June 16, 2020

Sales Execution

5 Ways to Inspect Next Quarter Pipeline — and Take Action

Kyle Coleman

Kyle Coleman

Kyle Coleman
Kyle Coleman

VP of Growth and Enablement

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We’ve discussed current quarter analysis as a means of predicting your revenue outcomes, first looking at pipeline created and then delving into pipeline quality. But the best revenue teams are focused not just on this quarter, but also on future quarters.

Today, we’re sharing how to develop a true understanding of your opportunities and pipeline that are closing next quarter, and the actions you can pursue as a result of this understanding.

How are we pacing toward next quarter pipeline coverage goals?

This is a simple view looking at how much pipeline we’re creating every day with a close date of next quarter. We’re tracking our progress toward the pipeline coverage target set in conjunction with finance, knowing that if we enter the quarter with a certain amount of pipeline, we feel good about our ability to hit and exceed our revenue targets.

To take a step back, let’s review what pipeline coverage is and isn’t. Check out this article (and video) for a deep dive on pipeline coverage fundamentals.

The screenshot above is just the high-level aggregate view that we use on executive dashboards. It shows current pipeline coverage (the sum of all your sales opportunities compared with your revenue target) over time. The red $40m line is a calculation Clari makes based on your next quarter revenue goal and historic pipeline conversion rate.

In this instance, Clari is recommending 3x coverage of $40m based on our quota of $13.3m.

Let’s peel back the curtain to get a real sense of what’s going to happen next quarter.

How is next quarter pipeline shaping up?

Clari gives us an incredibly detailed view of our likely revenue outcome for next quarter. Here’s how to read it:

  • The bars on the x-axis show how much pipeline we’re creating every week that's set to close next quarter, stacked by the forecast categories you can see along the bottom.
  • The blue line is Clari’s AI-driven projection of the most likely amount of revenue closed next quarter.
  • The dotted blue is our quota for next quarter.
  • All the key figures are across the top, including a real-time calculation of coverage ratio and suggested coverage (coverage ratio = pipeline / quota). The top bar shows the week over week change, and the gap to goal.
  • The dotted green line towards the top of the chart shows the suggested goal for how much pipeline we need to enter next quarter with in order to meet our quota, based on historic conversion. When you hover over that suggested amount, a pop-up appears breaking down this target by forecast category & stage.

This is the secret sauce that makes Clari so valuable.

It’s a combination of the retrospective and predictive analytics capabilities of the platform — historical conversion rates by pipeline category, and applying those rates in real-time to existing inventory to forecast a result. This level of detail is far beyond what most top of funnel teams have, and gives a full sense of what needs to happen to best support the business.

Here are some scenarios where this is useful:

  • If we have enough pipeline overall, but Clari tells us that too much of it is in early stages, we can pivot from focusing on creating net new pipeline to focusing on deal acceleration plays (more on this in the next blog).
  • If the overall pipeline number is a bit low, but we have enough in later stages to support our revenue targets, we can continue focusing on generating net new to backfill the pipeline that turns into revenue.

And of course, all of these insights are surfaced to our sales leaders and executives, so we’re always on the same page about what the business needs and what we should do to best support each other.

Historical pipeline trends help predict the future

This is Clari’s Trend view, looking at quarter-over-quarter pipeline conversion rates to closed business. This is the science of what’s happened in the past that informs Clari’s predictions of what’s going to happen in the future. Leaders are acutely aware of the people or process changes that may affect these conversion rates, and can therefore triangulate the most accurate forecast by using the science of Clari and the art of sales.

For example, we’re constantly monitoring how much of our pipeline is coming from our highest priority accounts that have the highest conversion rates.

If our account-based marketing programs are working as intended, our next quarter pipeline should be composed of more and more opportunities from these accounts. So, we can anticipate higher conversion rates of the overall pipeline as a result.

Of course, Clari’s AI will spot this trend and adjust accordingly. But things are constantly evolving and changing, so there’s plenty of value in a sales leader’s gut-check assessment of their business in concert with Clari’s insights.

How’s next quarter pipeline looking by region & segment?

These views are extremely important to inform my conversations with regional or segment sales leaders. We’re able to drill into their pipeline inventory and assess opportunities one at a time to determine necessary action plans. We can also look at the overall state of the business and ensure that things are tracking as they should be.

For example, the top view shows that the east sales team is lagging in next quarter pipeline. I can surface this insight to our sales and growth marketing leaders, and come up with the right action plan on how to reallocate resources from other regions to bolster coverage in the east.

That may come in the form of tactics to drive net new business or for deal acceleration type tactics, depending on which segment needs the most support.

In the bottom view, it makes sense that we enter the quarter with more pipeline in our larger sales segments, since much more SMB pipeline will be created and closed in the same quarter. If this view showed the opposite, we’d have some major concerns about our ability to prosecute existing SMB pipeline in accordance with our financial model’s expectations, as well as our ability to hit our enterprise revenue target with light coverage.

What’s the makeup of pipeline closing next quarter?

This is an incredibly useful view to understand how much risk there is in the pipeline, based on the mix of deal sizes we have set to close next quarter. In this view, we can easily see a lot of deals are in our largest deal band. This allows us to ask questions like:

  • Is this going to be an issue?
  • How confident are we that our seven figure deals are going to close?
  • What can we do with growth marketing resources to help shore these deals up?

This leads to the same workflow I’ve described before — surfacing these insights to leadership and creating the action plan that best tracks with the overall goals of the business.

It’s not a new concept that the biggest deals get the most attention, but the difference here is that identifying and prioritizing these deals is an objective exercise that every member of the revenue organization has insights into.

The final piece of the puzzle is how to identify the right deals to focus on for acceleration. That breakdown is coming in part four.

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