The reverse pipeline is simple arithmetic and every owner has done it on a napkin. This version adds one more line: minutes per quote times quotes per day, against the quoting hours the team has. It tells you when the target is not ambitious but arithmetically impossible under the current method — and what the ceiling is.
Target divided by order value is jobs. Jobs divided by win rate is quotes. Quotes divided by working days is what you have to send every day. Owners do this on a napkin and it is right — but it stops one line short. Multiply quotes a day by minutes per quote and compare it with the hours the team can actually quote, and some targets turn out not to be ambitious but impossible.
The reverse pipeline is three divisions. Revenue target divided by average order value gives the jobs you need to win. Jobs divided by win rate gives the quotes you need to send, because you do not win them all. Quotes divided by working days gives the number that has to go out every day. That is where most calculators stop, and it is useful as far as it goes.
The fourth line is capacity. Quotes a day times minutes per quote is the hours of quoting the target needs every day. People who quote times the hours each can honestly spend quoting — between calls, orders and everything else — is the hours available. When the first is bigger than the second, the target cannot be reached by effort, only by changing the minutes. The tool then runs the arithmetic backwards to give the ceiling: the most revenue the current method can produce with the hours it has.
Because it is exactly the peak-season arithmetic that broke the wholesale nursery before the rebuild. In the busy season the sales team could take fifteen to twenty leads a day. At fifteen minutes a quote that is nearly five hours of pure quoting before anyone answers a telephone — so under the old method they simply could not quote them all and take calls in the same day, and some proportion of those leads never got a quote at all, in exactly the weeks the business was most likely to win them.
At two to three minutes it is under an hour. The same three people now quote every peak-day lead the same day, and the business went from £1m to £3.2m with the office unchanged. The target did not get easier. The minutes got shorter.
A £1.5m target, £1,500 average, 25% win rate, 250 days: 1,000 jobs, 4,000 quotes, 16 a day. At fifteen minutes that is four hours of quoting a day; two people with three hours each have six. Fine. Double the target to £3m: 32 a day, eight hours, against the same six — impossible. The ceiling under today's method is six hours × four quotes an hour × 250 days × 25% × £1,500 = £2.25m. From a system at three minutes, the £3m target needs 1.6 hours a day.
Put next year's target in, not this year's. If the warning shows, the sales plan depends on a quoting method that cannot deliver it, and the fix is the minutes per quote — the price book in a system so a quote is built from a catalogue on the call rather than from a spreadsheet afterwards. The operations audit starts there for any business that quotes, the other calculators cover the hire and the hours beside it, and the short version of the method is on the byHoratio homepage.
Target divided by average order value gives jobs; jobs divided by win rate gives quotes; quotes divided by working days gives what has to go out every day. A £1.5m target at £1,500 an order and a 25 per cent win rate over 250 days is 1,000 jobs, 4,000 quotes and 16 a day. Then check the fourth line: 16 quotes at 15 minutes is four hours of quoting a day, which the team has to actually have.
Then the target is not reachable under the current method, regardless of effort. You have two levers. Hiring another quoter adds one person's hours at the same minutes per quote, so it raises the ceiling by a fixed step and brings on-costs with it. Cutting the minutes per quote — quoting from a catalogue in a system rather than from a spreadsheet — raises the ceiling for everyone at once, which is what took the nursery in case study 004 from unquotable peak days to quoting every lead the same day.
Fewer than the working day. Between calls, orders already sold, customers on the phone and everything else, three hours of actual quoting a day is honest for most salespeople; some days it is one. Use the figure you would defend, not the one you would like, because an optimistic capacity hides the impossibility the tool exists to reveal.
Because it is the number that stops the argument. The ceiling is the hours available converted back into revenue through minutes per quote, win rate and order value — the most the current method can produce. If next year's target is above it, the quoting method has to change before the sales plan can, and no amount of motivation alters that.
Last year's. The point of the reverse pipeline is to find out what the plan requires of the business, and a win rate you hope for hides the requirement. If you want to see what an improved win rate would do, change it after — and note that faster quoting improves it, which the quote response time calculator shows.
If the quoting hours don't fit in the day, no sales plan survives contact with it. Change the minutes per quote first. Twenty minutes, no deck, no pitch.
HORATIO@BYHORATIO.COM
15–20 leads a day, all quoted the same day, by the same three people — after the minutes changed.
The same capacity arithmetic, run against the peak season.
The hire, the charge-out rate, the margin leak, and more.