How to Calculate Pipeline Generation
Pipeline generation tracks how marketing-qualified leads flow through your funnel to become sales opportunities and revenue. It's essential for forecasting and measuring marketing effectiveness.
The Pipeline Generation Formula
Understanding the Funnel Stages
- MQL (Marketing Qualified Lead): Lead meets basic fit criteria and shows interest (downloads, form fills, engagement)
- SQL (Sales Qualified Lead): Sales confirms lead has budget, authority, need, timeline (BANT)
- Opportunity: Active sales process, deal in CRM pipeline
- Closed-Won: Deal successfully closed, revenue recognized
Pipeline Conversion Benchmarks
- MQL to SQL: 20-30% (B2B average)
- SQL to Opportunity: 40-60% (good qualification)
- Opportunity to Win: 20-30% (depends on industry)
- Overall MQL to Win: 3-8% (end-to-end efficiency)
How to Improve Pipeline Generation
- Improve Lead Quality: Refine ICP, target high-fit accounts, better lead scoring
- Align Sales and Marketing: Agree on MQL/SQL definitions and handoff process
- Faster Lead Response: Contact within 5 minutes to maximize conversion
- Better Lead Nurturing: Educate and qualify before passing to sales
- Track Stage Metrics: Identify where leads drop off in the funnel
- A/B Test Messaging: Optimize for conversion at each stage
- Implement Lead Routing: Match leads to best-fit sales reps
- Regular Pipeline Reviews: Clean stale opportunities, focus on high-value
Pipeline Coverage Ratio
Pipeline coverage measures whether you have enough pipeline to hit revenue targets:
- Formula: Pipeline Value ÷ Revenue Quota
- Healthy Coverage: 3-5x (need $3-5 in pipeline per $1 of quota)
- Low Win Rate: Need higher coverage (5-7x)
- High Win Rate: Can operate with lower coverage (2-3x)
Common Pipeline Problems
- Low MQL→SQL: Poor lead quality, misaligned targeting, or overly strict sales qualification
- Low SQL→Opp: Weak discovery/qualification, poor lead nurturing, or slow follow-up
- Low Win Rate: Poor qualification, weak value prop, pricing issues, or competitor disadvantage
- Stalled Opportunities: Lack of urgency, missing stakeholders, or budget uncertainty