Helping sales teams can sometimes feel like being a physician. Sales leaders come to us with challenges they are facing and often, those challenges are just symptoms of more deep rooted problems. One of the very first things Funnel Clarity does is seek an understanding of the company’s sales funnel health.
A sales funnel is typically understood as the process through which a sales lead is converted into a closed deal. It also acts as a visual representation that helps organizations determine expected revenue and assess what needs to be done to hit or exceed targets.
Consider these questions below to see if you have underlying issues with your sales funnel.
If you answered no to any of these three questions, you probably have an underlying problem with your sales funnel. The biggest symptom is the lack of forecast accuracy. SBI reports that forecast accuracy is at an all time low. CEOs tend to feel that their forecasts are only about 50% accurate.
There is a lot that goes into a well constructed sales funnel and most of it has to be individualized to your company and your customers. However, there are some components that every healthy sales funnel must have. Here are the initial questions you should try to answer when making a sales funnel assessment.
Don’t confuse a sales workflow with a sales process. A sales workflow is entirely dependent on the work and actions of the seller. An effective sales process and funnel stages will incorporate decision milestones reached by the customer in order to form a process for winning the most deals.
For example, lets say your sales funnel stages consist of a discovery call, a demo, a deeper exploration, then a proposal stage. All of these stages are dependent on the actions of the sales person. If a seller has a discovery call, then you move the deal to the demo stage. However, that movement from one stage to another had nothing to do with the customer and everything to do with the action of the seller.
The way an opportunity moves through the sales funnel needs to be determined by the actions of the customer. Prospects and their actions at your target account create momentum in an opportunity.
If deal movement is determined by customer action, then your forecasts are also more likely to be accurate. Customer action has a much larger correlation to real opportunity movement than the actions of the sales person.
Your first step towards a healthier sales funnel is to ensure that your funnel stages reflect customer actions, not a sellers workflow.
The sales funnel health is heavily dependent on the seller’s willingness and ability to enter accurate notes. If your funnel stages are determined by customer actions, the sellers should start to notice that their forecasts are a lot more accurate. If they can see that their efforts of putting in data are yielding better results for them and their company, their rate of data entry will improve.
Also make sure your company encourages accurate reporting in funnel stages by letting sellers know that backwards movement in a funnel is ok. In fact, it's healthy! No customers make complex decisions in a linear fashion. Sometimes customers will ask for a proposal then realize they never actually thought thoroughly about the outcome they were seeking. So, they will go back to step one. That's not a bad thing. Let the customer properly think through their decision and be their guide throughout their decision journey.
Yes, if deals move backwards then it is not likely that you will close that deal this quarter. But next quarter? Most likely. If you moved them backwards in the funnel when it was appropriate that means that your quarterly forecast got a lot more accurate. It also gives you a much stronger chance of actually closing that deal next quarter and ensuring you have a happy customer that felt heard throughout the sales process.
Encourage your sellers to be accurate with their forecasts. If you want reliable predictions and revenue numbers, your sellers need the freedom to be honest, flexible, and timely when utilizing sales funnel stages.
Your sellers may all have their own style, schedules, and territories. The one thing they will always share is the company sales funnel stages. It seeps into everything you do. It can either be a nuisance that sales people feel obligated to comply with. Or, you can turn your sales funnel into a strategic tool that helps everyone in the organization gain real insights.