I am often asked the question by sales people and business owners, how big a pipeline do I need to meet my goals. My response is typically well what are your goals, and is there a way we can extrapolate a reasonable estimate of the pipeline required to get there. I often talk about the karmic method being the synthesis of empirical methods applied to a sales process with accumulated experience. To that end lets apply these principles to this question.

The size of your pipeline is going to depend on a bunch of variables (typically the same variables involved in many other sales calculations):

1.  Total revenue you want to achieve in the period.

2. Average sales price.

3. Close ratio- Ratio of opportunities won to total opportunities in the pipeline. You will need to back out how many raw opportunities you will need to have in the pipeline.

Based on these variables you can calculate your ideal pipeline size:

Revenue target/ASP= # of deals you need

# deals needed/ Close ratio= pipeline size required

So an example calculation for a software product would look like:

Total Annual revenue target= $1,000,000
ASP= $50,000
Close ratio= 15%

There for you would need 50 deals to hit your target.  You would need 334 deals in your pipeline to hit a target of $1,000,000 with an ASP of $50,000 and close ratio of 15% of the raw leads. Needless to say the percentage close rate will be different at various stages of your sales process, so you can further sensitize this calculation by calculating the deals required at each stage based on the close percentage of that stage. The interesting thing about this method is that you can then evaluate the accuracy of your calculation by looking at previous years results (provided you have the data) and using regression analysis(Microsoft excel will do this for you) determine the co-efficient of each of these variables for your business.

You can then adjust your revenue target based on the time you have (ie. 3-6 months) or by the average sales price. For example go for a few large deals or many small deals depending on the market. All of this assumes you have data set to call upon.

If you don't, then begin building one. Take your revenue target and set a multiple for your pipeline that is difficult but achievable. You can then start tracking against your multiple as you gain data. At least this will give you a starting point while you build a dataset.  The key to karmic selling is to apply critical reasoning to seemingly "art like" processes to ensure foreseeable consequences. The determination of pipeline size provides a defendable road map for sales people to follow that will ensure both sales people and the company hit their monetary goals.

Moment of Zen
"Introspect daily, detect diligently, negate ruthlessly"- Swami Chinmayananda 

P.S. If you are interested in leveraging the karmic philosophy to accelerate your career or business please check out my website http://www.karmiccoach.com , and get Karma working for you!