By Mark Boundy
The Seven “Power Components” of Elite Funnel ManagementThe Seven “Power Components” of Elite Funnel Management https://c-suitenetwork.com/advisors/wp-content/themes/csadvisore/images/empty/thumbnail.jpg 150 150 Mark Boundy https://secure.gravatar.com/avatar/fda1708afcd4681826f4fb12f56401d9?s=96&d=mm&r=g
Companies must excel in managing their sales funnel at all levels, from salesperson self-diagnosis, to sales management one-on-ones, to executive funnel reviews. Funnel management is key to understanding the health of any business. Ultimately, high-performing sales organizations are great funnel management organizations.
In this article, I’ll go over some of the principles I share with my clients. We build a regular cadence around the aspects below.
- Some indicate sales behavior gaps. That is, the areas below identify gaps in how sellers manage their businesses, and point sales managers to productive coaching conversations.
- Some indicate dysfunctional management behavior. Yes, some problems come about because management puts inappropriate incentives in place.
1. Does the Funnel Reflect Your Business?
Your process probably doesn’t reflect your business if it’s the process that came with your CRM “out of the box”. Instead, take the time to make your funnel yours, instead of your CRM vendor’s.
Does your funnel reflect how your customers buy, and align your sales process to that?Simple process steps or full-on playbooks which incorporate all selling resources and roles are all fine, depending on your business, but:
One simple guideline: build your process around your typical customer journey. Remember, as process detail builds, make sure nothing clouds the view of your customer’s buying process.
2. Does Your Funnel Give Full Visibility?
Basically, if a seller spends time on an opportunity, it should appear on the funnel. Sellers can’t work effectively “maintaining two sets of books”, especially when one is in their heads. Worse, companies can’t resource properly.
Unfortunately, dysfunctional incentives often drive lack of visibility. Sellers sandbag when management harangues indiscriminately on early stage deals. Sellers logically avoid busywork when documentation/data entry burden on early stage deals is excessive (as judged by the sales person). Leaders, if you want full visibility, you need to welcome it…and minimize the pain of disclosure.
- For example, I recently worked with a sales force whose standard operating procedure was to “enter-into-CRM-when-won”. The company’s close rate was 90+%, but opportunities appeared in the CRM minutes to days before being won (actual sales cycle could be 5 quarters). As a manufacturing company, lead times stretched because operations had no advance notice, and couldn’t order materials. While sales people hated dealing with long lead times, they obviously hated dysfunctional funnel conversations even more.
3. Is There Enough Business In Your Funnel?
The bigger the funnel, the better, right? Unfortunately, this area spawns unintended consequences. Some sales leaders gravitate toward oversized funnels. Predictably, mere minutes after an edict for 3x or 5x the sales goal goes out, sales people begin entering “manager repellant” deals into their funnels. Then, everyone from sellers to managers, CRM admins, executives, operations leaders, etc. gets sucked into the extra work of touching, monitoring and handling hundreds of “dead man walking” opportunities. While a funnel must contain sufficient volume of opportunities to retire sales goal, “multiples” aren’t fixed, but depend on individual seller ratios, seasonality, fit, industry, and more.
Whenever I work with clients on “funnel sufficiency”, we combine volume with quality scoring for fit/winnability. Removing low-probability opportunities from the funnel increases predictability. More importantly, clients de-resource time-wasting opportunities, reallocating effort more productively.
Bottom line: put only good deals into your funnel. If there aren’t enough of those, the cure isn’t adding garbage opportunities.
4. Is the Funnel a Healthy Shape?
One level deeper than overall funnel sufficiency is volume at each stage. I refer to this as funnel shape. A healthy funnel is shaped like…well…a funnel. A variety of selling behavior problems show up simply by examining volume in each stage. For instance, if a seller’s funnel is dominated by top-of-funnel deals (with almost no opportunities in the middle and late stages), that seller is either a new rep or might have a hard time qualifying opportunities. Similarly, different deformations signal a need for a helpful coaching interaction. These conversations are targeted; guided by the funnel shape. Even better, coaching interventions occur in time to rescue opportunities…and sales careers.
5. Are Opportunities Progressing Well?
By itself, how quickly opportunities progress is an indicator of winnability. “Time kills all deals” is a truism. Once funnel stages corresponding to a customer’s buying processare identified and incorporated in your system, we develop an expected time for each stage. CRM systems can easily measure time-in-stage, which doesn’t have to trigger panic, but should trigger an alert to sales people and front-line managers to diagnose the reason for the holdup.
The metrics-savvy manager could deduce that a higher number of sales stages might yield shorter stage durations, and thus a faster trouble indicator. Maybe; it depends on a couple things. 1) The precision of defined customer actions for advancing to the following stage; poor definitions lead to lots of false triggering, which causes everyone to ignore alarms. 2) Your sales team’s willingness to put up with the workload of more frequent updates; the more detail a CRM asks for, the less accurate the CRM tends to be.
6. Can You Immediately See Opportunity Quality?
What would you think about a funnel view that shows deal size and expected close date, but also displays quality/fit/winnability? Your view of your business would go from a flat, two-dimensional representation to a full-depth view. You would have greater confidence and could make better decisions, couldn’t you? This is true for the salesperson looking at their own business all the way to the CEO preparing for an investor call.
In my practice, I see a good-better-best continuum of opportunity quality:
- Basic level: Stages are assigned a standard win probablility, perhaps validated historically. Alternately, sellers can override standard probabilities, using personal estimates (or some overall guidelines).
- High Level: when sales stages incorporate customer actions (item 5 above), zombie deals (no customer buying activity happening, but opportunities keep walking along) are excluded. Additionally, opportunities get scored with criteria specific to the business and customer fit.
- Elite Level: Sales forces quantify customer-perceived value throughout an opportunity pursuit. When incorporated into the opportunity scoring system above, sellers and executives alike have a direct line-of-sight into the customer’s case for change and preference for the seller’s solution. Forecasts with this level of customer insight are highly reliable. Won-lost reviews are precision events. This also builds a foundation for profitable, win-win pricing.
7. Does the Funnel Show a Desirable Business Mix?
Does the funnel show healthy prospecting and early qualification activity? Looking at new opportunity entries, is there enough, and is initial qualification activity taking place? Are quality value conversations taking place from the outset? That is, is value quantified early and widely?
Is the right emphasis given to large opportunities? Big numbers attract disproportionate resources. Is there a solid value assessment in place to justify those resources? When appropriate, is there a co-created customer “plan-to-go-live” (the customer-centric twin of the “win plan”) in place?
Are stuck deals – those languishing too long in a given stage — identified in timely manner and are interventions compelling? Looking at customer-perceived value assessments gives insight into the customer motivation/internal case for change.
Is the right product-mix represented? If not, is a seller gravitating toward a certain kind of business, leaving other opportunities untended? This could point to a product training issue, a misaligned incentives issue, or a seller issue. Figure out which and intervene accordingly.
Rinse. Repeat. Have Regular Cadence
None of these guidelines matter if they stay on the shelf. Hold your leaders accountable for a regular cadence. Make it a priority. Incentivize cadence properly and track it, because sales leaders aren’t any different than anyone else.
To your success!