Sales Tip 1849: Pipe Coverage Math Is a Big Reason People Miss Quota – David Weiss

Scott Ingram: You’re listening to the Daily Sales Tips Podcast and I’m your host, Scott Ingram. Today’s tip comes from David Weiss. David is the CRO of the Sales Collective and founder of DealDoc. Here he is.

David Weiss: What is up Sales Success Society? This is David Weiss coming at you with another tip of the day. So my tip today is to throw out your quota math and redo it, because here’s the thing, most salespeople and organizations miss quota by 50%. And so if most are missing by 50%, clearly their math is f*cking wrong. So I would really be, you know, thoughtful because here’s the thing that I see with most people’s quota math, most people that I, that I follow, and I follow a lot of LinkedIn influencers and I like to think I’ve built a little bit of a following myself. Most of them say you need between 2 and 4x pipe coverage. That means you have between a 50, a 25 and 50% close rate. And what I can tell you right now is, is the majority of companies do not have a 25 to 50% actual close rate. Now they juice those numbers by only opening opportunities when they’re about to close.

They juice those numbers by only opening opportunities after they are, like, thoroughly qualified and have been, you know, had two, three, four meetings with and a competitor identified. And Bance, you know, looked at those are not win rates. How I look at this and what I’ve always done is I’ve done my opportunity qualification where I start win rates starting with the first meeting booked, so then I can say how many meetings do I need to book to equal my number with certain size opportunities? And then I also like to look at my conversion rate from first meeting to second meeting to make sure I can improve that. And you can only do that if you open opportunities at time of meeting booked. And so this then actually gets me to, allows me to get to a better view of what win rates really are. And what I find is people actually need closer to 6-10x pipe coverage. And so oftentimes what I’m doing is I’m taking whatever people tell me their, their win rates are and I’m doubling it. And then I’m working with them to work backwards on the quota math for the activity needed to do between a 6 and 10x pipeline coverage.

And I can tell you right now, when I’ve done this exercise, and then people have executed on the needed levels of activity, not a single one of them have missed goal. In fact, most of them land between 110 and 200% of goal. So one of the biggest problems out there is say your win rate is right. Say you have a 25% win rate and you need 4x pipeline coverage. And you have 4x pipeline coverage. You essentially just said you need to win 100% of those deals and the math needs to work perfectly and you have no margin of error. That’s like flying a plane with no redundancy. You know, a plane can fly on on one engine, but they put two on so if one fails, everything’s still fine.

Would you rather fly on a plane that has two engines with a 50% redundancy, essentially 100% redundancy, or would you rather fly on a plane with one engine and if it goes out it crashes? I would argue that your pipeline should have two engines and should have some redundancy to it. So you’re going to want to redo your quota math. Yes. If you are looking for a resource or a document to help you with your quota math, head on over to thesalescollective.com we’ve also included a link to a tool and resource in this tip that will bring you right to our Quota Math Calculator, which will help you figure out not only your quota, but also all the activity you need to hit that quota.

Scott Ingram: For links to The Sales Collective and that Quota Math Calculator, just Click over to DailySales.Tips/1849. Once you’ve clicked over there, be sure to click back here for another great sales tip. Thanks for listening.