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- Every great go-to-market leader and founder and CEO that I've worked with, they have obsessed over pipeline coverage. Pipeline coverage is that thing that it can be one of the greatest predictors of whether you're gonna be able to hit your number, whether you're gonna be successful or not. And yet most of the gurus don't really talk about it. But pipeline coverage, when you start to calculate it, when you start to apply it to how you think about your go-to-market machine, can be the difference maker on whether you hit your number or not. So here's a big question, what exactly is pipeline coverage? How do you calculate it? And how do you actually use it to ensure that you're gonna be able to hit your number? In this episode, I'm gonna walk you through the three principles that you absolutely need to know, more than you ever wanted to know, about SaaS pipeline coverage. And when you follow these principles, you'll be able to ensure that you actually hit your number and accelerate your path to that next stage of growth. Intro. (upbeat music) What's everybody? Welcome to "Unstoppable." I'm TK, and on this channel I help SaaS founders like you grow your SaaS business faster with an unstoppable strategy. Now if you new to this channel, welcome, I drop an episode every single Sunday with actual strategies and tactics from the trenches on how to grow your SaaS business faster. So be sure to hit that subscribe button and that bell icon, that way you'll get notified every single time I drop an episode with the TK Energy. Now, if you're already part of this channel, if you're part of this community, if you're part of my SaaS Go-To-Market Coaching program, my people, welcome back, it's really awesome to see you over here. So I remember when I hired my first chief revenue officer, this is when I was running ToutApp, we pioneered the sales engagement space and then we grew that company and sold that company to Marketo, and then we sold Marketo to Adobe for $4.75 billion, but that's my backstory. But I remember at a specific point in time for ToutApp, we hired a chief revenue officer. So this was the person that, he was an OG guy, he was so OG, his name was Frank Swain, by the way, he was so OG, he would come into work wearing a three piece suit every single day. And I remember with Frank, he was one of the first guys that I really learned about scaling SaaS companies into an advanced sales organization. And I remember he would come to me for my one-on-one every week and he was OG, so he had a piece of paper, where he would write down what's the lowest amount that we're gonna close, what is the commit, meaning, what is he committing and the sales team is committing to close? And what is the upside? Meaning how much can we close if everything lines up perfectly? And he would give me these three numbers and for that week, it would help me understand what we are trending to for that week, for that month, and for that quarter, which was incredibly powerful. That was kind of my first exposure to thinking about pipeline and sales pipeline and what are we gonna close and what are we not? When we really started to professionalize our sales teams. One of the problems that I had was by the time Frank gave me that forecast, it was kind of already baked. We would kind of know we would hit our commit and what the upside would be. And really the question was, was that in ance with the target that we really needed to hit to hit our growth targets? So I was like, there's gotta be a better way where I can figure out if we're gonna hit our number well before Frank comes in with his piece of paper and his lowest number and his commit number and his upside number, there's gotta be a way to have an early indication of whether we would actually hit our target for the quarter or for the month or for the year even. And so that's when I went to another OG guy in go-to-market. I went to Mark Cranney, and at that time, Mark Cranney, he's this guy right here, was kind of the go-to-market expert, the sales expert at Andreessen Horowitz, who was an investor in us. And I asked him like, hey, what are the things that we really need to understand in terms of pipeline and whether we're gonna hit? And he was incredible because he gave so much advice and so much incredible information to all the founders that were in the portfolio. And that's when I learned about pipeline coverage. And that's when I really started to understand, okay, there's a math to this, I can predict whether we're gonna hit our number and I can start to think about what do we need to change to actually drive success and drive growth for our SaaS business. And that changed everything for me. And so in this episode, I'm gonna walk you through the three principles, three, that you absolutely need to know about how to think about pipeline coverage, how to calculate it, and how to make sure that you use that to actually drive growth ahead of time and really know if you're not gonna hit your number. So if you're excited to dig in, go and smash that like button for the YouTube algorithm, it really likes it when you do that, let's dig right into it. So the first principle I want you to understand is what is pipeline coverage? I'm gonna explain that in simple math terms because this is what was the aha moment for me when I learned it. So let's just say you have a certain target number. Let's say your target is to close a million dollars, and you can say, depending on what stage you're in, is that this year or this quarter or this month, whatever stage you're in. Let's just say you have an average win rate. Let's say you have a 20% average win rate, and that's pretty standard for SaaS companies as they're scaling, and once you start to hire reps, it kind of goes to the average of 20%, and you can do better than that, I've seen companies that have 30% win rates, but you know, you