Sales Pipeline Value
The value of your sales pipeline is the single most important factor impacting your sales growth rates. Therefore, increasing the value of your sales pipeline increases your company’s sales growth rates — it’s as simple as that.
Before we explain why, let’s take a step back and define what a sales pipeline is and what it does for a company. A company’s sales pipeline provides employees with a representation of their prospects’ progression through the sales process toward making a purchase.
With that said, how can a company determine the value of its sales pipeline?
According to HubSpot, sales pipeline value can be defined as “The total value of every qualified opportunity in your pipeline.” Here, the emphasis is on qualified leads — leads that have the right budget to purchase, the authority to make purchasing decisions, and the motivation to purchase your product or service. Qualified leads are valuable because they are more likely to convert into sales than unqualified leads.
Unqualified leads, on the other hand, lack the key characteristics we highlighted above. This means that they are less likely to work with your sales team and move through your pipeline toward making a purchase.
All of this is to say that high-quality leads are crucial to increasing your company’s sales growth rates. To illustrate this point, let’s crunch the numbers.
Sales Growth by the Numbers
If you improve three key factors by 25% — your average deal size, average closing ratio, and average sales cycle — the result is a 73.6% increase in annual sales. The charts below provide a visual representation of this strategy.
|Current Metrics||Improve by||Improved Metrics|
|Avg Deal Size ($)||100,000||25%||125,000|
|Avg Closing Ratio||25%||25%||31.3%|
|Avg sales velocity (days)||120||25%||90|
|Impact of Improved Average Deal Size and Closing Ratios|
|Current Sales||Improved Sales|
|Avg # of Monthly Meetings||10||10|
|Avg Closed Deals/Month||2.50||3|
|Increase in Sales||140,625|
|Impact of Sales Cycle Reduction|
|Current Sales||Improved Sales|
|Annual Sales ($)||2,250,000||3,906,250|
|Increase in Annual Sales ($)||1,656,250|
As these charts demonstrate, these relatively small 25% increases add up to a sizable difference in sales growth over time. Ultimately, these charts illustrate that sales growth rates are impacted by a variety of factors, each contributing to the number of closed deals.
However, the keystone to increasing sales growth rates is increasing the number of high-quality leads in your sales pipeline. We’ll go into more depth regarding why this is true in the next section.
High-Quality Leads = Higher Sales Growth Rates
As we discussed above, sales growth rates depend on the number of high-quality leads in your sales pipeline, which means you need more of them to increase your sales growth rate. But how do you attract more high-quality leads without also attracting a ton of unmotivated, low-quality leads?
Never underestimate the impact of your content. Content plays a crucial role in reaching your potential customers — from catching their attention, to directing them to sites where they can learn more about your product, your content acts as the foundation of a more robust sales pipeline.
In part, this is true because buyers today expect to find all the information they need to make an informed purchase through vendors’ websites. Increasingly, buyers prefer using content and self-serve methods to make purchases, rather than speaking with sales reps. With this in mind, your content must provide useful and highly relevant information to your specific target market. This will encourage prospects to see your company as an authoritative resource and to seriously consider making a purchase.
Similarly, because high-quality leads are motivated and have the right budget and authority to make a purchase, they are more likely to close faster, at a higher rate, and at full price. All of these elements add up to a sales growth rate that is significantly higher than one that relies on low-quality leads.
To learn more about the value of high-quality leads and their impact on sales growth rates, download this paper.