Are you squeezing all the good juice out of your sales pipeline to get every last drop? Without crushing your team and annoying your customers? Many companies face the challenge of efficiently exploring the leads and opportunities available to them. The answer may be the sales funnel!
However, it’s not enough to just have a sales funnel. In this article, you’ll see how to apply sales funnel best practices to improve your capacity to forecast your sales and focus on winning deals.
Check out these 3 common challenges:
1. Unreliable sales forecasts and target setting
2. Inexistent or poor customer buying probability tracking
3. No clear guidance regarding which deals to focus on
If any of these challenges sound familiar, this article will be very valuable to you.
The sales funnel …
… supports business leaders and sales teams in analyzing and managing the sales conversion path – from lead to opportunity and from opportunity to close. It is typically measured in number of deals, turnover and profit. Advanced analytics by customer, opportunity, product, sales rep, region and more provide key insights to improve forecasting and the sales conversion rate.
1. Unreliable sales forecasts and target setting
Today, many companies still base their forecasts primarily on top-down marketing analysis using information about market trends. Bottom-up sales forecasting is often only marginally considered. This can lead to a mismatch between the sales team’s goal and the customer’s purchase intent.
The reliability of sales forecasts can be greatly improved with the sales funnel. If you diligently feed your CRM with your leads and opportunities and at least capture the value of the potential deals, the sales funnel will do the rest for you. Good news: most CRM systems already offer this feature in the basic version.
Take a look at the following example. Marketing has analyzed the historical generation of leads. Sales has surveyed customers and gathered their purchase intentions for the next year. CRM has then summarized the result in the “Estimated turnover” column.
CRM indicates that John has a chance to close the next year with sales of about 2 million euros.
A marketing forecast based on market trends might give a different figure. The decision for the final target could be somewhere in the middle; however, customer purchase intent and the historical win rate cannot be marginally considered. I strongly recommend using the sales funnel as the primary source and evaluating market trends as a calibration source to capture potential benefits.
Most people in sales think CRM is a bureaucratic task and a waste of time. Once you can show them that this workload also serves to set a fairer target, resistance decreases significantly.
2. Inexistent or poor customer buying probability tracking
Your salespeople usually have a good sense of their customers’ likelihood to buy. Especially if they have customers in the same sales phase, for example in the final negotiation phase. As soon as they have customers in different sales phases, for example, one in the solution development phase and the other in the objections phase, the accuracy of the salesperson’s gut feeling decreases significantly.
The situation becomes even more difficult when the sales support teams (e.g. back office, development, and technical department) have to prioritize their work according to the requests of the different sales reps. Each salesperson will try to get as many resources as possible to their customers. But is this common situation really what maximizes the sales win rate for the entire company?
The answer is clearly no! If there is not a well-designed sales funnel that analyzes the buying probability from customers across sales reps and sales phases, the sales reps themselves, and more importantly the supporting teams, will be very inefficient. It’s incredible how much you can increase your sales win rate when you implement buying probability tracking in the sales funnel.
It is important that the buying probability information is also available to the sales rep and not just to management. Once the people in sales see that their efforts to feed data into the system come back as a useful tool that helps them achieve their goals, their commitment to CRM data management increases significantly.
3. No clear guidance regarding which deals to focus on
At this point, it’s no secret that an important part of the routine for sales reps and sales support teams is deciding what priority to give to open deals.
You will see here a practical example of how the sales funnel can support you in meeting your targets by simply prioritizing the right business to focus on.
Let’s assume that there are two deals that need to be worked on. Take a look at the table below. Which deal would you have your sales and sales support teams focus on if you didn’t have enough resources to meet the expectations of both customers?
Typically, sales teams and sales support teams will focus on the larger business, which is here represented by Company 1. Now let’s assume that you are using the sales funnel.
The value of the deal when we look at the historical win rate (weighted value) gives a surprising result. You can see that the weighted value for the deal with Company 2 is more than double the value for Company 1. By tracking the buying probability, not only the sales teams but also all the teams supporting them can prioritize the tasks accordingly and maximize their chances of achieving the targets.
Therefore, apply sales funnel best practices if you want to achieve your target without overwhelming your team and upsetting your customers. The sales funnel:
- Provides a reliable process for target setting
- Supports the entire company in making difficult decisions about prioritizing opportunities or leads
- Gives a fair indication during the sales season whether you will finish the year as planned, and helps you to understand where to take corrective action if you are off course
Contact KRAEMER to further improve your capacity to forecast your sales and focus on winning deals.
Caio Kraemer is a professional with more than 10 years of practical experience implementing and managing Sales Excellence projects in Germany and globally. His 25 years of experience extend to several industries, market structures, consumable and durable goods. The success of his projects is based on passion, pragmatism, know-how, perseverance and change management.
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