Your sales funnel (also known as the sales pipeline) is far more than just a prediction/forecasting tool. At their most powerful, funnels show sales function health – and a disciplined, clean funnel predicts sales results. For managers, funnels communicate the health of indivicual sellers’ businesses. World-class funnel management acumen is the core skill set of world-class sales organizations, allowing sales leaders to:
- Accurately forecast financial results
- Provide valid forecast information to the rest of the organization.
- Coach sales people efficiently and effectively.
- Diagnose specific problems with specific deals in time to be remedied.
- Identify low-probability deals that can be de-resourced
- Benchmark both efficiency and effectiveness.
First-line sales managers have a springboard to success when they use a robust set of tools to accomplish these items — a key link in sales performance.
Execute these at a high level for a more predictive funnel. Let’s look at the major components of a Predictive Funnel Management system, how it integrates — actually becomes — the regular management cadence. Throughout, I’ll also provide research-based evidence tying superior sales results to the best practices discussed.
Tying Methodology to practice
As I stated before, rigor and discipline in process drives a world-class organizations’ performance engine. In fact, an effective funnel management cadence operationalizes a company’s sales system: converting “methodology training” to “the way we operate”. Funnel management ties reporting together with teachable, coachable insights for first-line managers.
Let’s examine some research comparing average sales organizations to those who achieve world-class results (revenue growth, customer retention, share-of-wallet growth, etc. contact me for the specifics if you’re interested).
This Graph (as well as the graphs that follow) is from CSO Insights’ 2016 Sales Best Practices Study, which compare. companies who outperform their peers (WC, for world class) vs. average performers. World class sales organizations use effective funnel management much more frequently than average performers.
Defining the Funnel and its stages
Your first step in developing an effective funnel is to carefully define funnel stages — specifically for your selling environment. Each stage should clearly define selling activities, and also include minimum acceptable customer buying activities. By incorporating both criteria into each funnel stage, buying and selling processes stay in synch. Importantly, placing clear definitions of both seller actions and buyer actions pushes “disengaged customer” deals out of your funnel. You also place opportunities more accurately in your funnel, which improves closing date predictions.
Diagnosing problems: Funnel Shape, Deal velocity, Opportunity planning
Your funnel is much more than a forecast. Once you place opportunities accurately in a customer-aligned funnel, world-class sales managers analyze funnel health, often diagnosing concerns.
- Format opportunities by number, size of opportunities, and stage into a visual representation: funnel shape. Experienced managers analyze this high-level view to draw coachable inferences from funnel shape alone.
- Next, deals that spending too much time in a specific funnel stage, or not progressing through the funnel in an orderly fashion should be flagged for manager scrutiny.
- World-class organizations require documented pursuit plans for certain deals using specific guidelines. Deals without pursuit plans yet within these guidelines are given automatic scrutiny. To improve win rates, managers learn to review all pursuit plans, diagnose gaps, and coach deal-winning behaviors.
Many organizations develop opportunity “winnability” scores using expertise and best practices from their top performers.
They then set standards for minimum winnability scores for each funnel stage, which gives early warning when deals start going off track. More importantly, when an opportunity score doesn’t increase as the opportunity progresses through the funnel, world-class sales organizations intervene early — recommending sales behaviors validated by their top sales performers
Effective sales organizations develop a rich picture of their funnel’s health using all of these diagnostic markers. Here is a screenshot of a sales dashboard that integrates funnel shape, funnel stage definitions, opportunity size, opportunity stage, days in stage, whether an opportunity plan is in place, and opportunity score — all into a single, intuitive display.
Mangers gain additional insights when they view a dashboard by individual rep, by team, region, product, company-wide, and more. Insights developed from this analysis are real-time inputs to a healthy management review cadence.
Connecting Funnel Insights to Behaviors: Coaching
Merely developing insights in real time is not enough. World-class companies need to intervene on troubled deals proactively, getting them back on track before damage festers and deals are lost to a competitor.
World-class sales managers leverage insight into effective selling behaviors consisitently. They use effective customer management methodologies and apply the right elements of those methodologies at the right time.
The management and review cadence in world class sales organizations is a purposeful, proactive, cadenced discipline. The intent is to entrench methodologies into regular seller practice. Coaching ties methodology to opportunity reviews. Rather than coaching deal-by-deal, it becomes behavior-based, focusing on behaviors you want sellers to practice on every opportunity. Managers stop being “super sales people”/opportunity savers, and are able to advance their entire teams. Additionally, they build long-term sales acumen in their team members. This in turn nourishes your management succession track.
Good coaching creates an environment for sales people to flourish..and grow into leaders.
Using Funnel Acumen for Resource Allocation
Lleaders can confidently allocate resources when they can measure winnability of opportunities at an earlier stage. Instead of chasing all deals equally, sales leaders can focus on high probablility deals and divert resources away from those deals not worth the investment.
Think of the impact on your organization if you were able to answer “yep, that describes us” to the following questions. Look at the percentage of normal sales organizations vs. high-performing orgs. How much revenue could your organization gain if you could resource more of the “right” deals?
Your sales organization’s most limited resource is selling time. When leaders and first-line sales managers have the means to predict which opportunities have the highest potential ROST (return on selling time) and focus resources accordingly, the entire team operates more efficiently and effectively.
Improving time to results, ensuring sustainment
Disciplined funnel management, linked to robust methodologies by strong coaching acumen creates a closed-loop system. Organizations create flexible, customer-centric selling engines that quickly adapt to changes, with metrics and tools for continuous improvement.
Our management team is highly accountable for their sales teams’ continuous improvement (88-36%)
First-line managers — and their coaching acumen — are the foundation of a comprehensive system of sales performance. Coaching reinforces methodology training. Funnel reviews and diagnosis drive efficient, effective coaching, and highly effective sales force management. The system becomes self-sustaining and self-improving.
Another benefit: effective sales coaches accelerate new hire productivity, rapidly socializing them into your selling culture. Territories come into “full yield” quicker. Even better, turnover drops, reducing the revenue vacuum of vacant territories.
Through experience derived from thousands of client engagements, we have found that investing in a coaching infrastructure has a much higher ROI than simple training alone. Companies to achieve superior results over the long term when they develop first-line managers into great coaches.
Team & Organizational impacts
More accurate forecasts are obviously important, but robust funnel management extends benefits well beyond the sales organization. Reliable forecasts increase the overall credibility of the sales organization. Funnel Management acumen tethers to other business processes as well: accurate forecasts drive efficiencies in supply chain and operations, for instance.
Executives are confident that customer and market feedback is incorporated in new products, and that the sales organization can adapt more rapidly to market changes.
Sales organizations implementing funnel discipline find additional insights and effectively diagnose a variety of issues. Many problems like territory realignment issues can actually be funnel problems in disguise. Looking at issues first as funnel problems prevent teams from applying misdirected solutions to such issues.
Summary
Effective funnel management coordinates an entire set of sales performance tools. Methodology and coaching are entwined to create, a sustainable, flexible, adaptable selling organization – sustainable for the long term.
Feel free to comment below, or contact me directly to discuss in greater depth.
To your success!