Why Should You Rethink the Funnel?

 

In the recently released book, The Funnel Principle, I make a case for putting a new focus and attention on the sales funnel. What's the rationale behind this?

Let's start with the most important reason: achieving quota.

More than anything else, achieving quota is what will define your success this year. Your performance evaluation might include 'soft' measures, but the one that matters most is achieving quota. Your commission depends on it. Your bonus depends on it. Your income depends on it. Your boss or your people depend on it. Your credibility depends on it.

Quota is all about net new sales opportunities, right? And guess what else is all about net new sales opportunities? The funnel. Let's look at quota first.

You're going to have to win new business to hit quota. Because your quota likely includes business that recurs from last year, business you don't really have to win again, let's focus on new sales you'll have to produce to hit that quota. For example, if your territory did $1M last year and this year your quota is $1.1M, then you've got to find another $100,000 in net new sales.

But wait – you'll likely have to find more. What's the chance that all of the $1M you sold last year will also be sales this year? Let's say 25% of last year's business turns over this year. There's another $250,000 of net new sales opportunities you've got to find and close. Now we're up to $350,000 of new business to hit this year's $1.1M quota. If your sales turnover is more than 25%, then the delta is even bigger and you've got some serious funnel work to do.

How's the funnel all about quota? It's a funnel
of net new
sales opportunities and therefore it's tied to achieving quota in the strongest way. If you've got to find and close another $350,000 to achieve quota then the first place you should look for your ability and the plan to achieve that is your funnel.

Which leads me to the second reason you should Rethink the Funnel. Your funnel provides leading indicator information that helps you answer the funnel's ability question. Unlike sales, a lagging indicator, funnel data is information you can still do something about - as long as you're not too far into the year.

Let's say your funnel's ability to close enough business to achieve your quota is weak. What do you do? You find more sales opportunities to chase. If your funnel has a 1:1 ratio of sales opportunities to GAP (GAP is what you have left to close to achieve quota), then you'd better have a 100% hit rate. If that makes you nervous (it shows you have a pulse) then you should immediately plan to increase your funnel value to something more than a one to one ratio to your GAP. Otherwise, it could be a long off season.

And here's reason number three: the funnel is a behavioral tool. Meaning, it tells you what you should do next when you're working an opportunity. How? The funnel's stages tell you where the opportunity is in the process, which then suggests what you should do next.

Now, here's the catch. To be most effective as a behavioral tool, your funnel has to be designed the right way – the BuyCycle Funnel™ way. This funnel design is based on the customer's buying process, not on selling activities (like a traditional funnel). The BuyCycle Funnel makes you think of what the customer's commitment should be before you decide what you're going to commit to. For example, for some given opportunity should you prepare the proposal next? Or should you have the customer give you more information first? For another opportunity should you give some person a sample to use? Or should you first get a commitment for when and how that sample's going to be used? For some other opportunity should you buy the plane ticket and make the sales call? Or should you first make sure that the right people are going to be there and know why you're there?

If you're a sales manager and you want to develop and help your salespeople succeed, think of how effective your coaching could be using a tool that gets your salespeople to focus on the customer's buying process. You're using the funnel to facilitate a conversation with them, a richer, more meaningful conversation, says John Hoskins, co-founder of Advantage Performance Group (APG). This funnel dialogue helps you challenge assumptions that your salespeople are making. It helps them be much more productive and improves the quality of the funnel data you're looking at.

 

While the funnel has value as a quantitative measure, we can't let the funnel be misperceived as just a source for quantitative information. Metrics and probabilities can be important, but the real leverage points are in improving the integrity of funnel data, one conversation and one sales opportunity at a time. Better funnel data is what makes the metrics and probabilities valuable at all. This is done through a BuyCycle Funnel™ design and an ongoing dialogue between salespeople and managers.

 

 

 

The power of simple for sales coaching

I just finished participating in two Funnel AuditsTM with a client of mine in the chemical industry, and I am reminded that a simple sales process is a powerful tool for effective coaching.

The sales director lead the Audits and did a wonderful job of fulfilling his purpose - helping his salespeople see things they aren't seeing regarding their funnels and their deals. His simple questions got to the heart of the issues. His salespeople diagnosed better. Better diagnosis set up a better sales strategy for each deal we reviewed.

Let me know if you think a simple sales process is more effective than a complex one and share your experiences with either type. Tell me what simple or complex looks like. Thanks.

Have sales funnel will travel

It's 11:06pm EST and I'm getting ready to conduct a funnel training session through Microsoft Live Meeting to a Funnel Principle client in Asia. We'll have an eclectic group on the session - managers from China, Korea, Japan, India, Hong Kong and more.

I've had the privilege of conducting sales training in person in several countries during my 14 years as a sales consultant and I'm always amazed at how well good sales concepts 'travel'. Sometimes however, the connection isn't made.

I'd be interested to hear what your international sales training experience has been, and in particular what types of training traveled well and what types did not (no need to mention brand names, rather, just mention 'category' info such as face to face sales skills, negotiation, account management, territory planning, funnel management, etc.

Is forecasting wrecking good selling?

