How Funnel Economics works

Why a pipeline is measured step by step

For every open deal the money is already spent: on the lead, on qualification, on the selling work. Revenue arrives only at the close. In between lies the time in which that capital is tied up. Funnel Economics measures this stretch: what the open stock lets you expect, how old it is and whether it moves. None of these quantities is a payment stream. The calculation uses your own Salesforce data, not market values.

Two expected values for the same pipeline

bEFV, the structural expected value, multiplies the amount of each open opportunity by its stage win rate. The stage win rate is measured: the share won among the decided deals that stood in that stage. rEFV, the risk-adjusted revenue expectation, values the same stock and also takes the age of the deals into account. The gap between the two is called EVL (Execution Value Leakage). EVL is not a lost amount and has no fixed threshold: it is read against its own history.

Four questions about time in the funnel

Four quantities answer four different questions, and they are not interchangeable. Is a deal old for its stage? SLA Health says so: it classifies each open opportunity by its total age as HEALTHY, DELAYED or STALLED. Is a stage slow? BPV (Build-to-Perform Variance) says so, the time spent in the stage against its SLA. Did a deal move? That is what Dormant Opportunities ask. How long is the whole run? That is the cycle length, which Sales Velocity works with. A deal in the STALLED band can move up a stage every week: the band measures age, not standstill.

The forecast is a range, not a single number

A forecast for executives consists of three named cases: worst case, realistic case and best case. Each case stands for an assumption about the business, not for a confidence bound. cEFV, the calibrated revenue forecast for the end of a period, is the best case of that range, not the realistic case. A running quarter gets three standings instead of the range: won so far, expected (an upper bound), and the bound of today's stock, which is no absolute ceiling. More on this is in the article on the forecast range. The optional add-on Funnel Economics Strategist is designed to give a forecast in this form.

Calibration: how well did the forecast hit?

EFV Ratio divides actual Closed Won revenue by rEFV at the start of the period. It says how well the forecast was calibrated. EFV Ratio has no ideal value; it is read as a series over several periods. EFV Ratio is not quota attainment: attainment is the actual against the plan, EFV Ratio the actual against the forecast. Two directions of view stand behind this. A PERFORM model looks back at a completed period, a BUILD model looks ahead at the open pipeline. Both are described in the whitepaper on BUILD and PERFORM.

Your kinds of business, your stages, your SLA values

Funnel Economics evaluates each opportunity type separately, for example new business and the expansion of existing business. Per stage and opportunity type you set two SLA values; SLA Health measures age against them. The stage win rates come from your own history. That is why the method works without reference values from outside: the quantities are read against your own SLA values and your own history, not against a market value.

Patterns the method names

Recurring pictures emerge from the quantities, and the method gives them names. Funnel Calcification, the over-ageing of the pipeline: the share of the open stock in the DELAYED and STALLED bands rises against its own history; your own SLA values are checked first. Strategic Decoupling: the amount of the open pipeline grows over several periods while its rEFV falls. The Handoff Shell Game: at the handoff between marketing and sales, deals are demoted into a lead stage, and the time deals spend in a handoff stage deviates markedly from the target value, the first SLA value of that stage. A pattern is a reason to look closely, not a verdict: it is read against your own history.

What Core calculates and what Strategist calculates

Funnel Economics Core calculates bEFV and a simplified rEFV based on health status in your Salesforce org and shows both in the dashboards. Funnel Economics Strategist is an optional add-on and not active by default. Strategist forms rEFV with measured factors per health band; further quantities such as cEFV build on that. BPV is calculated by Strategist as well. bEFV is the same in both; rEFV and EVL differ between Core and Strategist because the two form rEFV differently. How Core runs in Salesforce is described on the page Funnel Economics in your Salesforce org.