s explore how to set those pipeline targets.
In Funnel math
“Too often, sales reps understand this to mean this quarter’s number.” Closing deals is critical, but in our rush to focus on the current quarter, we forget that we can close only what is already in play. Effort at the top of the funnel – prospecting, qualifying inbounds, and finding opportunities with existing customers – is a big driver of whether your team is gliding to a strong finish a few quarters out, or trying to pull a rabbit out of a hat.
In Funnel math
“They devise ever-more-creative ways to pull deals forward from future quarters” Closing deals is critical, but in our rush to focus on the current quarter, we forget that we can close only what is already in play. Effort at the top of the funnel – prospecting, qualifying inbounds, and finding opportunities with existing customers – is a big driver of whether your team is gliding to a strong finish a few quarters out, or trying to pull a rabbit out of a hat.
In Funnel math
“sales leaders push them to get that “Hail Mary” deal done, to do the superhuman in order to eke out a win against all odds.” Closing deals is critical, but in our rush to focus on the current quarter, we forget that we can close only what is already in play. Effort at the top of the funnel – prospecting, qualifying inbounds, and finding opportunities with existing customers – is a big driver of whether your team is gliding to a strong finish a few quarters out, or trying to pull a rabbit out of a hat.
In Funnel math
Set Starting In-Quarter Pipeline Targets “Here is the basic premise of reverse funnel math: if you know the portion of your pipeline, on average, that converts by the end of the quarter (i.e., conversion rate), and you know your bookings goal, you can divide the two to set your starting pipeline target.” That’s simple enough, so consider a few nuances. First, the maturity of the pipeline – that is, the sales stage of each opportunity. Next, depending on the sales cycle length, a meaningful portion of your quarterly bookings could come from ‘invisible pipeline’ that isn’t in the pipeline on day 1 but is created and closed within the quarter. Lastly, some of your quarterly bookings could be pulled forward from future quarters, closing sooner than expected.
Set Starting In-Quarter Pipeline Targets “If your bookings goal next quarter is $2.5M, all else being equal, you should have $2.5M / 25%, or $10M, in pipeline at the start of the quarter.” That’s simple enough, so consider a few nuances. First, the maturity of the pipeline – that is, the sales stage of each opportunity. Next, depending on the sales cycle length, a meaningful portion of your quarterly bookings could come from ‘invisible pipeline’ that isn’t in the pipeline on day 1 but is created and closed within the quarter. Lastly, some of your quarterly bookings could be pulled forward from future quarters, closing sooner than expected.
You expect ~$300K in invisible pipeline bookings and pull-forward bookings “Doing the reverse funnel math, you should have $3.1M of late stage pipeline and $6.7M of early stage pipeline entering the quarter in order to hit your bookings goal of $2.5M.” Set Weekly Pipeline Generation Targets
Alternatively, purchase a revenue operations platform, like InsightSquared or Clari, which extends CRM capabilities and automates some of the analytical workload. “That means opportunity owner, close date, stage, and $ value are accurate at all times, especially (i) at the start of a new quarter and (ii) just before you pull the data each week.” Not All Opportunities are Created Equal
Not All Opportunities are Created Equal “Be sure that stage one opportunities have clear seller and buyer criteria that must be met to become “official” pipeline.” Wrap Up
The first commandment of sales is hit your number. Too often, sales reps understand this to mean this quarter’s number. They devise ever-more-creative ways to pull deals forward from future quarters, and sales leaders push them to get that “Hail Mary” deal done, to do the superhuman in order to eke out a win against all odds. “Effort at the top of the funnel – prospecting, qualifying inbounds, and finding opportunities with existing customers – is a big driver of whether your team is gliding to a strong finish a few quarters out, or trying to pull a rabbit out of a hat.” Step one in this reorientation is understanding exactly how much pipeline is needed to hit your overall number – doing what is called ‘reverse funnel math’. With the right pipeline targets, coupled with clear and regular reporting, sales leaders can improve forecasting accuracy, more quickly identify issues, and remedy those issues before it’s too late.
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