really have to work towards that. And let's just say you have a certain amount of pipeline. The big difference in terms of pipeline coverage is you want to have 5X pipeline coverage. Meaning if your target is a million dollars, you wanna have 5X that amount of pipeline. That's what pipeline coverage is. It's whatever your target is times a certain number, that's your pipeline coverage. And what you wanna do is make sure you're aiming for 5X. And I'm gonna show you why. let's just say you have 3X pipeline coverage, you have 3X pipeline coverage. That means you have $3 million of pipeline for your $1 million target. Which means that if you close $3 million of that pipeline with your average win rate of 20%, you're gonna close 600K. Now, let's just say you have 5X, which means that you actually have $5 million of pipeline. If you close 20% of that $5 million of pipeline, you are actually gonna get a million dollars, which means that in this scenario, you are actually going to hit your target. And in this scenario, you are going to miss your target. And this is simple math, this is not crazy, right? All I did is whatever your target is for the month, for the quarter, you just times that by three or times that by five, and then you figure out, okay, how much of that do we close given our average win rate? And what's our number gonna be? That's it. A lot of times we're just not taught this, a lot of times we just don't do the math. We get so enamored on the day-to-day activities, we don't take a step back and say, "Hey look, if we have a certain amount of pipeline and we close 20% of it, what happens to that? What's that number? And does that mean we're gonna hit our target or not?" Once you start to do the math, a few things start to come together. Number one, you're gonna start expecting your team to actually deliver 5X pipeline coverage. Otherwise, mathematically, you're just not gonna hit your number. You're also gonna want your team to start to rise above this 20% average win rate because that way you can actually ensure that you're more likely to hit your number given the pipeline that you have. And third, you're gonna wanna start ahead of time to think about how do we actually generate this pipeline number? Because what you realize is while the target revenue number is a number that you want to have as a target, the real target to begin work on, even a quarter ahead of time or two quarters of three quarters is your pipeline number. Because if you don't generate enough pipeline, you're only gonna close 20 to 30% of that, maybe 40%. You don't stand a chance at hitting your number. That was principle number one. And that was one of those things when I learned it, when I started to understand the math, I'm like, oh my God, I should have done this three quarters ago, I should have thought about this four quarters ago, I should have thought... And intrinsically, we know we need more pipeline and every sales leader is gonna ask for more pipeline, but a lot of times, we don't do the math. And what this allowed me to do was actually say, cool, this is our pipeline target. It allowed me to go to my SDR leader and my demand generation person and say, "Awesome, here's our pipeline number. How are we gonna hit it, let's come up with a plan. How many SDRs do we need? And what kind of activity do they need to drive? How do we set up their comp plans? Or how much demand generation do we need to do? How many webinars do we need to run? How many people on the list do we need? How much ad budget do we need to generate that pipeline and how do we split it up?" And that's the power in actually calculating your pipeline coverage. Is it simple? Yes. But is it difficult to actually transact on? Absolutely. Which is what brings us to principle number two. Principle number two is a concept we talk about very often on growing SaaS companies. It's having a proper go-to-market strategy in order to generate whether it's 3 million or 5 million or whatever your pipeline target should be, to have this 5X coverage, you need a proper go-to-market strategy. So the key components to a proper go-to-market strategy is your ICP, your ideal customer profile, you need your manifesto, this is essentially your messaging, your positioning that you take into the market to actually acquire this pipeline, and it's your Broadway show, this is the consistent set of sales and marketing activities that you're running to generate this pipeline. Now, one way to visualize this is essentially thinking about this is your ICP, okay? And this is essentially your manifesto and your message. So this could be your lead magnet, this could be your strategic narrative, your value prop, whatever it may be. And basically, pipeline generation is all about bringing this message to your ICP and actually getting them to take action and become a lead or part of your pipeline so they can get into your product, if you're product-led. Or talk to sales, actually become an opportunity. And so in order to do this, you need a proper ICP. What's the ideal customer that you're going after? If you target the entire world, your pipeline generation activities aren't gonna be very good and they're certainly not gonna convert. You also need to think about what are the key channels that you can use to actually bring your message to your ICP? There are six key channels you can follow to get this pipeline coverage, let's go through them. The first way you can actually bring your manifesto to your ICP is you can do inbound. This is essentially social, you can do SEO towards content, that's one way you can bring the message to your ICP. The other thing you can do is you can do outbound. This could be call, email, you can even do a FedEx envelope. The third way you can do this is channels. You can do marketplaces, you can have partners, you can even do events at other other companies that target this ICP and you can bring them