For a company\u2019s executive management and all members of the sales team, a CRM system proves its value by improving the quality of the sales pipeline and the efficiency of closing those deals. Sure, a CRM\u2019s contact and account information are valuable to management \u2014 but those pale in comparison to the value of deals that will (or won\u2019t) make the quarter. If a CRM system helps win just one more deal every quarter, it more than pays for itself.\nUnfortunately, too many sales pipelines are just baloney: wishful thinking about deals that will never close (or, worse, that don\u2019t exist at all). There\u2019s also the opposite problem: Big deals that may well close, but don\u2019t show up in the system at all until they do. These \u201cmiracle\u201d deals are never harmless surprises, and can be downright dangerous if you have a long supply chain.\nThe good news is that there are several metrics you can use to validate the pipeline health. But simple numbers need to be supplemented by policies, automation, and business processes that provide incentives for good behavior. Let\u2019s look at some examples of policies that should be in place:\nIf a deal isn\u2019t in the CRM, it doesn\u2019t exist\nThis is really basic, but many companies still have some deals that aren\u2019t in the CRM pipeline, and some others that are pretty badly misrepresented. To keep things consistent, it\u2019s best to create synthetic deals that represent all the corner cases (such as \u201crun rate\u201d business, distributor\/reseller deals, renewals, etc.). Make sure that these deals are clearly distinguished from standard ones using record types or other flags that prevent confusion in reporting and other business processes.\nIncorporate automatic deal dupe detection, particularly across channels\nThis will require some fuzzy logic, but makes sure that you\u2019re not double or even triple-counting deals in the pipeline.\n[Related: 6 CRM predictions for 2016]\nAll deals have realistic close dates and amounts\nAgain, basic \u2026 and way too often violated. The key is the enforcement of the word \u201crealistic,\u201d using criteria such as the following:\n\nHow many stages does the deal still need to go through?\nWhat\u2019s the average number of days required for each stage?\nAt the later stages of the sales cycle, is the amount field substantiated by line-item quotes?\nDo the quoted line items make for a coherent order, or do they appear to be random entries designed to fool the system?\nAre those quoted items available on schedule for the deal?\nHow often has the deal record been updated?\nDoes the latest update cause the deal to shrink in value, move out in time, or go backwards in the sales cycle?\n\nHow many completed activities have been done for the deal, considering its stage in the sales cycle?\nHow many open activities need to be completed before the deal can close?\nAs discussed in this article, the criteria for the above bullets will have to vary depending on vertical industry (e.g., government vs telecomm vs financial services) and country (e.g., US vs UK vs Japan). To avoid confusing\/meaningless criteria, you have to split data modalities and follow the edict of that 50\u2019s song, \u201cBeware of the blob.\u201d\n\n\n\nIt\u2019s best that these criteria be checked automatically, although that can involve some fairly complex code.\nA deal\u2019s 'likelihood of close' reflects the customer\u2019s behavior, not ours\n\nThis is tricky, because your internal activities and sales cycles are easily monitored but your customer\u2019s intentions are not. In big deals, the customer has an incentive to hide information.\nIdeally, customer actions and intentions (e.g., downloading of install guides, trial\/pilot usage, request for quote, asking questions in customer forums, etc.) are monitored and collected in the CRM system. It\u2019s a best practice to have email exchanges or forms filled out by the prospect as part of your sales process, so that you have objective evidence of their state of mind.\nObviously, these indicators are much more readily available for deals involving SaaS products and direct sales cycles. But with some creativity, almost any sales cycle can be instrumented.\n\nInstitute automatic pipeline cleaning\nFor example, two weeks after the end of a quarter, all deals that were supposed to have closed at the end of the quarter but haven\u2019t been updated by the rep are automatically closed out. If you want to be ornery, make it so they can\u2019t be re-opened. But don\u2019t take it too far, as this kind of thing can become an engraved invitation for reps to game the system (e.g., automation that re-assigns in-progress deals to another rep if they haven\u2019t been updated in 30 days).\nChannel\/distributor forecasts incorporate data from partners \n\nThis one is really hard, unless your company has significant market power. Your channel partners have to work with a lot of vendors, and they have little time to fill out forms for you.\nProvide a portal that makes it really easy for them to get leads, download information, hear about specials, and get sales support. Make the portal a magnet, so they are in there at least once a week. Only when this is working do you start requiring them to register their deals and update the state of the business on at least a bi-weekly basis. Give them spreadsheet templates and an easy way to upload their pipeline and inventory data directly into the CRM.\nMake sure you have incentives for accurate forecasts, not big ones. Make sure they understand that discounts and allocations are contingent upon the best data, not the most optimistic.\n\nAll fields and related entries of the deal should have audit trails turned on\n\u201cAudit trails\u201d means a date\/time stamp, user ID, and before vs after values for every single change (i.e., this is not a weekly snapshot). Keep these audit trails for at least three years, just like the rest of your CRM data. This is for your own protection when the lawyers come a-callin\u2019, so just do it.\n[Related: What CRM data tells you about your sales methodology] \nAll forecasting is based only on the data from the CRM system\nEven if you are using some sort of external forecasting tool, all the data it uses should be coming from the CRM system.\n\nExternal spreadsheets may be used for reporting, but not as a data entry or modification vehicle.\nAssuming that your system has a real forecasting tool, all adjustments to the pipeline, commit, and other forecasting parameters need to be recorded in the CRM. If your system doesn\u2019t have a forecasting tool, it is acceptable to have managers\u2019 forecasting adjustments made in the form of synthetic deals (with either negative or positive amount values).\nAgain, audit trails must be on for all forecasting entries and results, whether you are using the CRM\u2019s forecasting system or an external tool. Definitely keep these audit trail tables around for at least three years.\n\nForecasts must be analyzed to outlaw bogousity\nBogousity means any of these things:\n\nMandated by any level of management (e.g., \u201cyour number this week will be X\u201d). This issue is painfully fraught with politics.\n\u201cGamed\u201d entries from the worker-bees (e.g., \u201cif I move this deal into next month and that other deal into this week, nobody will notice that I\u2019m behind\u201d)\nAdjustments to the forecast have been made with no comments recorded or apparent changes to the underlying pipeline.\nThe forecast in aggregate involves an unusually fast or optimistic close rate.\nThe forecast contains no notion of probabilities or ranges: if the forecast is \u201cjust this one number,\u201d it\u2019s being forced. True forecasts have a high, low, and \u201cmost likely\u201d component.\n\nAll quotas are in the CRM system, with audit trails on\n\nThis supports \u201cI can see everything in one place\u201d and eases management conversations.\nThis also reinforces the distinction between \u201cyour nut\u201d (the number you need to achieve to make on-target compensation) from \u201cthe forecast\u201d (the realistic appraisal of the deals).\n\nAll commissions are contingent \u2026\n\u2026upon deals satisfying the pipeline criteria of the first bullet and the \u201canti-gaming\u201d criteria described throughout.\nAnd then there\u2019s that culture thing\nEvery level of management needs to explicitly reward good pipeline and forecasting behavior, while visibly highlighting sloppiness and sloth. With a sales organization of any size, the culture of accurate forecasting is a key success factor and a bad culture is a nexus of failure. Unfortunately, getting this right requires consistency, patience, and time -- things that many managements aren\u2019t very good at.