How do you separate forecasting and pipeline management activities? Or, even more simply, how do you tell them apart? To answer those questions, let’s briefly examine the goals of each task and how to know when you’re achieving them.
The two goals of pipeline management are to build a healthy pipeline and to win more deals. In our research, we found that companies measured pipeline health across three key dimensions — size, shape, and contents. Deals were won through focused coaching on individual opportunities. Therefore, if you are examining the overall health of your sales pipeline or coaching your reps to win a deal, you’re probably steering the ship.
The only goal of forecasting is to accurately predict future performance. Typically, you step into the realm of forecasting when you begin to make three specific assumptions: the size of a deal, the likelihood you’ll win the deal, and the date you expect it to close. When you say things like, “this $100,000 deal has a 25% likelihood of closing next quarter,” you’re unquestionably forecasting. You’re using three assumptions to estimate when your revenue will arrive. Nailing those assumptions will not make you more likely to win that deal, nor will it make your pipeline any healthier. But it will make your prediction more accurate, and that’s the goal of forecasting.
There’s much more to be said about pipeline management and forecasting. Both are rich topics that require unique strategies, tactics, and analytics to do well. But the first step toward improving them both is to successfully separate them in your minds. Know your goals, know what you’re doing, and you’ll realize better outcomes for both. Learn to manage the ship while still minding the horizon, and you’ll arrive both safely and on time.