Value of deals in the pipeline for partners. A healthy pipeline can indicate that the partnership department is providing value to its partners and helping them drive business outcomes.
How to calculate it
Partner deal pipeline starts as one number: add up the value of every open, partner-sourced opportunity in the period you care about.
Partner deal pipeline = total value of open partner-sourced opportunities in the periodTo judge whether that number is healthy, sales teams turn it into a coverage ratio against the revenue target for the same period.
Pipeline coverage ratio = total pipeline value / revenue target (quota)A few inputs decide whether the number means anything. Count only open deals, not closed-won or closed-lost. Use the same period for both the pipeline and the target, so a quarterly pipeline is measured against a quarterly quota. Decide up front whether a deal counts as partner-sourced. The clean rule is to credit the partner whose deal registration or referral opened the opportunity, which keeps this metric clean against partner-sourced revenue and partner-sourced pipeline.
A worked example
Suppose a company sets a quarterly target of $1,000,000 in partner-sourced revenue. Its partners have $3,500,000 of open deals registered to close that quarter. The coverage ratio is $3,500,000 divided by $1,000,000, which is 3.5.
A ratio of 3.5 means the partner funnel holds three and a half dollars for every dollar the team needs to book. Read another way, the team needs to win deals worth about 29 percent of the open pipeline to hit the target. As the Gary Smith Partnership notes, a ratio of 1 or less means the funnel is too thin to reach the goal even if every open deal closes.
What a healthy ratio looks like
Most sales teams aim for a coverage ratio in the range of 3x to 5x, meaning three to five times the revenue target sitting in open pipeline. Practitioner Ramin Zacharia, a CPA writing on LinkedIn, puts the common rule of thumb at 2x to 4x. The right number for a partner channel depends on the partners' win rate. As Topo points out, a team that wins one in five deals needs roughly 5x coverage just to break even, while a team winning half its deals can run closer to 2x. Set the partner target against the actual partner deal close rate, not a generic benchmark.
Where the number gets distorted
A big partner pipeline can lie. The Gary Smith Partnership names the most common traps, and they hit partner channels hardest. Early-stage deals inflate the total, so a funnel full of just-registered opportunities can show a comfortable ratio while almost nothing is close to signing. Slipped deals that have not really moved keep padding the number quarter after quarter. And pressure to show coverage pushes partners to register deals on hope rather than real buying intent.
Two distortions are specific to partner programs. The same deal can be double-counted, once by the partner and once by the direct team, which overstates the funnel. And a deal registered months ago with no activity is dead weight. The fix is the same one direct teams use: weight each deal by its real probability before you trust the ratio, and tie pipeline to a defined partner sales cycle length so stale deals fall out.
Related
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