Sales Funnel Management is a sales productivity tool that allows Salespeople and Managers, to manage the sales process. Managing the sales process is critical to ensuring long term and sustained sales success. Knowing and quantifying the sales process will allow you to pinpoint strengths and weaknesses that ultimately impact results. Knowledge is power.
The following steps/levels will assist you in identifying where your customers are in the sales process. Yours may vary but be cautious not to have less than 4 or more than 10 limited. Too few will limit the usefulness of the data and too many will limit participation or skew the accuracy of the data reported.
The Initial Contact is simply your first contact with the client/customer. These contacts can be either premise visits, telephone contacts, digital lead sources, lead lists or referrals. If you have previously contacted them but are starting a new sales initiative, also identify it in this stage.
Subsequent Contacts are obviously contacts made after the initial contact. It doesnâ€™t matter who the contact is with, however the contact needs to be strategic and add value to the sales process. These contacts can be either premise visits, telephone contacts or written forms of correspondence. There can be multiple subsequent contacts per sales initiative.
The Data Gathering stage involves your efforts to gather information that will ultimately allow you to develop a solution. These sessions can take place in either the initial or subsequent contacts and with any relevant employee of the company. A customer remains in this stage until you have gathered all necessary information to develop a solution or determined the sales opportunity is lost.
Solution Development takes place after you have gathered information. This stage includes determining which product(s) meet the customers needs, pricing, proposal preparation, etc. When a customer reaches this stage, they remain here until you make the presentation or decide the sale is dead. A sales initiative can only be counted once in this stage.
The Proposal stage is reached once you have presented your solution to the customer. It stays in this stage until the customer agrees to buy or until the sale is dead.
The Sales stage is reached once you and the customer have reached a contractual agreement. These include new sales, win-back sales or upselling existing sales. This is not a forecast of sales or a verbal promise of purchase or even a Letter of Intent.
QUALITY and QUANTITY
Sales Funnels measure both quantity and quality. Quantity – how many contacts does it require to make a sale, or conversely, to make the total sale required how many contacts are needed. Quality- how efficient are you in moving a contact through each step of the sales process.
SET THE EXPECTATION
1 – The best place to start is working the funnel in reverse. Using total revenue or total sales (based on average revenue/sale), how many sales are required by the company, each sales team, and each salesperson.
2 – Calculate the number of proposals that are needed to make a sale. This will typically be based on an actual or expected proposed-to-close ratio or percentage.
3 – Calculate the numbers required in each step using similar ratios between each step of the process.
4 â€“ The end result will provide the quantity of opportunities needed in each step and the quality expectation illustrated by the percentage/ratio from each step to the next.
WORKING the FUNNEL
Now that you have established the funnel requirements begin tracking actual data from each salesperson daily or weekly. Roll the data up through each level of management until you reach the company level.
- QUANTITY Perspective: The quantity in the funnel will quickly allow you to determine if there is enough activity from top to bottom to produce the sales required.
- If there isnâ€™t, the quantity perspective says add more at the top
- QUALITY Perspective: Tracking the closing ratios from step to step will help identify quality issues where sales opportunities may be leaking out. Managers â€¦ it isnâ€™t always just doing more.
- If the standard for propose-to-close is 50% and a salesperson is at 25%, but they are in line with all other steps in the process, the quality perspective says fix this one step versus adding more quantity to the top of the funnel.
- BLENDED Perspective: Improve the quality in each step of the process so you can add more quantity at the top of the funnel. This will produce incrementally more sales using the same level of sales resources.
Effective sales funnel management is much more than just managing the numbers, it is managing the people and processes that move the numbers in and through the funnel. Too often when management does not see the desired results coming out of the funnel their response is to say do more or do better or go do it somewhere else. Basically, theyâ€™re just managing the top of the funnel (do more) and the bottom of the funnel (do it better), but what about the all the steps in between? Do you think it would be important to know why sales opportunities arenâ€™t making it all the way through? Do you think it would be important to set benchmarks at each step so you can readily identify where a salesperson or process is falling short? The answer to these questions and more is a definite yes! Understand the funnel, set quality and quantity benchmarks for the funnel, manage to those numbers, and create specific development plans for improvement. The result will be what your initial instinct demanded, do more and do it better.