Are you asking the right questions about your funnel?
The sales funnel is the visual representation of the sales process, from the point of initial contact to the actual closing of the sale. It has been represented in many ways, the most popular one the inverted pyramid, but it also comes in the form of arrows or blocks lined up, concentric circles, … . Every part of the pyramid, arrow or circle represents a new stage in the process. The number of stages and the naming of every stage varies according to the author, but the systematic flow that drives the sales process remains the same.
The form or the naming of the stages is not important and more related to the personal preferences of the user, so I will not go into this. What counts is how an organization uses, monitors and manages its funnel. And I purposely refer here to an “organization”, as this logic can be equally applied by a small or large corporation to manage its sales cycle, notwithstanding if it operated in the B2B, B2C, B2B2C sector, as well as by a not-for-profit organization to monitor the evolution in its fundraising efforts. Based on the status of its funnel, meaning the amount of activity there is in every phase of the sale process, the organization will be able to predict the outcome more accurately and determine what actions need to be taken.
In order to get the best results out of it sales efforts, an organization should answer a number of questions for every stage in the sales funnel:
When does an enquiry become an actual & valuable lead (or for some industries, will an enquiry immediately become a valuable lead)?
How many steps will a typical sale go through once it becomes a lead, and what are the typical characteristics of the sales process in that stage?
Following that, what are determining criteria to move a lead into the next phase? Or to remove it from the funnel, which sometimes is even more critical, as dragging along laggard leads will prevent the generation of new ones?
What is the likelihood of a sale to be closed for every stage in the funnel? Based on historical data, the organization can determine what percentage of sales were ultimately closed once they passed through a certain stage in the funnel, and what the loss or drop-out ratio was.
How much time does a lead typically stay in a certain stage? The duration might be shorter or longer in the earlier or later stages in the funnel, depending on the industry or type of customer. Yet for every stage and every market segment there will be a standard stage velocity that can be identified and used as the reference flow-through time.
For every stage, what actions are required by the sales team (or other teams if necessary) and what processes should be followed by these teams to keep the momentum going and ensure the lead moves more towards the sale’s closing stage?
What systems or tools does management have at its disposal to monitor the funnel? What metrics are being used? Have these been clearly defined and communicated, and are the systems in place to measure these? And last but not least, when is management action required, and who will be taking the necessary steps when needed? Nothing is more detrimental to effective sales funnel management as stale deals or an overinflated funnel, leading to false hopes (and later, major disappointments & headaches), because the proper criteria were not defined or maintained by the management team.
These are just some of the basic questions to be asked when starting to build and manage a successful sales funnel, the tip of the iceberg so to say. When managing sales, these items need to be refined and detailed in order to fit the requirements of the organization and the environment it operates in. They also need to be effectively communicated to the relevant teams within the organization, ensuring proper accountability for the targets the organization has set for itself. Sales leaders and business owners should continuously manage the sales funnel, and regularly reflect on its status to determine if there are areas of improvement in the sales process or actions to be taken.
I2ACT Canada has extensive knowledge in sales funnel management and offers sales management services to support organizations in their lead generation and sales efforts. We will actively assist your organization in effectively managing your sales funnel & driving sales results. If you want to learn more about the sales management services I2ACT Canada can offer and the solutions & know-how it can bring to your organization, visit the I2ACT website or contact Dirk Baerts.