What’s The Difference Between A Sales Forecast And A Sales Pipeline?

sales forecast - Photo Courtesy of spiderfinancial http://www.flickr.com/photos/spiderxl/7303216450/A sales forecast and a sales pipeline are not the same. Forecasts are smaller segments of the pipeline that are used to project revenue.

A blog post on the Salesopedia website explains that some organizations often confuse a sales forecast with a sales pipeline. But it’s important to remember that there are distinct differences between the two terms, and they shouldn’t be used interchangeably.

Here’s how I would describe the difference to a distribution salesperson. The sales forecast is an account-by-account projection of the sales and margin dollars expected for a given period of time. On the other hand, the pipeline is really a list of projects that the sales rep is working on with customers. There may be customers that have multiple projects going on, but the projects might be independent of one another.

As the post explains, the pipeline offers a comprehensive view of a salesperson’s opportunities. The operative word is “opportunities.” The pipeline must show everything from new leads to transactions that are ready to close.

The post says that some salespeople are hesitant about putting unqualified leads in the “top end of their pipeline” because they don’t want to focus on sales that are still up in the air. They would rather focus on the business that is nearly closed. But doing things that way is a mistake, as it does not paint the whole picture.

So remember, having a diverse sales pipeline is a good way to keep track of all of your projects. And as the Salesopedia blog post suggests, it is important to indicate which stage of the sales process each of the projects is currently in. Then you can extrapolate from that the likelihood of closing some of those projects.

I’m a big advocate of sales pipelines for salespeople, whether they’re inside or outside salespeople. I think the idea of indicating what stage of the process they’re in is an excellent one that would really help many salespeople in wholesale distribution.

Source: Salesopedia, April 21, 2013

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