Let’s keep selling through this.  Our commitment to you in these uncertain times →

Sales Pipeline Guide

Introduction / Chapter 4 of 7

Sales pipeline analysis: Key metrics & 3 steps to set up reporting

by Steli Efti, CEO

Last updated July 17, 2020


By now, your sales pipeline is starting to take shape. You’ve taken the basic pipeline stages we discussed in Chapter 2 of this guide, and customized them to your own unique business process and customers, as we learned in Chapter 3.

But once your pipeline is up and running, that’s not the end of the story.

Building a sales pipeline is just the beginning. To make sure that pipeline is effectively helping your team close more deals, you need to know how to analyze it.

Analyzing and maintaining your pipeline is essential: That way, your sales pipeline will stay healthy well into the future. With proper sales pipeline analysis, you’ll empower your team to reach their sales goals and make sure no deal gets left behind.

In this chapter, we’re going to discuss:

  • Sales pipeline analytics: what to track and how
  • Sales pipeline analysis: how to set up reporting
  • How to know if your sales pipeline is healthy

By the end of this chapter, you’ll know exactly what to track, how to track it, and how to use that information to make better decisions with your pipeline.

Sales pipeline analytics: what to track and how

There are scores of sales metrics that you can track in your sales pipeline. But let’s face it: who has the time to analyze all that data? (Not me.)

So, let’s talk about some of the most important metrics you should be tracking, and how to do so:

Pipeline value

Your pipeline value is exactly what it sounds like: the value of the opportunities in your pipeline. Knowing this will help you accurately forecast your goals, and be better prepared to reach them.

How to calculate pipeline value:
Start with the number of deals in your pipeline. Then, multiply that by your average deal size.

The calculation would look like this: 50 deals x $5,000 average deal size = $250,000

Sales pipeline velocity

This shows you how much money is passing through your sales pipeline every day, based on how fast leads are going through your sales pipeline. This metric helps you understand how healthy your pipeline is and identify opportunities that are taking too long to close.

How to calculate sales velocity:
First, take the number of deals in your pipeline. Multiply that by your average deal size, then divide it by your average sales cycle length in days.

Here’s an example calculation: 50 deals x $5,000 average deal size ÷ 60-day sales cycle = $4,166

So, in this case, there would be $4,166 moving through your sales pipeline every day. (The higher this number, the better!)

Pro tip: To improve this number, try these methods to create urgency and close deals faster!

Conversion rate per stage

To make sure your pipeline is healthy as a whole, it’s essential to keep an eye on the conversion rate for each stage. In other words, what percentage of opportunities in a certain stage will convert to the next stage?

Keeping track of this metric will help you ensure each stage of your pipeline is working well, and will also alert you to any potential shifts in the market or with your customers.

How to calculate the conversion rate per stage:
Most CRMs will calculate this for you. Keep track of historical data so that you can compare the conversion rate over time.

In Close, you can customize your view of the Status Change Report to see how different stages convert over time.

The Status Change Report in Close CRM shows you how different stages convert

Pro tip: Watch this recorded webinar to see how 5 top sales leaders increase their conversion rates.

Sales rep pipeline performance

Tracking how each rep performs within your sales pipeline tells you where each rep needs help and encouragement individually.

For example, if a certain rep moves a higher-than-average amount of opportunities through the qualification stage but then has a lower close rate, they may need help qualifying better. Or, if a certain rep struggles to get new leads into the prospecting stage, they may need direction on where to identify and contact potential customers. Using this sales data, you can build actionable insights that help your team improve.

How to calculate rep pipeline performance:
Separate your pipeline view to see only a certain rep, and then see the average conversion rate per stage. Then, compare this to the overall average conversion rate, and see how each rep is performing.

So, now you know what you should be tracking. Let's talk about how you can set up your sales analytics.

Sales pipeline analysis: how to set up reporting

Once you’ve got your sales pipeline set up and you know what metrics to track, it’s time to set up reporting. With automated sales pipeline analysis, you’ll not only see the right data at the right time. You’ll be able to take that data and turn it into powerful action items for your team.

Here’s a simple, three-step process to set up and automate reporting:

1. Set up automatic opportunity confidence reporting

Using what you already understand of your conversion rates for each stage, you can create automatic confidence levels for each of your opportunities.

Here’s what you’ll need:

First, set up your Google Sheet with a percentage of confidence for each stage in your sales pipeline. For example, if 50% of leads in the negotiation stage eventually convert, then opportunity confidence at this stage would be 50%.

