Here at Catapult we are all about understanding our agency’s prospecting and pipeline needs. If you don’t know what it takes in terms of activities and numbers to generate a winning piece of business, how can you develop a successful plan to do just that? As an easy tool, we created a Pipeline Calculator that breaks down this process into three simple chunks to help our agencies get a head start on understanding their pipeline numbers.
The goal section is made up of three main pieces – revenue goal, the number of contacts in the database, and average first-year value of a deal. Your revenue goal should be pretty straightforward in this calculation. We are looking at the amount of new revenue generated from new business (not organic growth). The number of contacts in your database is essentially how many individual contact prospects you’re currently reaching out to in your content marketing. This is a number that is easily changed and can have a major impact on your new business success. Often though, we see people trying to adjust other numbers and holding to very small databases with zero success. Resources like Winmo allow for focused growth in these databases to hit the quantities needed to be successful.
Lastly, the average first-year value of a deal is limited to just this first-year value, so in these calculations we are not over-valuing each deal for our short-term prospecting efforts.
This is the area where many agencies struggle. Understanding each stage of the sales pipeline process is something that most have never done. We broke this section out into four main parts – Initial Approaches, 1st Meetings, Needs Analysis, and Pitches. For many of our clients, turning the amount of Initial Approaches into 1st meetings is the biggest area where we can provide improvement for them. Most agencies aren’t making a lot of proactive introductions to new brands. As a result, they are limiting themselves from an initial database size perspective, and their conversion rate in this area is also very low. For any sales person this is going to be a smaller number, as we are fighting through initial qualification, awareness, and timing issues to move these prospects to first meetings. With that knowledge, increasing your database size and improving your approach are paramount.
We also find that many of our clients initially overestimate their win rate on pitches. Anecdotally, I can tell you that when I talk to agency principals and owners, the win rate is often overestimated while a New Business Director may often underestimate. I think this is purely a function of perception given how much they are both involved in conversations with new prospects. Our advice: Be conservative on your pitch rate win percentage and if you overperform it, all the better.
From here, we should have a good understanding of both the number of new clients that we will win based off of percentages, and the total revenue generated from new client wins. Disclaimer: There are many factors that go into your individual success, such as time, skill, resources, etc. This calculator should be used with the understanding that it is giving you a baseline of understanding of different areas of your pipeline process that you need to consider when both setting goals at the beginning of the year, and as your year progresses.
You should be using this calculator to understand where you might be underperforming. If you find yourself lower than average on initial approaches, then you can fix that area. If you are generating enough meetings and pitches but not winning business, no worries. We fix our pitch materials. If we are fine on all of our pipeline stage percentages but still not getting enough meetings, then most likely we need to look at how many prospect contacts we are reaching out to in our database.
Hopefully, this calculator gives you an initial guide to your proactive prospecting efforts!