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When Sales Funnels Go Wrong

Are your sales funnels delivering?  Probably not, if you’re reading this. Or, at least, you sense your sales performance could be better.

It’s really all about risk management. There’s the risk of coming in below predicted target with implications for individuals and organizations. And you have the risk of business plans and cash requirement being driven off course. You might even be at risk of non-delivery if unexpected business comes in at unexpected times.   

But successful funnel management goes beyond risk reporting. And it does more than improve forecasting accuracy. Optimized sales funnel management identifies potential problems in the sales process at the point when it is still possible to do something about it.

WHEN SALES FUNNELS GO WRONG

Some sales funnels just seem to have worked out in the past. By some mysterious process, you’ve always come in more or less on budget. No one quite understands how it happens but because it does happen, no one worries.

But when the situation changes it’s very hard to fix what we don’t understand.

The four main problem characters

  1. “Keep it up your sleeve.” This salesperson likes to surprise the business with good news.  Sales appear as if from nowhere with a fanfare! The salesperson is quite hurt when project managers and service deliverers get frustrated with him or her.  He doesn’t like to talk about opportunities until they are “in the bag!”
  2. “The optimist.” This character is forever predicting sales that never seem to materialise. They genuinely believe the deal is going to happen (or perhaps don’t dare believe it won’t). I had a consultant working for me in Ireland who was adamant a deal would come. It kept appearing in the pipeline—just delayed by another month or two. She always had a good reason. But the deals didn’t happen.
  3. “Don’t you trust me?” With this character, the conversation goes like this. “So how’s the deal looking?” “Oh, fantastic!” “How big do you think it will be?” “Massive!” “How confident are you it will convert?” “It’s for sure!” “When will we get the signature?” “Any day now.” Any questioning is met with resentment.  “Why don’t you trust me? Just leave me and MY customer alone and I’ll deliver. You’re just cramping my style!”
  4. “They’re all different.” In this case, the salesperson has no understanding of sales process and can see no pattern to his sales activities. He believes the only way you can know what is going to happen is when it does happen!

This leaves you with six options:

  1. Do nothing and hope. Not really an option if you want to be in control.
  2. Ask more questions of individuals:  Increase the focus on pipeline in one-on-ones. Keep the conversation anecdotal but make good notes and draw your own conclusions and make your own calculations.
  3. Place a probability on steps in the process. You may have enough data and insight to be able to attribute these percentage probabilities. One professional service firm uses the following:
    • First meeting in diary – 7%
    • Second meeting booked to discuss further within 60 days  – 15%
    • Solution proposed – 30%
    • Verbal yes  – 70%
    • Documents out for signature – 90%
  4. This works quite well for them mainly because they have a high volume of lower value projects. These percentages will probably not be right for you but the principle is rational.
  5. A firm of advisors who win most of their business through tenders uses the following generic, rather than case-specific, calculations:
    • They divide the number of competitors by the likelihood of the project happening at all and then add a weighting for their competitive position in the bid.  So a £200,000 ITT that went out to 5 firms and where they believed the project had an 80% chance of being awarded to anyone (there could be an issue of funding or authorisation) would have a 100% x  20% x 80% = 16% x £200,000 = £32,000 in the weighted pipeline.
    • If they were a strong front runner they might multiply by 1.5 to give £48,000. If they felt they were in a weak competitive position they might divide by half. One large pensions provider decided to take a two-speed approach. They use the light method (3) for most cases. But for the top 10% of cases by value, they use a more rigorous scoring mechanism. This attaches weighted values to the different steps in the decision-making process for the case. This really only works for a small number of large cases but it is a very strong and accurate approach.
  6. There is one final approach I borrowed from a professional services firm’s divisional director. He keeps a weighting for each of his people. Before submitting pipeline to his boss, he increases the weighted pipeline of the pessimists by X, accepts the pipeline of the accurate realists and divides the figure offered by the optimists by Y. His approach is pretty accurate—but not very transparent!

This blog on sales funnels comes to us from our partner experts at SalesLevers.

Built on decades of experience, SalesLevers transforms sales performance for companies that want to survive and thrive in a changing world. Through an integrated approach spanning diagnostics and development to reinforcement and recalibration, SalesLevers is known for delivering real results and consistently creating value for clients around the world, from multinationals to startups. Based in London, SalesLevers has offices in Scotland and Yorkshire. To learn more, visit saleslevers.com.

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