It should look something like this:

Example view of opportunity confidence in Google Sheets

Next, connect that Google Sheet to your Close account using Zapier. When an opportunity status in Close changes, run a zap that will search for the opportunity confidence level in your sheet. Then, set up a second zap that will translate that data into a custom confidence level and update the opportunity in Close.

How opportunity confidence looks in Close CRM

For a more in-depth discussion of how to do this, watch this tutorial:

2. Automate pipeline value calculations for each stage

Understanding your pipeline value is essential to understanding where your deals stand and how close you are to reaching your goals. It also helps you see whether or not your pipeline is healthy.

In Close, these pipeline value calculations are done for you, automatically.

That means you don’t need to recalculate everything when an opportunity moves to a new stage. Pipeline value is calculated in the moment and adjusts automatically when you move opportunities to different stages.

Sales pipeline value is calculated automatically in Close CRM

You can also see different types of values, including annualized value, monthly value, or one-time value.

Sales pipeline value as seen in Close CRM

With Close, your pipeline value is always at hand.

3. Analyze the performance of individual reps within the sales pipeline

For this, you’ll need an activity-based CRM that your reps are using to track and record their actions, like Close.

In Close, reps can send emails, text messages, and even make phone calls. These actions are all automatically recorded and can be reported on later.

For example, on the dashboard, you can set up your own custom leaderboard to see how your reps are performing.

Set up a custom leaderboard to analyze pipeline performance

You can also see different types of values, including annualized value, monthly value, or one-time value.

Activity Comparison Report in Close CRM

This helps you see how reps are performing with the opportunities in their pipelines. You can also see the actions they’re taking, such as with calls, emails, SMS messages, and relate these to the opportunities that have been won, helping you identify the methods that are working within your pipeline.

Once you’ve got your reporting set up, though, how can you tell if your pipeline is healthy or not?

How to know if your sales pipeline is healthy

Maintaining a healthy sales pipeline takes constant analysis and effort. A healthy pipeline can’t be judged by how many opportunities it has or the total value: you’ll need to evaluate all the key metrics we discussed above to understand the health of your pipeline.

With good reporting in place, you’ll be able to answer these questions and determine the health of your sales pipeline:

Where do you see the most significant drop-off?

Is there a certain stage that is seeing more drop-off than normal? In general, the stages towards the left of the pipeline will see more drop-off than those to the right. If you’re seeing something different, you may need to make some changes.

Are prospects spread out through the different stages of the pipeline, or are there more on one side than the other?

Typically, you’ll have more leads on the left of the pipeline than on the right. In reality, if your leads are evenly spread across all the stages or if there are more leads on the right, this could be a sign that your pipeline is going to dry up. Use the pipeline size calculations we discussed in Chapter 3 to know how many opportunities should be in each stage, and work to make that a reality.

Example of an unhealthy sales pipeline

An unhealthy pipeline has too many leads on the right, and will probably dry up soon.

Is your pipeline velocity increasing or decreasing?

How much money is going through your pipeline on a daily basis? Using the calculations we discussed above, keep a constant eye on your pipeline velocity. That way, you’ll be aware if it starts to drop.

Are reps actively using and updating the sales pipeline?

Another way to measure pipeline health is by its adoption rate on your team. Are your sales reps really using the pipeline? Is it up-to-date, or have they fallen behind in updating the opportunities they’re working with?

Using these questions and the data you’ve collected, you’ll be able to see whether or not your pipeline is healthy, and adjust where needed. Run through this check once a month or so in order to keep a constant eye on how your pipeline is doing.

Use sales pipeline analytics to boost productivity

A good doctor analyzes the symptoms to give an accurate diagnosis before it turns into something more serious.

Just like that doctor, you can use your sales pipeline analytics to regularly check the health of your pipeline. This allows you to ‘diagnose’ any issues in your pipeline, and correct them before they cause issues with your team or your sales.

Above, we showed you the essential metrics you need to watch in your sales pipeline, including pipeline velocity, conversion rates for each stage, pipeline value, and rep performance, as well as how to track these metrics and draw conclusions from the data using your CRM.

We’ve also seen what questions you need to ask in order to assess your sales pipeline health.

By keeping up a regular routine of pipeline analysis, you’ll be in a better position to manage your pipeline effectively.

Want to learn more about sales pipeline management? Then, head over to the next chapter!


Sales Pipeline Guide: Table of Contents

Table of Contents

Read next chapter ⇢