Cohort Your Pipeline
If you are looking at your pipeline and asking “I can’t even understand this chaos” then you are not alone. Most leaders that I speak to don't fully understand the circus that is operating underneath them. Deals are flying around all over the place, where do I need to focus enablement and what is the persona/ICP I’m most successful at?
That feeling is shared by all of us. It’s also unnerving when you cannot anticipate if the pipeline is fantastic or if it’s mired in very shaky deals. This is why I am a HUGE believer in cohorting your pipeline. Why is it important?
Early Detection of Pipeline Issues
I like to cohort my pipeline into ARR cohorts. You can break down deals from $1-10k, $11-25k and $25k+ ARR. You’ll need larger cohorts if you have an Enterprise pipeline but let’s use these as an example for now. I would also recommend putting this into your CRM for tracking but here is a basic chart to see:
Now if you see an underperformance of any kind in your overall number then you can diagnose which section of your pipeline is at fault. Then you can point your sellers towards this area for improvement. You can also slice and dice the data in that cohort to understand if it’s a closing problem, lead source issue or something else. In this example my SMB and MM Teams seem to be performing well but my Enterprise team is struggling.
Sales Rep & Team Performance
Running an org is a mixture of segments and regions. The bigger your org the more complexity there is. Also, SMB teams are MUCH different from Mid-Market teams as well as Enterprise Teams. Territories also behave differently. Buyers in NYC are different from SF… the midwest is different from the south etc. I can take the same chart and cohort the teams for $25k+ ARR deals.
Breaking the pipeline down by ARR cohorts allows you to understand what segment is performing or what region. You can also see which team is lagging in performance. Overall you can focus your training, target your coaching and make decisions with this greater focus. In this example my East and Central team obviously are underperforming while my West team needs a bit more help.
Marketing & Sales Attribution
Cohorting allows you to focus your spend and efforts towards what is working. You can determine which channel, campaigns or targeted persona is the most successful. This allows you to refine your ICP (if needed) as well as messaging to the section of the market.
It’s incredibly powerful to understand the likelihood of an opp closing by just seeing where it was sourced, the industry it competes in and the title of the person interested in speaking with you. Here is another example:
Secondary KPIs such as avg days or close rates can really help with forecasting as well. Which leads to my next point…
More Accurate Forecasting
If you are historically better in a certain cohort then you can cross reference historical performance on current success. You can also predict sales velocity as well as close rates to help determine a final commit number (this is huge if you have a PLG motion). Additionally, you can analyze those whale deals that never close. If you have those in your pipeline and a rep that is hesitant to close the deal then you can run historical analysis on it.
For example; A majority (80%) of your $400k ARR deals close within 5-6 months for b2b use case selling to the VP of IT. In contrast, 2% of your deals historically close at that ARR level when it gets into month 7 while selling to an IT Manager. You can then predict with a great degree of certainty that this stalled deal won’t come in and should be moved to closed lost.
Cohort your pipeline and it allows for you to easily group your leads and opportunities. The benefits of this are endless… but the ones that jump out the most to me are that you can track performance, identify bottlenecks and adapt as needed.
