Optimize your sales funnel and sales pipeline for finance

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foreign hey this is Victor Antonio and today I want to talk about something that I haven't seen in a while and I don't like saying to be quite honest but I've seen it again so I want to bring it up and talk to you about it it's called a weighted pipeline now if you've never seen a weighted pipeline let me first describe it to you and then I'm going to talk about some of the issues I personally have with the weighted pipeline let's say You're A salesperson and I asked you to give me a forecast and your forecast is the following you have several deals in your pipeline one's a ten thousand dollar deal one's a five thousand dollar deal another one's ten thousand another one's twenty thousand if you add those up you got forty five thousand dollars in the pipeline I say fantastic but then I ask you what is your comfort level what is the probability of you closing that deal and then you assign it a weighted factor for example for the ten thousand dollar deal there's a 50 chance that you'll get it 50 50 that you may or may not get it right for the five thousand you tell me there's a sixty percent chance that you might get it then there's an 80.80 chance you might get it and then the last deal there's a 70 chance you might get it you then take these numbers 0.5 which is fifty percent multiply it by ten thousand you get five thousand do the same here point six times five is three thousand get the idea work the numbers across and when you add a weighted probability to these numbers now your new number is not forty five thousand what you're telling me is that you're going to get basically come in at about thirty thousand that's your rationale so Victor you know I've looked at these deals that I've got in the pipeline based on the weighted probability I've signed them I'm going to estimate that my quota my number will come in at about thirty thousand now I'm happy with that number I'm thinking okay thirty thousand not the best but it's You're On Target to hit your annual number but there's a problem with this way of thinking this is really a horrible way of thinking and doing your probabilities and your forecast for example what we don't understand is that when deals are like this are assigned probable outlines or weighted outlines it's not reality because because a deal is either yay or nay binary one or C or either you get it or you don't get it nobody assigned you a percentage a probability of that deal for example right here ten thousand dollars is a 50 50 chance you'll get it and so you assign that a five thousand dollar number well what happens if you lose that ten thousand dollar deal most likely you'll lose the ten thousand dollar deal client's not gonna say he'll give you five thousand I'll give you five thousand that's not the way it typically works so using a weighted probability when calculating your forecast is really a lousy emphasize underscore a lousy way of forecasting your Revenue that you'll generate for the following quarter please don't use this strategy the best way to approach this is to really talk with your managers and talk about guidelines to basically establish what's a legitimate risk and what isn't for example if I'm going to assign something an eighty percent probability of getting it then what I want to do is sit down with my boss and Define what 80 it really means in other words if the customer has a budget our product fits its need it's a customer that's when in our daily wake of what we offer and they've bought from us in the past then I have an 80 chance that I think we can actually get that deal in other words by having guidelines to assign a probability maybe a way to mitigate that uncertainty and then anything below 80 percent we're just not going to count it we're going to assume that it's going to be a goose egg and if it comes in great but if it doesn't we weren't depending on it so if I'm looking at this from a sales manager standpoint and you're a salesperson and you bring this in to me the only thing I'm going to consider real on this graph in this pipeline is probably this deal right here that's above 80 percent other than that I'm not going to look at the other numbers and really depend on them so right now I'm looking at you and saying you only got about ten thousand dollars coming in right now in this forecast and you're supposed to hit at least 30. uh I'm concerned get the idea so again if you use a weighted probability to calculate forecast bad idea what you need to start doing is look at your forecast look what's in your pipeline then ask yourself what is above let's say the 80 mark because nothing's ever 100 guaranteed right so look at what's above 80 percent but again what are the guidelines to determine that something is at an eighty percent probability if you don't have these guidelines then you're always guessing at whether or not a deal will come in so this is Victor Antonio with another sales training tip reminding you selling ain't hard when you measured correctly when you fill the pipeline up with more deals than you need and you sell and then it becomes easy this is Victor Antonio signing off thank you very much we'll see in the next video [Music] foreign [Music]