As a start-up, your sales funnel is the lifeblood of your business. There’s no two ways about it.
Your ability to win customers will determine whether you sink or swim.
Here’s what I learned over the past week about how to organize, analyze and which key performance measures to keep track of…
I always like to start with the big picture – what do we want to achieve?
I was told the following real life example of a company in the enterprise software space:
This particular company provides big-ticket (6 figure) software solutions to large institutional clients. It closes 95% of its deals in the last week of every quarter. For years the management team was unable to predict what level of sales it would end up with every quarter, thereby missing investors’ expectations and wreaking havoc to its internal plans.
They then decided to break their sales funnel down into 21 steps and had each salesperson track in excruciating detail in which step each deal was located at any point in time. (Having a salesperson do this might be the biggest challenge in the whole process. But it’s worth the effort and belongs in the category of 80/20 thinking.)
6 months later they were able to know halfway through the quarter what their final sales number would be within 5% of the actual outcome.
This is the level of visibility any CEO or board of directors desires to run its company effectively. This is a goal to aspire to.
In reality, though, it’s highly unlikely any business owner or startup entrepreneur will be able to divvy up her sales funnel into 21 steps in a short period of time. More likely, she’ll start with 4 or 5 steps and look to expand to 7 or 8 steps over the first 12-24 months.
After imagining the “big picture” I want to start with the end in mind. To do that I’ll look at the key performance indicators I want measured.
Here are some suggestions to monitor monthly or quarterly:
For each KPI, show a visual representation of the summary KPIs for the sales funnel in the form of charts. Nothing is as powerful as being able to look at a picture of your performance.
Finally, and here comes the “visibility” aspect again…
Show a timeline of the sales proposal process (12 months). The goal is to show what the next quarter forecast looks like with regards to proposals expected to be pitched, submitted, won, lost, etc.
As with any work I do, the more visibility I get into a business the more ideas stream forth from my subconscious showing me even more things I can do to boost profits.
As you think through your sales funnel, what new ideas come into your mind that you should take immediate action on?
Whatever stage you’re at in business, you need to be all over the numbers. In posts like this, we aim to offer bite-size food for thought – but in a few hundred words, we can only do so much.
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