Pipeline hygiene in expected value: EVL
Online version: https://funneleconomics.ai/resources/glossary/evl
EVL (Execution Value Leakage) is the difference between bEFV and rEFV: the distance between two expected values of the same open pipeline. EVL is expressed in euros and is not a lost amount. The ratio of EVL to bEFV is judged against its own history, not against a fixed threshold.
How is EVL calculated?
EVL = bEFV − rEFV
EVL Ratio = EVL / bEFV × 100
- bEFV – the structural expected value of the funnel, without regard to current sales hygiene
- rEFV – bEFV, weighted by SLA Health with measured factors per band
EVL is the distance between two expected values, stated in euros: bEFV minus rEFV.
The EVL Ratio expresses the same distance as a percentage share of bEFV.
For EVL and the EVL Ratio, lower is better. A high EVL stands for a lot of diluted, unhealthy pipeline.
EVL follows the rEFV it is formed from. The dashboards of Funnel Economics Core show EVL based on a simplified rEFV by health status. The optional add-on Funnel Economics Strategist forms EVL from rEFV with measured factors per band. The two values therefore differ.
What does EVL show, and what does it not show?
bEFV takes no account of current sales hygiene. rEFV weights bEFV by SLA Health with measured factors per band.
The health band follows from the opportunity's total age in the funnel, measured against the two SLA values of its stage. EVL shows how far the expectation departs from bEFV once the age of the deals is taken into account.
EVL is not a lost amount. Both sides of the calculation are expected values, and money moves only when a deal is won. EVL therefore does not say either that this distance comes back as revenue when the stock gets younger.
Why is there no threshold for EVL?
There is no fixed threshold for EVL or for the EVL Ratio. What is judged is the standing of the ratio EVL/bEFV within the history of the same model, and its direction.
A fixed threshold is tied to the weighting under which it was set. A cut that has never been measured against an outcome carries no information.
How EVL differs from the EVL Ratio
| EVL | EVL Ratio | |
|---|---|---|
| Measures | the distance between the two expected values: bEFV minus rEFV | the same distance as a share of bEFV |
| Unit | currency | percent |
| Use | putting a figure on the distance between the two expected values | judging standing and direction within its own history |
Related terms
- bEFV
- rEFV
- EVL Ratio
- SLA Health
FAQ
How is the cost of delays in the pipeline calculated?
EVL (Execution Value Leakage) is the difference between bEFV and rEFV. bEFV is the structural expected value of the funnel, without regard to sales hygiene. rEFV weights bEFV by SLA Health with measured factors per band. The distance between the two values is EVL, stated in euros. EVL is not a lost amount: both sides of the calculation are expected values.
At what EVL is action required?
There is no fixed threshold for EVL. What is judged is the ratio of EVL to bEFV against its own history in the same model, and its direction. A statement such as “higher than in the prior periods and rising” is information; a fixed percentage is not.
What is the difference between EVL and the EVL Ratio?
EVL is the distance between two expected values, stated in euros: bEFV minus rEFV. The EVL Ratio sets that distance against bEFV and is a percentage. EVL puts a figure on the distance between bEFV and rEFV; the EVL Ratio expresses the same distance as a share of bEFV. For both, lower is better, and there is no fixed threshold.