I was with a client this past week and the subject of forecasting came up. He's very focused on doing it well and consistently.

After the meeting it occurred to me that he was obsessed with it. It's not a judgment, just an observation. He's not the only VP of Sales I know who is really intent on perfecting it. But it made me think, with all this focus on forecasting is there any negative repercussion to it?

Don't shoot me - I'm just the messenger.

Another way to look at it is how does an intense focus on accurately forecasting help the salesforce achieve its objectives and be productive?

What are the pros and cons of an intense focus on getting forecasting right?

Let me know what you think.

How Real is Your Sales Funnel?

Would you bet your next paycheck that the sales funnel you're looking at is real?

The sales funnel (pipeline) is getting more attention these days. This is definitely a good thing, given its pivotal role in a company's overall sales process. This attention is largely being fueled by the software and 'saas' companies (like salesforce.com) providing CRM and salesforce automation services.

The focus on CRM has given managers, reps and the head of sales a visibility of the sales funnel like never before. Visibility makes it possible to run reports, analyze, and be more productive at working the funnel.

In the draft of these path cutters is something that's being missed - low integrity of the data that's on the sales funnel.

What's the cost? Missed forecasts, insufficient prospecting, chasing bad deals, low productivity, longer sales cycles, lower hit rates, missed quotas.

A client of mine recently said his CRM investment is a mixed blessing. He's got visibility in one place, but he's got very low confidence in the funnel data he's looking at. Another client tells me he routinely cuts by 50% the forecast his salespeople send him. He has little confidence that they're giving him accurate forecast information.

So the first VP used to spend lots of time gathering funnels from all his managers and reps, and now he spends lots of time trying to determine what's real and what's not.

This missing link is good funnel data. Funnels of high integrity.

You know what integrity means: honesty, wholeness, soundness. In a word I'll say how real. And funnel integrity? How real is the sales funnel information on the funnel.

For example, is that deal at stage 3 really a $300,000 deal? Or is it a $75,000 deal that might lead later to a $225,000 deal? And if it might, then it also might not.

CRM's not the bad guy here. It's just that VPs who hoped that CRM investments would transform the accuracy and consistency of their forecasting and funnel data integrity underestimated the continued effort it would take to get the outcome they were buying.

The VPs and sales managers need to refocus on the funnel process itself, especially the funnel stages. Those stage definitions are the key to accurate placement of the opportunity. If the stages are misleading or not defined at all, the rep's more likely to place the opportunities at the wrong stage and he or she will have bad funnel data. If one hundred salespeople place 100 sales opportunities at the wrong funnel stage, now the VP of sales has a real problem on her hands.

Here's something to think about:
1) What's your confidence level in how real your funnel data is?
2) What adjustments do you make to compensate for less than 100% confidence, and how consistent and accurate are you in those adjustments?
3) What else would you be doing if you didn't have to spend your time making those adjustments every week, every month, every quarter?

What Every Person Must Know About Selling

Welcome to the new blog of Breakthrough SalesPerformance. We're a sales consulting company in its thirteenth year of operation. I'm CEO and Founder Mark Sellers.

Recently, I published my first book called The Funnel Principle: What Every Salesperson Must Know About Selling. We're thrilled with the reception and recognition the book is getting. Gerhard Gschwandtner, Selling Power magazine's Publisher called it "a terrific new book". Hank Babiarz, former EVP Sales of GA Braun said "The Funnel Principle gives you the edge to consistently compete and win."

Since this is the first posting of our blog It's Time to Rethink the FunnelTM and you're a busy person, I'll get right to the point: What is it that every salesperson must know about selling?

It's simple: the sales funnel is perhaps the tool with the greatest potential for helping a salesperson achieve the one thing that he or she will be most remembered for at the end of the year - you know this - it's achieving quota.

Why is this true? Quota is the mission of the salesperson. Quota is all about net new sales. And the funnel is all about net new sales. It's the one tool in the bag that is exclusively and entirely focused on achieving quota.

Therefore, you'd better get good at it fast. Look only to today's tough business climate for justification that your funnel had better be full enough of real sales opportunities. Otherwise, it'll be a long off season.

One of the reasons a sales funnel is so valuable is that it provides leading indicator information. A quick example of a leading indicator is a heart rate monitor for marathon runners and other athletes. They use it during training to know how much stress they're putting on their heart, and to know to back off or push themselves even harder.

In sales, your funnel data is leading indicator information because the sales are in progress and represent future potential revenue. (A closed sale is a lagging indicator). The total dollar value of those funnel opportunities tells you something important about your chances of ultimately hitting your quota at year's end. Like the heart rate monitor lets you back off or push harder, the funnel value tells you to fill that funnel more, or to shift more attention to already qualified leads. If the dollar value is low and keeps you awake at night, there's still time to change that. Unless of course you've waited too long to know what that dollar value is.

When you put a process to knowing your funnel value it becomes one of the most valuable assets you have. And it will pay off for you year after year.

For more information about maximizing your use of the sales funnel visit our websites http://www.funnelprinciple.com/ and http://www.breakthrough-sales.com/ and download resources like Tips to Breakthrough series and Breakthrough Case Studies.