It’s often hard to get people to differentiate between opportunities in their pipeline, and deals that can and should be forecasted.
There seems to be a number of reasons for this, some are individual, and therefore easy to address, some are systemic within the company, and could be very difficult to address without large scale change.
At the risk of over simplifying things let first look at what these two things are. The pipeline contains all the opportunities one is currently working on no matter what stage of evolution they are at. Some use the traditional 30-60-90 approach; others with longer cycles may use a same concept but with longer time scales.
Others use a timeline driven by their known and consistently measured length of their sales cycle. So if on average you need 16 weeks to close a deal, then your pipeline would be all opportunities in play less than 16 weeks.
Normally we like the latter method as it brings a layer of realism over the30-60-90 method which allows greater subjectivity, without the reality check of time, how old is the opportunity, has it aged. In the 30-60-90 there is the opportunity to move opportunities back and forth, I often ask reps how many times they have had that particular opportunity in the 30 day column, and it is usually multiple times; other times things just sit there well past the predicted time.
The marked-to-time method force one to deal with reality, keep the opportunity moving, or replace it with something else. A harder discipline, but one that pays off. Many of our clients use a hybrid of both, but not having it marked-to-time element is just asking for issues.
Now just because an opportunity is in the pipeline, does not make it forecastable. With both methods you need clear cut definitions, rules, attributes and actions for each stage of the pipeline. Assuming these are adhered to, deals that can be forecasted are small subsets that meet specific criteria that allow them to be forecasted. Beyond being in the pipeline, there has to be some sense of predictable certainty, based on subjective factors that allow an opportunity to be forecasted as closing at a specific point, for most in a given month.
For example, we do not forecast anything unless a proposal has been formally submitted. Pre-proposals and discussion documents are good indicators, but not forecasted. There has to be an active client. I see a lot of “forecasted deals”, where the rep does not even have an agreed to next step.
Both forecasts and pipeline are important tools, but they are not the same, and unlike with some organizations, are not interchangeable, organizations that do interchange usually fail to deliver, have highly in accurate forecasts, and often weak pipeline.
Tibor Shanto, The Pipeline