| Have you ever wondered what happens to all the | | | | An individual or small team from within sales should |
| prospects your sales team contacts - and why more | | | | begin by drafting a model of the sales process. One |
| of them don't end up as customers? Maybe your | | | | effective method is to draw a model of the sales |
| team is spending too much time with prospects that | | | | process using removable labels (such as Post-it notes) |
| are not qualified or interested buyers, or perhaps the | | | | and to put it up on a wall or whiteboard. This |
| process falls apart at the end, when it's time to actually | | | | emphasizes that it is a draft document and stimulates |
| close a sale. A sales funnel can help provide the | | | | discussion among staff members. It is important to |
| answer by illustrating where potential customers fall | | | | remember that estimates of timing and success rates |
| out of the sales process. | | | | throughout the process are crucial components of the |
| What is a sales funnel? | | | | funnel. With a completed model, it is time to bring in the |
| In the broadest sense, a sales funnel is the graphical | | | | rest of the sales organization and the other |
| representation of the sales process. It usually starts | | | | constituents to provide their comments. After all |
| with "lead generation" and ends at the "sale close." It is | | | | needed changes have been made; you can distribute it |
| an internal tracking system that follows what happens | | | | to the organization. |
| at every stage - which prospects get qualified, which | | | | Once a funnel is designed, it's useful to measure |
| ones don't make it past a first proposal, and so on, | | | | performance on both a "micro" and "macro" level. The |
| right down to "sale closed." | | | | "micro" metrics will measure each phase of a sale - |
| The biggest benefit of a funnel for salespeople is that | | | | such as the time needed to move to the next stage |
| by showing them where they lose potential customers, | | | | and the percentage of prospects moving to the next |
| it gives them a better understanding of where they | | | | stage. Macro metrics include how long it takes to get |
| can improve their techniques - and leverage their | | | | through the entire funnel, the percentage chance of |
| strengths. For sales managers, a funnel provides better | | | | deal closure at each stage and the average deal size. |
| control of the process and can help them make the | | | | The cost of sales can also be measured. |
| best use of the time they spend training the sales | | | | How have companies used a sales funnel to improve |
| force. But a sales funnel is valuable for other | | | | sales? |
| departments, too. It can help a company's top | | | | Once you have a clear understanding of the current |
| managers - especially manufacturing and production | | | | sales process in your company - the time, cost and |
| executives- plan better since it can shed light on future | | | | efficiency from one stage to the next along the funnel, |
| sales and production issues. | | | | and throughout the funnel as a whole - it is then |
| How do I build a sales funnel? | | | | possible to begin to pull levers to improve overall |
| There is no one funnel design that is right for every | | | | performance |
| company, and many companies have more than one | | | | The CEO and vice president of sales at Greenhouse |
| funnel because they sell through different channels. | | | | IT, a fixed-fee provider of workstations, servers and |
| Direct sales, wholesaler/distributor sales, Internet sales | | | | network support in Manhattan, looked at the |
| and inside sales each dictate different processes. | | | | percentage of first meetings that turned into proposals |
| Different products or services also have very different | | | | and realized that it was too low. The company |
| sales processes and therefore require different sales | | | | concluded that the screen it was using to define a |
| funnels. For | | | | "qualified" first meeting to its inside sales was not |
| For example, compare the cases of Interfuse Media, a | | | | robust enough. Greenhouse altered the questions that |
| company that sells advertising space in magazines, | | | | inside sales asked and the responses required to |
| and ChemCo, a specialty chemical manufacturer. | | | | schedule a meeting. This lowered the percentage of |
| Interfuse is selling a fairly simple, easily understood | | | | first meetings they were getting from inside sales, but |
| product - ad space - for a magazine that is targeting | | | | dramatically increased the percentage of proposals |
| pregnant women who are 35 years and older. | | | | (and contracts) from those meetings. Overall, this |
| ChemCo (not its real name), on the other hand, sells a | | | | reduced their cost of sales while also increasing their |
| wide variety of chemicals to industries as diverse as | | | | overall conversion rate. The same company is |
| hair care, food and automobiles. Some of its products | | | | experimenting with another funnel, one where the lead |
| are commodities and require nothing more than a price | | | | generation source is a Google-targeted marketing |
| quote along with the specs. | | | | campaign leading prospects to its website. The |
| Others require trials before a prospect will be willing to | | | | company is attempting to decide whether the |
| commit to buying, and still other products are sold | | | | investment is worthwhile and, if so, how much it should |
| through distributors. Because the sales processes that | | | | invest. By having a baseline from their other funnel, |
| these companies (and even the various divisions of | | | | they will be able to compare the results and make an |
| ChemCo) use are so different, these companies will, | | | | informed investment decision. |
| by necessity, need to construct sales funnels that look | | | | Meanwhile, executives at ChemCo, measured each of |
| different. | | | | the firm's salespeople all along the funnel. They then |
| Drawing up a sales funnel is a process that needs to | | | | looked at the top 10% of performers at each stage to |
| involve the constituents who benefit from it. There are | | | | find out why they were so successful at that particular |
| many software programs that can help you capture | | | | stage. After identifying the factors that made those |
| and display all of the relevant data, from Excel to more | | | | staffers successful and training the rest of the sales |
| sophisticated customer relationship management | | | | organization, ChemCo was able to increase the overall |
| packages. But a sales funnel can simply be a | | | | skill level of the sales force. Within six months, overall |
| step-by-step description of the sales process, and a | | | | comparable year-over year revenue had increased |
| listing of which prospective clients are in which sales | | | | over 30%. |
| stages. It is the process of analyzing and defining the | | | | A sales funnel is a powerful tool that helps companies |
| sales stages and defining what it takes to move from | | | | bring some science to the art of selling. It enables you |
| one level in the funnel to another that is critical. Equally | | | | to see exactly where your process is working well, |
| important is getting buy-in from the sales staff and | | | | and where you need to improve. Armed with that |
| managers, who will have to make the time to record | | | | knowledge, business owners can plug up leaks in the |
| how prospects move through the funnel - and when | | | | funnel. |
| and why they fall out. | | | | |