Pipeline Management vs. Sales Forecasting: What’s the Difference?

Your business has multiple operations within sales, revenue operations, and finance. On the one hand, you must build your sales pipeline, ensuring you have a healthy stream of prospects and new customers. On the other hand, your business must have an accurate and up-to-date sales forecast. This forecast allows your company to determine estimated revenue, staff investments, advertising budgets, and much more.

This is the core difference between pipeline management vs. sales forecasting. The two functions are intricately interconnected. However, there are fundamental differences between the two. Solutions like those offered by Next Quarter can bridge the gap between these functions, and these increased connections can help your sales and revenue teams work together for a more functional whole. 

What Is Pipeline Management?

Pipeline management involves the appropriate optimization and maximization of your sales pipeline. Your sales pipeline refers to customers interested in doing business with your company. Different businesses configure their pipelines in various ways, and every business has different phases for its sales pipelines. However, pipelines all have the same basic setup: A customer shows interest in a company and connects with an appropriate sales team member. That team member then pitches the customer, closes a sale, and works on retaining that customer while maximizing their revenue potential. 

Pipeline management can refer to:

  • Ensuring the optimization of each phase of your pipeline. For example, are you maximizing inbound or outbound marketing? Is there money wasted in this process? 
  • Confirming that data is properly entered into your CRM.
  • Managing the combination of automated data entry and human interaction in a manner that will maximize your chance of landing a sale?
  • Transferring data from your pipeline to other teams — like revenue or finance. This ensures that all facets of the company operate with the same data and at maximum efficiency.

Pipeline management requires human expertise. It also requires the right technological solutions — such as real-time analytics and artificial intelligence — to ensure that the information presented is as accurate and up-to-date as possible. 

What Is Sales Forecasting?

Sales forecasting refers to estimates of revenue. Sales forecasts are broken down by specific revenue operations and estimated for months or years. You can also build accurate sales forecasts around particular scenarios. For example, what happens if your company increases advertising? If there is a recession? If you increase the number of prospects that flow through your sales pipeline?

Meeting sales forecasts is crucial to the long-term success of your business. The information gathered from a sales forecast determines salaries, staffing levels, and company-wide investments. 

However, you can only meet your sales forecasts if the data they are based on is accurate. Setting correct sales forecasts means all departments need the most up-to-date data. Accurate forecasting also requires that all departments in a business are connected. Spreadsheets and other siloed forms of data create manual-entry nightmares. As such, this data should update automatically and flow smoothly from one section of your business to the next. 

What Are the Similarities Between Pipeline Management vs. Sales Forecasting?

There are unquestionably similarities in terms of pipeline management vs. sales forecasting. 

First, you must understand the relationship between pipeline management and sales forecasting. Improving pipeline management is likely — although not guaranteed — to positively impact your sales forecasting. Additional prospects may increase revenue, and this will alter your sales forecasting. Furthermore, more accurate sales forecasting may enable other company-wide investments, such as advertising or sales training. When done right, these estimates can increase revenue-generating activities.

As such, both pipeline management and sales forecasting rely on accurate data. Therefore, you need top-tier software capable of being accurate to the second. From a revenue intelligence perspective, understanding areas of improvement in your pipeline management process can lead to a more precise and robust sales forecast. Human expertise and artificial intelligence can be critical in determining where you can improve. It can also help determine how these improvements may impact your sales forecasting. 

What Are the Differences?

There are major differences between pipeline management vs. sales forecasting. However, you must understand that these differences are not necessarily an “either-or” dichotomy. Instead, your company should view them as influencing each other differently.

Pipeline management is more of a sales process. It involves using sales techniques, marketing, and old-fashioned shoe leather. The sales team typically manages pipeline management. The success and talent of this segment of your company will ultimately determine your pipeline’s success.

By contrast, sales forecasting refers to how much revenue sales or business activities generate. There is no question that pipeline management influences sales forecasting. As pipeline management is optimized, the numbers generated for sales forecasting can rise or fall. That’s not to say that there is always a relationship between the two. For example, pulling more customers to the top of your sales pipeline won’t always increase revenue if you can’t close more deals. Furthermore, sales forecast numbers may move independently of your pipeline. This movement may happen if other non-pipeline activities experience revenue alterations. 

The differences between pipeline management vs. sales forecasting are significant. However, they should not be overstated. More to the point, your company must understand the relationship and connections between the two. That’s why you need software — like Next Quarter — that can ensure that the differences between these activities are not exaggerated. By using the same raw data as a single source of truth, you can break down traditional departmental silos. You can also ensure that everyone in your company uses the same information to improve the functioning of your sales pipeline and the accuracy of your sales forecasting. 

Partner With Next Quarter

As you can see, while there are differences, there are deep connections between pipeline management and sales forecasting. Treating them in silos will lead to disaster. Treating them as two sides of the same coin better connects business operations. It also leads to a more robust sales pipeline and accurate sales forecast.

That’s where Next Quarter comes in. The Next Quarter Platform offers a highly robust Revenue Intelligence module. This platform can directly connect your sales pipeline with sales forecasting. This integration enables more accurate forecasts and better-managed sales pipelines. Our Revenue Intelligence module comes with numerous functions, including up-to-the-second sales forecasting, data-driven engagement scores, and sales pipeline opportunity management. All of this information can be tracked across any sales methodology of your choosing, ensuring that you have the most customized product possible.

Are you ready to move forward with Next Quarter, or are you looking to hear more about our offerings? Contact us today to book a demo and learn how Next Quarter can grow your business.