your message to your ICP. Another way you can actually generate this pipeline, where you bring your manifesto to your ICP, is you can run ads. And this could be social ads, it could be SCM ads, it could be display ads, you name it. There's many different ways that you can actually do this. Another way that you can actually drive your message, your manifesto to your ICP is you can host your own webinars. This is another version of events. I put events over here because there are other people's events that you're going to and sponsoring, but you can also do your own webinars. You can use all these other channels to drive traffic to. And then people come to your webinar and they can watch your message and then take action and talk to sales. And the final way, the sixth way, that you can run your Broadway show, to bring your manifesto to your ICP, is you can ask for referrals. So referrals are really powerful, and I'll talk more about this in the next principle because this is one of the most differentiated ways that you can actually drive pipeline. Referrals are really powerful because your ICP already knows other people in your ICP. And so basically you're saying, "Hey, can you give our manifesto to appear?" And so that could be another way you can generate pipeline. Now these are all the different ways that you can run a consistent set of sales and marketing activities, inbound, outbound, channels, webinars, ads, referrals, to actually bring your manifesto to your ICP in a consistent basis. This is one of the things we talk about in this channel all the time. The more focused your ICP is, the more focused your manifesto is gonna be, and the more focused these two pieces are, the easier it is to go through all these channels to essentially achieve what we call conversation dominance. Meaning wherever your ICP goes, everywhere, they're like, "Oh, oh my god, these guys are everywhere, I gotta talk to them." And that's what you want to accomplish with a proper Broadway show. So that's principle number two. If you know what your target is, your pipeline number, then you can start to have a constructive conversation internally about what are the different channels we can use to bring our manifesto to our ICP? And this is kind of one of the most important aspects of this. The more focused your ICP is, the crisper your messaging is, and your positioning is in your manifesto, the more effective your Broadway show is gonna be. And the more effective your Broadway show is, the more likely you're gonna hit your pipeline number and the more likely you hit your pipeline number, the more likely you're gonna hit your revenue number. That's the power in this. Chances are if you're watching this video, you're already doing some mix of this. And one thing that you may be asking yourself is like, okay, how do I know if mine is any good? Are we hitting the right benchmarks? And also I'm doing all this TK, what else do I do to rise above? First, let's talk about if you're any good, and then in principle number three, I'm gonna talk about what you can do to rise above. The biggest thing that we've taught founders that we work with in my Go-To-Market Program to measure is what we call your activation percentage. One of the things that we always measure when we work with folks in the Go-To-Market Program is if you're generating leads or traffic, how much of that is actually activating? And the way we think about this is, let's just say you do a social post and you get 100 visits to a landing page for your manifesto. Out of those visits, let's just say 20 of them become leads, and you may be experiencing this right now, you're like, oh my god, marketing's generating so many leads or SDRs are actually getting so many appointments. But the more important thing to understand is out of these leads, how many of them actually engaged with your sales team or your product? So let's just say 10. This, this conversion is your activation rate. The number of leads that actually engage with your sales team or get into your product experience is your activation number. If this activation number is less than 20%, then you actually have a shitty go-to-market strategy. If it's greater than 20%, that means that you have a good to great go-to-market strategy. And this is a litmus test that you can run to understand, okay, are we just doing a bunch of activities and we're generating a bunch of shitty leads, or are we doing a bunch of activities with a proper ICP, proper messaging, proper Broadway show, and these people are such fits, they're actually saying, yeah, I wanna get into the product, or yes, I wanna get on a sales call? Once you start to measure this activation rate, you'll start to understand if you are actually operating a proper go-to-market strategy, and if you have a chance to actually hit your pipeline target, which will tell you if you are gonna hit your revenue target. Now, before I go to number three, which goes into how do you differentiate in all this and rise above the noise, lemme just pause here for a second. And you starting to see the power in this? Are you certain to see the power in how these pieces come together? And if you actually properly think about your pipeline coverage and you have a pipeline number more than your revenue number, and then you start to say, cool, how do we generate that pipeline that's quality, and you actually measure quality with this activation rate, using all these different channels and your ICP and you manifesto, can you imagine what's gonna happen to your SaaS business and your growth? And we start to see the power and the clarity this brings in a leading indicator, meaning it's not just looking at do we hit our number or not? Or what's our commit or what's our upside next week? It's ahead of time, you can start to understand, are we gonna hit our number? If you're starting to see the power in this, can I just get yes in the comments