Pipeline generation is near and dear to my heart. It’s the lifeblood of growth and, in my opinion, the most important leading indicator of go-to-market success. Especially for cybersecurity solutions with longer sales cycles where you can’t wait 6-18 months to make a call on whether an activity is working. Pipeline generation is the first KPI to consider when making GTM investment decisions and planning budgets.
Need to slow down spend? Here’s where that can happen without disrupting pipeline generation. Have more budget dollars to invest? Start with things that already generate pipeline well. Need to make the business case for more marketing investment? You got it, focus on impact to pipeline generation.
Sounds easy right? Not so fast bucko. The reality for many cybersecurity companies is that pipeline is measured in ways that create serious blind spots. The most common culprit? Using forecast or late-stage pipeline as the primary measure of pipeline generation.
Forecast and late-stage pipeline are useful for capacity planning and reporting to investors. But they shouldn’t be the basis for planning pipeline generation. Why? Because:
Unfortunately, the discipline that goes into adding deals to the forecast is often absent in earlier pipeline stages. The earlier the pipeline, the less reliable it is as an indicator. And that can’t be the situation if you want an agile GTM that is responsive to what’s working and what’s not.
To be clear, I’m not saying sales opportunities should be reviewed by your CRO or VP of Sales before being added to the pipeline. That’s crazytalk. But I am saying that being able to trust pipeline generation data is strategically important. It should be prioritized accordingly. Otherwise you’re flying blind.
Ideally, the criteria are observable things that have taken place. Such as:
Emphasis on observable. It keeps it simple and makes accountability far easier.
Scheduled the intro meeting but haven’t actually met yet? Not pipeline.
Met with the prospect, gave them ballpark pricing, and have another call with them to review next week? Why isn’t that in your pipeline? Add it ya sandbagger.
Prospect was super interested, but they told you to follow up with them in 6 months to see if they’re ready to move forward? That’s wishful thinking, not pipeline.
I know these scenarios seem absurd. No one would do that right?
It happens. And good luck cleaning it up without objective, observable criteria.
The first red flag that you shouldn’t trust your pipeline data is not having those observable criteria in place. Are there others? YES.
Here are some more red flags to watch out for:
RED FLAG: Using a “best practice” 3x or 4x pipeline rule for planning pipegen targets when you have past pipeline conversion data.
This can happen when teams have an aggressive ARR number to hit relative to past performance and are trying to figure out the pipeline they need to get there. But when applying their prior pipeline conversion rate, the new pipeline target seems unrealistic. So they rationalize using an industry standard pipeline multiple instead.
Sometimes those rationales are ok.
“Last year we had an entirely new sales team and process that made conversion data for most of the year a poor predictor of what we should expect going forward. We saw conversion improve late in the year and it’s only going to get better.”
Sometimes they’re famous last words.
“We’ve got a killer product roadmap that’s going to change the game. We’ll win at least a third of our pipeline, probably even more than that.” SPOILER: They won’t.
RED FLAG: Having zero or small value opps in CRM that aren’t anywhere close to your ASP.
This happens when observable criteria like those covered earlier aren’t in place or enforced. There’s no benefit for an individual seller to put meaningful dollar values on early stage opps in CRM. In some organizations it only creates downside for the seller. After all, they don’t get paid on pipeline and full transparency into it can make them look bad.
If you’re seeing opps in CRM like this, you have issues with how early-stage pipeline is managed. You need to increase accountability. Sometimes that means having more focus on it from sales leaders and regional managers. Sometimes it means you need to make it easier for sellers to put realistic values on early-stage opps. Sometimes it means that you need to make it clear that this information is critical to GTM investment decisions. Translation: DO IT IF YOU WANT MORE INVESTMENTS IN PIPELINE GENERATION.
RED FLAG: Conversion rates vary greatly depending on the opportunity source.
If this is happening after opportunities have been qualified and added to the pipeline, your qualification process needs work.
Here’s Chase and Dee to help explain:
INT. CONFERENCE ROOM — MIDDAY
Chase Quota, VP of Sales, slides a laptop across the table toward Deborah “Dee” M. Andgen, VP of Marketing, who is mid-sip of her third coffee.
CHASE: We need reporting that analyzes conversion of pipeline by marketing source all the way to close.
DEE: Why?
CHASE: So that we can focus demand gen spending on what’s actually delivering revenue.
DEE: Is our qualification process not working?
CHASE: No, we’re very good at qualifying opportunities. What does that have to do with it?
DEE: Well… qualified pipeline has been qualified. At that point we’re saying it’s a real deal that meets all of our criteria.
CHASE: And?
DEE: That means all qualified pipeline meets the same standard and should convert at a similar rate. How it converts from qualification forward isn’t really dependent on the demand gen channel or campaign that sourced it.
CHASE: (long pause, staring into the middle distance)
Ok — I think I get it? If our pipeline data suggests there is a significant conversion rate difference based on the source… that means we have a qualification problem.
DEE: You got it. If qualification is working the way it should, we don’t have to wait for deals to close. We can use qualified pipeline to make demand gen decisions far earlier.
CHASE: (nodding slowly, then brightening)
Great. What’s for lunch?
FADE OUT.
Ok — back to the post here.
None of this is complicated. But simple isn’t the same as easy.
The things I’ve shared in this post happen at companies with talented teams and experienced leaders. Not because nobody knows better, but because it’s easy to overlook early-stage pipeline issues and fixing them requires discipline, accountability, and the occasional hard conversation.
Start with the criteria. Make them observable. Make them non-negotiable. Then look at your pipeline and ask yourself if it actually reflects reality.