5 Essential Questions to Assess the Health of Your B2B Sales Pipeline

As a sales leader, the health of your pipeline is the pulse of your business. A strong pipeline is the lifeblood that leads to closed deals, happy customers, and hitting your revenue targets. But how can you tell if your sales pipeline is truly healthy or just full of "junk" that will never close?

Regularly assessing the quality and quantity of your pipeline is critical for sales success. Research from Vantage Point shows that companies that spend at least 3 hours per month managing their pipeline see 11% greater revenue growth than those that spend less than 3 hours.

But what exactly should you be assessing? Here are 5 key questions every sales manager needs to ask to determine the health of their B2B sales pipeline:

1. Is our pipeline properly balanced between stages?

One of the first things to examine is the shape and distribution of your pipeline across different stages of your sales process. A healthy pipeline should have a steady flow of opportunities from the top of the funnel to closed won deals.

Ideally, it should somewhat resemble a funnel, with more early stage opportunities than later stage. A study by InsideSales.com found that the ideal distribution is:

• 30% in the prospecting/qualifying stage
• 50% in the demo/consideration stages
• 20% in the proposal/closing stages

If your pipeline looks more like a champagne glass with tons of top-of-funnel leads but very few making it to the end, that‘s a red flag. It likely means opportunities are not being properly qualified and nurtured.

On the flip side, if you have an hourglass shaped pipeline with a bulge of late-stage deals that have been stagnant for months, those opportunities may be "stuck" or at risk. In fact, 70% of B2B deals that make it to the proposal stage end up closing, according to Salesforce. So if many of your proposals are just sitting there, dig into why.

2. Do we have enough pipeline to hit our targets?

It‘s not just about the number of opportunities – it‘s about the total potential revenue in your pipeline compared to your quota or bookings target. A general rule of thumb is that you need about 3x pipeline coverage to consistently hit your goals, assuming average win rates.

For example, if your target for the quarter is $1 million in new bookings, you should aim to have about $3 million in qualified pipeline going into that quarter.

However, the exact ratio depends on factors like your average sales cycle, win rates, and deal sizes. Bridge Group found that the average B2B pipeline-to-quota ratio is 4.1 to 1, but can vary from 2.8 to 7.5 depending on deal size:

Keep a pulse on this metric weekly, both at the team and rep level. If coverage starts to dip below 3x, it‘s an early warning sign to focus on prospecting. If it jumps too high above 5-6x, reps may be overly optimistic on deal amounts or close dates.

3. How efficiently are deals moving between stages?

Conversion rates between pipeline stages are telling metrics of deal progress and quality. For each stage, track what percentage of opportunities convert to the next stage within a given time frame.

According to SiriusDecisions, the average conversion rates between stages are:

• 31% from inquiries/leads to qualified opportunities
• 56% from early-stage opportunities to late-stage
• 49% from late-stage opportunities to closed won

If your conversion rates are much lower than these benchmarks, it means opportunities are falling out of the funnel at a higher rate. Investigate where the biggest drop-offs are happening. Is it after initial demos? After sending a proposal?

For example, if you see a big drop-off after conducting demos, you may need to examine how effective and compelling those demos are at moving buyers to the next step. Are they tailored enough to the buyer‘s specific needs and use case?

Also look at conversion rates for each individual rep compared to the team average. If someone has unusually high or low rates, dig into what they are doing differently in their sales process.

4. How fast are opportunities moving through our pipeline?

Velocity is another important pipeline health metric. It measures how long opportunities are spending in each stage before converting to the next. Time is money in sales – the faster you can move buyers through the funnel while still providing value, the better.

Sales Hacker found that the average sales cycle for B2B companies is 84 days. But this can vary significantly by deal size, industry, and other factors:

There are a few different pipeline velocity metrics to track:

• Stage-to-stage velocity: Average time spent in each pipeline stage
• Opportunity age: How long individual opportunities have been in the pipeline
• Sales cycle length: Total time from initial lead to closed won

Compare your metrics to industry benchmarks, your historical averages, and between reps. If deals are suddenly taking much longer to close compared to last quarter, figure out why. Is it due to competitive pressure, product issues, pricing changes, or other factors?

For stalled opportunities significantly older than your average cycle, consider implementing an auto-close rule (e.g. closing lost after no engagement for 30+ days). Pipelines need consistent pruning to stay accurate.

5. How accurate are our deal forecasts?

Of the opportunities currently in our pipeline, how likely are they to close as forecasted – both in terms of amount and timing? An over-inflated pipeline leads to missed forecasts and revenue shortfalls.

Assess the quality of each opportunity relative to your sales process:

• Are key stakeholders and decision-makers engaged?
• Has budget been confirmed?
• What are the compelling events or urgency driving the purchase?

Look for warning signs like close dates continually pushing, decreasing deal size, or a lack of access to power. PipelineDeals recommends deal ratings based on these factors:

Each quarter (or more often if you have a shorter sales cycle), compare the deals and amounts that were forecasted to what actually closed. According to research from Clari, the average sales forecast is off by 19.3%. Were certain reps, products, or deal types consistently less accurate?

Rather than asking reps for a single-point projection, consider a range forecast to get a better sense of risk and upside. Have reps submit best case, commit, and worst case scenarios. Celebrate accuracy in forecasting, not just hitting quota.

The Importance of Continuous Pipeline Management

Assessing pipeline health is an ongoing process, not a one-time event. B2B buying is becoming longer and more complex, with an average of 6-10 decision-makers involved per deal according to Gartner. This makes active pipeline management more critical than ever.

Some tips for operationalizing pipeline management:

• Establish KPIs and benchmarks for each of the key pipeline metrics
• Use real-time CRM dashboards to monitor metrics weekly
• Set pipeline review frequency based on length of your sales cycle
• Analyze cohorts of closed won/lost deals to glean patterns
• Enable reps with tools to easily update opportunities and provide visibility

Don‘t leave the health of your pipeline to chance or gut feel. Leverage data to identify risk and opportunities in your pipeline early and often. By asking the right questions and proactively managing your pipeline, you can ensure a healthier flow of revenue for your business.