below and also smash that like button for the YouTube algorithm, it just loves it when you do that. Also, if you're in this stage where you really want help figuring out what's our pipeline coverage? How do we think about our ICP? What should our manifesto be? How do we run a proper Broadway show? How do we like actually measure this activation number to figure out if it's any good? This is why I run my SaaS Go-To-Market Coaching Program. It's an incredible program, I'll tell you more about it at the end of this video, I'll also link to it below, you don't have to go anywhere right now. Let's go to principle number three because I wanna tell you how you can actually differentiate in the market if you're doing some of this or a lot of this already. So when I talk to founders, a lot of times they're not doing the proper ICP, they're not doing the proper manifesto, they're not doing the proper Broadway show. And so we actually get them organized, they're like cool, here's the data to measure, here's how you build an ICP. When we build an ICP together, there are 29 points that go into it, here's how you build a manifesto. Manifestos go through iterations because we wanna get it right, and every manifesto is different depending on your ICP and what you're selling and the competitive dynamics. And here's how you run a Broadway show. So we do all these things. And then we have a lot of clients, at this point, we've worked with over 250 founders across my Go-To-Market Program, we've got a lot of clients that implement all this. They get growth and they're like, now what? I want to actually take this up to the next level. I wanna really 10X what we're doing, I wanna really up-level this. I want unfair ways of growing. And so we had to go back and we're like, okay, what else do we give these guys? How do we really give 'em more? How do we really help them rise above? And that's when we really started to understand this one strategy. And I alluded to this before, but this is gonna be a huge game changer. The third strategy that we started to really talk about is referrals. Now I know what you're thinking, it's like TK, 1999 called, they want the go-to-market strategy back, they want referrals, I get it. First, let me explain why referrals are so powerful and then let me explain why this is a game changer. The reason referrals are powerful is when you have your message, your manifesto, you are doing all these crazy things to get to your ICP, this thing right here, you're doing social posts, you're doing SEO, you're actually doing outbound, you're hiring SDRs, your marketing budget, you're running ads, you don't know if that you're gonna get that money back, you're running through these channels, trying to forge these partnerships, you're running webinars, it's a lot of money, a lot of work without clear indication of this is gonna pay off. You look at your activation number and you're like, okay, I think this is gonna pay off, but let's see how it pans out, and then you have a 20% success rate. That's kind of what we have to do, that's the name of the game. So we went back and we were like, what else can we do? Like how do we really 10X this? And what we realized is there's one channel that's not really tapped into. If you think about it, if you've got your ICP, within that ICP, you have your customers, your current customers, and you have your future customers. Now, the interesting thing about this is your current customers know a lot of your future customers, they're peers, they know each other, they talk to each other, if you're selling to VPs of sales, VPs of sales talk to other VPs of sales. If you're selling to founders, founders talk to other founders. If you're selling to a CTO, CTOs talk to other CTOs, they know each other. And we're going through all these different channels to try and get attention and get them to trust us and give them our manifesto. And so we're like, you know what? This is great and you should run this and you have the teams in place, but if you really wanna rise above, this is what we're doing with our clients, let's go take your manifesto and give it to your current customers. And let's then ask them like, hey, if you can give our manifesto to a future customer, we'll give you a reward, and rewards come in different shapes and sizes. This is one of the things we've been working on. And when you do that, you are actually more likely to win this customer over than any of these channels, here's why. When a current customer refers a future customer, your win rate is up to 70% higher. When a current customer refers a future customer, the LTV is higher. When a current customer refers a future customer, your CAC is lower. And when a current customer refers a future customer, your time to close is actually shorter, why? Because when a current customer is referring a future customer and they're giving like, here we go, here's the manifesto, this company I really like. Basically, they are like, oh, I already trust you. I'll talk to these guys, we talk about this all the time. And because of that, they are actually more likely to purchase, they're more likely to purchase more, they're more likely to purchase quicker. So all these little metrics actually improve. And this is one of the things when companies work with us, and we say, cool, ICP, manifesto, Broadway show, boom, boom, boom, activation rate's looking good. When those pieces start to come together, they turn on these different channels, and we teach all of that in the program. They're like, what's next? And this is the next thing that we're working with the founders and the sales leaders. And right now we have companies anywhere from pre-revenue upwards of a 100 million in revenue. And these pieces work for any of those stages, and this piece works, especially as you start to get a good customer base because now you can actually use them to get to your future