PE – What “Sales Pipeline” Means in PE Backed Portfolio Companies

Sales Pipeline is a term that gets used often – but what does it actually mean (and how is it different from a Sales Funnel)?

• Sales Pipeline Definition: A sales pipeline is a set of live, qualified in-flight / open sales deals (i.e. “Opportunities”), that sales reps manage to strategically drive towards closure (i.e. towards “Closed-Won” and becoming a paid customer/account).
• Strategic Importance of the Pipeline: You need Opps in the Pipeline to ultimately win deals.  No pipeline = no sales.
• Pipeline Management: important initiative to better management of the Opportunities and affects more accurate sales forecasting. A well-managed sales pipeline is crucial for selling execution, sales planning and sales management and increasing the overall effectiveness of a sales team.

Also:

• Sales Funnel: A visualization of the sales pipeline in your CRM. It enhances  the visualization, tracking and accountability by breaking down actions, tactics, tasks and pinpointing stages prone to delays, enabling informed decision-making.
• Importance of the Sales Funnel: Provides a comprehensive overview of ongoing Opps, spots potential roadblocks, and supports accurate sales forecasts, essential for meeting sales targets and avoiding risks.
• Efficiency: Helps identify bottlenecks in the sales process where prospects are getting stuck or lost.
• Metrics: Provides valuable data on conversion rates, average deal size, sales cycle length, and other performance indicators.

P.S. When companies track their sales before being acquired by a PE firm, they often use methods that could be optimized for better performance and insights. It’s key to manage the Sales Pipeline effectively.