Pipeline Coverage

Details on what pipeline coverage is and what Rafiki measures here.

Rafiki Customer Success Team avatar
Written by Rafiki Customer Success Team
Updated over a week ago

Pipeline coverage is a key sales metric that helps sales teams assess the health and potential of their sales pipeline in meeting their sales targets. It is essentially a ratio that compares the total value of all opportunities in the sales pipeline to the sales target or quota for a given period.

Definition

Pipeline Coverage: The total value of opportunities in the sales pipeline divided by the sales target or quota. It indicates how many times the sales pipeline "covers" the sales target.

How Rafiki computes pipeline coverage

How to Compute

The formula to calculate pipeline coverage is:

Pipeline Coverage =  Total Value of Sales Pipeline / Sales Target or Quota

Total Value of Sales Pipeline: The sum of the potential revenue from all deals currently in the sales pipeline, regardless of their stage.

Sales Target or Quota: The revenue goal that the sales team aims to achieve in a specific time frame.

Interpretation

A higher pipeline coverage ratio suggests that there is a sufficient (or more than sufficient) volume of potential deals in the pipeline to meet the sales target, providing some buffer for deals that might not close.

A lower pipeline coverage ratio indicates that the sales pipeline might not have enough opportunities to meet the sales target, signaling a need for generating more leads or improving conversion rates.

Ideal Pipeline Coverage

The "ideal" pipeline coverage ratio can vary depending on factors like the industry, sales cycle length, and historical conversion rates. However, a common benchmark is having a pipeline coverage ratio of 3x to 4x, meaning the total pipeline value is three to four times the sales target, providing a healthy buffer to accommodate for deals that might not close.

Why do you need to measure Pipeline Coverage

Sales managers use pipeline coverage to make strategic decisions about where to focus sales efforts, whether it's generating more leads, accelerating certain deals, or reallocating resources to ensure the sales target is met. It's also used to forecast revenue and identify potential shortfalls in advance.

In practice, computing pipeline coverage involves aggregating data from the CRM system to sum up the value of all opportunities and comparing it against the set sales targets for the relevant period. Regular monitoring of pipeline coverage helps sales teams stay aligned with their goals and proactively manage their sales pipeline.

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