customers. Now, one of the biggest problems with referrals is that it's very manual. It kind of reminds me of when, you know, before we started a sales engagement platform, in order to send out outbound emails, you have to manually do it. And so right now, if you wanna ask for a referral, you have to like manually do it, which is why we actually, when we set up customers and clients we work with on a referral program, we actually have them use software. There's a brand new software called Megaphone. And by the way, this is not a sponsored video, I own this company. Megaphone, what it does is, is it automatically monitors your customer base and scores your customers, kind of like how you have lead scoring, you have customer scoring. And as those customers are happy, it automatically asks those customers for a referral, but they send the email on behalf of your sales reps, the people that close the deal for you. And so that way it looks completely personalized and it's asking them for a referral and makes it one click for them to actually send out a referral. This makes it programmatic. And the reason referrals haven't been leveraged as much in companies before is because it wasn't programmatic, it wasn't systematized. Kind of like how outbound emailing was back in the day. And so when we are working with our clients to get them set up on this piece, it's like, cool, let's get all these channels turned on and they hire the right teams and everything goes really well. Then when we're like, cool, here's the next thing that will really differentiate you, that's when we turn them on Megaphone. And Megaphone's incredibly powerful, I'll link to it below, you can check it out if you wanna use the platform and turn on referrals, and now you know what SaaS pipeline coverage is and how to take advantage of it to actually ensure that you hit your revenue target. So to recap, principle number one, make sure you calculate your pipeline coverage and understand the math behind it. Principle number two, once you understand the math behind it, now you have a pipeline number. So look at your go-to-market strategy and make sure that you're doing all the key pieces to actually hit that pipeline number. You hit that pipeline number, you're more likely to hit your revenue number. When you're following that go-to-market strategy, you wanna make sure you're calculating your activation number to understand if your go-to-market strategy is any good, and to hold your team or yourself accountable on whether you're being effective in your ICP, your manifesto, or in your Broadway show. Once you have these pieces running, then you need to actually differentiate to that next level. That's when you turn on programmatic referrals. Your current customers know your future customers, so give them your manifesto and programmatically ask them at the perfect moment to give you a referral and make it super easy for them to refer you. And when you get that referral pipeline, then the win rate is gonna be higher, your LTV's gonna be higher, your CAC is gonna be lower, and the time to close those deals is gonna be lower, which means that you're even more likely to get that pipeline coverage and hit your revenue number, which is what this is all about. Now, you may be wondering, all right, TK, this is awesome, I wanna make sure that I have the right go-to-market strategy, I wanna understand how to kick off the referral program, I wanna make sure I get all these pieces right. What you may not know is how do you actually create an ideal customer profile? What you may not know is how do you actually craft a manifesto that is effective in driving up this activation number to 20%. What you may not know is how do we run a Broadway show across these key channels to bring our manifesto to our ICP? What you may not know is, even if you're doing all this, how do we improve our benchmark numbers or how do we turn on referrals on top of this? This is exactly why I created my SaaS Go-To-Market Coaching Program. Inside of this program, we work together to actually help you craft your ideal customer profile, build your manifesto, and then show you how to run a Broadway show to consistently bring your manifesto to your ICP on a consistent basis so that you can hit your pipeline number and your revenue target. It's an incredible program. We have companies anywhere from right at pre-revenue, upwards of 100 million in revenue, working to revamp their go-to-market strategy and drive growth for their SaaS business. If you wanna work together, just go to tkkader.com/gtm, tkkader.com/gtm. And on that page, you'll get all the details around the program. And from there, you can just fill a little form and get on a call with us, we wanna make sure it's the right fit, the better the fit, the better the results, and if it's the right fit, we'll get started right away. So just go to tkkader.com/gtm. Also, if you got value from this video, please smash out like button for the YouTube algorithm, it just really loves it when you do that, and so do we. We put a lot of love into these videos. If you have a fellow SaaS founder or fellow SaaS leader that can get value from this video to think about how to think about SaaS pipeline coverage and all these different strategies that I shared, please share this video with them, it would just mean the world to us. Also, I drop an episode every single Sunday with actionable strategies and tactics from the trenches on how to grow your SaaS business. So be sure to hit that subscribe button and that bell icon and you'll get notified every single time we drop an episode. And lastly, remember, everyone needs a strategy for their life and their business. When you are with us, yours is gonna be unstoppable. I'm TK and I'll see you in the next episode or inside the SaaS Go-To-Market Coaching Program. Take care, everybody. (upbeat music) Every single time I drop an episode with, wow, that's weird.