Docs / 4 Factors
There are 4 Factors which allow a company to value their sales pipeline. Taken individually, these factors do not make or break a sales team, but considered altogether, they will allow the sales team to accelerate their earnings.
The FACT is, a pipeline is driven by 4 key factors — the improvement of which guarantees an improvement in sales performance.
The 4 Factors are:
Flow
Average Sale
Conversion Rate
Time to Close
When FACT is increasing, sales is increasing — without exception. Therefore, if you are not hitting your sales targets, one or more of the FACT variables in your business is declining or insufficient.
Flow refers to the newly qualified deals that have entered the pipeline. Ideally, a sales team should have a consistent number of new deals entering the pipeline any given month. An inconsistent flow of new deals will lead to inconsistent wins.
New Deals example, courtesy of SalesInsights.io — a sales analytics and reporting dashboard based on the OSM model.
The Average Sale is the average sale value of deals that have been won.
$$ AverageSale = sum(DealAmount) / DealsWon $$
Over time, a sales team should try to improve the Average Sale so that they make way into ever larger deals. All else being equal, for most businesses it is better to sell larger deals.
Conversion Rate, also known as Win Rate, is the number of deals won out of the sum total of won or lost deals in a period.
$$ ConversionRate = DealsWon / (DealsWon + DealsLost) $$