Pipeline Coverage Ratio

Pipeline coverage ratio measures how much active pipeline you need to hit your revenue target. If your target is $1M and you need $4M in pipeline to close $1M, your required coverage ratio is 4x. Too little coverage and you miss target. Too much and you're generating pipeline that will never close.

The principle: pipeline coverage is the earliest warning signal for revenue misses. By the time you miss revenue, it's too late to fix. By the time pipeline is thin, you have 1-2 quarters to react. Measure coverage weekly, act on it monthly.

The Formula

Basic calculation

Pipeline Coverage Ratio = Active Pipeline / Revenue Target

Example:
  Quarterly revenue target: $500K
  Active pipeline (qualified opportunities): $2M
  Coverage ratio: $2M / $500K = 4.0x