The Keys to Sales Pipeline Analysis

Blog
Jul 25, 2022
4 min read
Your sales pipeline is like a roadmap that shows how your sales team moves prospects through the sales funnel and ultimately converts new customers. A sales pipeline analysis is your way to be sure that it’s optimized at all times, leveraging the people, processes, and tools at your disposal to reach maximum sales revenue potential.

So what exactly is involved in a sales pipeline analysis? What metrics does it measure? How can you conduct one for your company? 

Read on for answers to these questions and more.

Quick Takeaways

  • A sales pipeline analysis gives you greater visibility into your sales process from both a holistic perspective and on a stage-by-stage basis.
  • Your pipeline analysis may be conducted by your sales team or a cross-functional team that includes departments like marketing, sales, finance, and customer success.
  • Important metrics to measure in your sales pipeline analysis include number of deals, length of sales cycle, average deal size, and win rate (among others).
  • Technology tools like CRM systems and other revenue management platforms should be leveraged for data-driven insights, maximum accuracy, and execution at scale.

What is a sales pipeline analysis?

Your sales pipeline is a comprehensive and visual representation of how prospects move through your sales process. Unlike the sales funnel, which looks at stages of the buyer journey (like awareness or interest), the sales pipeline looks at the actions that occur during each of these stages (like prospecting or lead qualification).

A sales pipeline analysis, then, evaluates how well these actions actually move prospects down the funnel and convert to new sales.

Conducting an analysis gives you greater visibility into your pipeline, both from an overarching, holistic perspective and on a stage-by-stage basis. It answers questions like:

  • Which activities are moving prospects forward?
  • Where are prospects getting stuck or falling out of the funnel?
  • Where are the most sales conversions occurring?
  • How much revenue will my pipeline generate in a given timeframe?

Over time, periodic sales pipeline analyses enable continuous pipeline improvement, help you identify and resolve issues more quickly, and power more predictable revenue streams.

How do you conduct a sales pipeline analysis?

Define your sales pipeline

The first step to analyzing your sales pipeline is knowing what it looks like in the first place. This means identifying all of the people, processes, tools, and tactics you use throughout your sales process and creating a visual representation of how they’re implemented.

Assign responsibility

Who will conduct your analysis? Sales teams are typically responsible for conducting a sales pipeline analysis. That said, organizations with RevOps models in place may assign them to a cross-functional team that includes members from all revenue-impacting departments, including marketing, sales, finance, and customer success.

Identify your key metrics

In the next section, we’ll walk through a list of metrics commonly included in a sales pipeline analysis. Identify the ones that are most important to your organization and that you’ll use as KPIs for measuring pipeline performance.

Leverage your technology tools

CRM systems and other revenue management platforms provide data-driven insights about your pipeline, often using AI and automation to provide them at scale. These tools should be utilized as part of your sales pipeline analysis, particularly to automate reporting, ensure the highest levels of accuracy, and enable smart forecasting to inform future strategies.

Develop reporting processes

Formalize reporting processes for your sales pipeline analysis as much as possible. You should have already identified your most important metrics. Now consider:

  • Who should receive a report on the results of your analysis?
  • How will you develop an action plan based on your report?
  • What ongoing processes will you put in place to track key metrics on an ongoing basis?

Key Metrics to Measure in Your Sales Pipeline Analysis

It’s important to look at specific metrics to objectively measure your pipeline’s current status and future performance. Metrics typically included in a sales pipeline analysis are:

Number of deals

What it is: The number of prospective deals in your pipeline at a given time.
Why it matters: Number of deals represents your total revenue potential at the time of your sales pipeline analysis. It tells you whether your lead generation efforts are working and, over time, helps you understand your ideal pipeline size to maximize sales team effectiveness.

Length of sales cycle

What it is: The average time that elapses between a deal’s initial entry into your pipeline and when it closes.
Why it matters: Knowing your length of sales cycle gives you insight into how many deals you can expect to close in a given time period based on the number of deals currently in your pipeline. It also informs you about whether you need to take steps to shorten your sales cycle to increase sales velocity.

Average deal size

What it is: The average amount of revenue generated from a single closed deal.
Why it matters: Average deal size tells you whether your sales team is generating the amount of revenue you expect to earn from each closed deal. You can then make adjustments to your sales pipeline activities to increase it if/when needed.

Lead/opportunity conversion rate

What it is: Number of initial leads that convert to true sales opportunities.
Why it matters: High lead to opportunity conversion rates indicate that activities at the beginning of your pipeline are working, while lower conversion rates indicate a need for improvement at these stages.

Win rate

What it is: Number of sales opportunities converting to closed sales.
Why it matters: A high win rate shows that your sales team is effectively closing deals at the end of your pipeline. Conversely, low win rates show that prospects are losing interest before they convert to paying customers.

Pipeline value by stage

What it is: The total value of deals in each separate stage of your pipeline.
Why it matters: Pipeline value by stage helps you analyze whether deals are moving seamlessly along the pipeline and identify potential issues that need resolution (for example, if a high number of deals continually fall off at a particular stage, or if deals are getting bottlenecked by a certain sales activity).

CLV:CAC ratio

What it is: The total revenue earned over the lifetime of a single customer relationship (CLV) compared to the cost of acquiring each new customer (CAC).
Why it matters: This number should always be greater than 1. If it isn’t, you’re spending more money to earn new customers than you’re earning from their actual business.

Putting it All Together

A sales pipeline analysis empowers you to take control of your revenue potential with stronger, more intentional sales strategies at every stage of the B2B buyer journey. Over time, it helps you achieve more predictable revenue streams that lead to higher growth.

To achieve these goals, you need the right tools in place to drive success.

Xactly Forecasting® delivers data-informed pipeline analytics to drive consistent sales execution and accurate forecasting for accelerating predictable revenue.

Schedule your free demo today!
 

  • Sales Performance Management
Author
Erik Charles Headshot
Erik W. Charles
,
VP, Business Operations, Japan

Erik serves as a subject matter expert on the interlocking fields of revenue intelligence, revenue performance, and revenue optimization. Erik focuses on helping Xactly drive expansion and growth by better aligning positions, responsibilities, and incentives to be in sync with achievable strategic and tactical goals. He is an accomplished professional with more than two decades of experience in marketing, consulting, and product evangelization.