Sales Pipeline Management: How to Spot an Ageing Pipeline

Funnel Calcification is the over-ageing of the pipeline: the share of the open stock in the health bands DELAYED and STALLED rises against its own history. Sales pipeline management measures this share per stage as the Calcification Rate. Judge it against your own history. Deals without movement in a period are a related quantity.

How do you notice that the pipeline is ageing?

The pipeline is larger than it has been for a long time. The pipeline meeting still runs like last quarter's: the same deals, new close dates. Revenue won does not grow with it.

To a sales leader, a full pipeline looks like safety at first. To RevOps, the same pipeline is an open question. The total of open deals says nothing about how much of it is over-aged.

In daily work the pattern shows in three observations:

• Deals have been in the funnel for several quarters, and the close date keeps moving on.
• The pipeline review covers the same deals as last time.
• New deals come in and old ones do not leave, neither won nor lost.

This picture has a name: Funnel Calcification. It does not mean the single over-aged deal. It means a pattern across the whole stock of open deals.

For a single deal there are conversation tactics. The pattern needs a measurement: how much value sits in over-aged stock, and in which stage does it stand?

Which two forms does Funnel Calcification take?

Funnel Calcification comes in two forms. The two forms differ in what happens to the inflow of new deals at the same time.

Funnel Calcification while inflow rises is the first form. The team generates many new deals, but those deals do not convert. The new deals grow older in the funnel than the first SLA value of their stage allows. The pipeline gets fuller, not more productive. Funnel Economics calls this form pipeline stuffing.

Funnel Calcification while inflow falls is the second form. The stock is calcified, and fewer new deals arrive at the same time. The pipeline then lives off its old stock. Funnel Economics calls this form pipeline starvation.

The distinction directs attention. With rising inflow, the question sits behind the entrance: what happens to deals once they have been created? With falling inflow, a second question joins it: why is less arriving?

Funnel Calcification is also different from loss. In Global Stage Attrition, the stage win rate of one stage drops for the majority of teams and regions. In Funnel Calcification, the deals do not drop out. They stay open and grow older.

How can Funnel Calcification be measured?

The size of the pipeline does not show Funnel Calcification. The pattern is measured by the share of over-aged stock. Beside it stands a related quantity that asks about movement. Both can be described in plain words.

The measure is the share above the first SLA value

The basis is SLA Health. SLA Health classifies each open opportunity as HEALTHY, DELAYED or STALLED. An SLA here is the time you allow a deal to take.

You set two values for it per stage and opportunity type: a target and an upper limit. An opportunity type is a kind of business, such as new business or business with existing customers.

Up to the target, a deal counts as HEALTHY. Between the target and the upper limit it counts as DELAYED, beyond that as STALLED. What is compared is the deal's total age in the funnel.

The Calcification Rate builds on this. For each stage, the Calcification Rate sets the open pipeline value in the DELAYED and STALLED bands against the total open pipeline value of that stage.

Calcification Rate = open pipeline value of the stage in DELAYED and STALLED / total open pipeline value of the stage × 100

In plain words, the question is: what part of the money in this stage sits in deals that have been under way longer than intended? A lower value is better.

The Calcification Rate is read per stage. It therefore shows in which stage over-aged stock stands.

The Calcification Rate does not show movement; it says something about total age. A deal can be above the first SLA value and still be moving. Another can be HEALTHY and not moving.

A related quantity is deals without movement

The health bands measure how old a deal is in the funnel. Whether the deal has moved recently is a second question.

A related quantity asks about movement directly. It is not part of the pattern's definition. Dormant Opportunities are open opportunities that show no movement during an entire period. A stage change, a promotion or entry into the funnel counts as movement; a deal that stands in the same stage for the whole period has not moved. The definition carries the number of these opportunities and their amount.

The amount is reported in two separate parts. The first part is dormant opportunities whose close date still lies in the window under review at the end of the period. The second part is dormant opportunities whose close date was moved out of the window and that are still open.

The moved-out part is the more critical one: moving a deal out without any movement hides it in the future. A sum of both parts is not “the value of the dormant pipeline”. See the entry on Dormant Opportunities, open deals without movement.

Dormant is a question about how the pipeline develops. The quantity therefore belongs to the view of how the pipeline is being built, not to the look back.

In plain words, the question is: which open deals stand in the same stage for the whole quarter?

The counterpart is flow in relation to stock. It means the share of the stock value that is decided or moves on within a period. If this flow collapses, the method treats that as a sign of Funnel Calcification as well.

The two questions complement each other. The Calcification Rate asks whether a deal is too old. Dormant Opportunities ask whether the deal is moving. Both quantities are read as a series across several periods, against their own history.

A trend needs two reference points

A single value says little. What is worth noting is whatever departs from the funnel's own history.

A trend is never read against the immediately preceding period alone. That comparison on its own ignores seasonal effects.

Two reference points are needed. With quarterly periods, they are the prior quarter and the same quarter a year earlier.

A value counts as rising only when it lies above both reference points. The same rule applies to the inflow of new deals, which separates the two forms of the pattern.

A pipeline can grow and age at once. What matters is not its size but which part of the stock lies above the first SLA value, against its own history.

How does Funnel Calcification show in the expected value?

Funnel Calcification also shows in two expected values of the same pipeline, which are compared with each other.

bEFV is the expected value of the pipeline: each opportunity's amount multiplied by its stage win rate. The health band a deal is in changes nothing about bEFV.

rEFV, the risk-adjusted revenue expectation, takes exactly that into account. rEFV additionally weights the same stock by SLA Health, with measured factors per band.

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.

EVL has no fixed threshold either. What is judged is the ratio of EVL to bEFV against its own history, and its direction.

For the quality of the stock, the method has a second term. EFV Density is rEFV as a share of total pipeline volume, both at the end of the period. No tool reports EFV Density.

If EFV Density drops while pipeline volume drops as well, that is a question, not a warning. Deals that are won leave the open stock and lower EFV Density mechanically. The question is held against the actual of the same period.

How do you approach an over-aged pipeline?

The obvious reflex is a clean-up. The first question is a different one: is the yardstick right?

The SLA is a setting. The SLA is set during setup, ages with the business and is not measured again on its own. Every statement about over-aged stock rests on that setting.

The procedure therefore has a fixed order:

1. Check your own SLA setting. Do the two SLA values per stage still fit the history of the deals you have won? The check runs per opportunity type, never once for the whole company.

2. Look stage by stage. The Calcification Rate shows in which stage over-aged stock stands. BPV (Build-to-Perform Variance) adds by what percentage the time spent in a stage deviates from the stage's SLA.

3. Put the inflow beside it. Is the inflow of new deals rising or falling against both reference points? The answer separates the two forms of the pattern.

4. Watch the course over time. The same measures are read every period for the same opportunity type and set against their own history.

The first step comes first on purpose. Only once the SLA fits your own business is it worth looking at the individual stages.

The company sets new SLA values itself. Which values should apply is a business decision.

For a sales leader, this changes the question in the pipeline review. The question is no longer how large the pipeline is. The question is which part of the pipeline lies above the first SLA value and in which stage that stock stands.

For RevOps, it becomes a recurring report: per opportunity type and stage the share above the first SLA value, beside it the inflow. Each of these figures stands next to its two reference points.