Sales pipeline

Between the Ears

Posted on September 22, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales Funnel, Sales Goals, Sales Management, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , , , , , , , , , , , |

If you’re a VP of sales and you’re thinking about making an investment in sales process or methodology right now it’s probably a stressful decision.  For one it takes a lot of time to think through the possibilities of what could be valuable.  You want to select something that’s going to squarely hit the mark.  It takes a bit of political capital if you’re needing to get financial approval from your boss.  It’s stressful because you’re not 100% sure your team will embrace it or reject it.  Your credibility as a leader could take a hit.

There’s one question that you should ask yourself to help with the decision:   How will it improve how your sales people think, dialogue, plan, and execute around selling?

Take the funnel for instance.  It is still popular to assign percentages on funnel stages.   Early stage sales opportunities might get a 5% or 10% assigned number.  Opportunities that reach a proposal stage might get 50% and one that is in negotiation might get as much as 80% or 90%.  But when asked how these percentages help a salesperson sell the answers are usually weak.  They don’t promote dialogue.  They don’t foster coaching.  They don’t help set strategy.

Another example with the funnel is funnel value.  We call it TVR, Total Viable Revenue.  TVR is the sum of the dollar or euro values of each opportunity that has reached the Commit Funding stage of the customer’s buying process.

With TVR the seller and manager have a powerful piece of information to help the seller plan, organize and prioritize to maximize his or her productivity.  TVR is used with the Funnel Audit to determine a 30 day plan every 30 days for working the funnel.  But even some of my clients fall back into the habit of  cramming the night before the test, completing their Funnel Audit Worksheets the night before.  They’ve missed out on the power of the Audit as a planning and prioritizing process.  When used properly the Audit helps the seller think with structure about his situation, weigh alternatives, assess the best option, and define the plan.

Finally, another example of using information to help you think and strategize better is when a sales process reveals something important about the sale that you had not considered.  Let’s say you had made a few calls on a current customer and thought you had a pretty good idea of the stakeholders involved and their roles in the buying process.  But you assumed that someone in purchasing had the financial authority to commit funding based on past experience with the account.  In a strategy session with your sales manager she convinces you that your purchasing agent doesn’t have this power and you don’t know which stakeholder does.  Now what do you do?

You could do nothing different and proceed as planned.  Or you could meet with the purchasing agent and explore this topic of funding.  By raising the topic you would learn something at least, such as what else is being considered or timing.  But at best you might learn exactly who has that funding authority and even get advice on how to get a meeting with that person.

I haven’t made your decision easy but I hope you put all of your options through the test of how will they help me and my sales team think better, improve dialogue, and ultimately perform the job of selling more effectively.

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Take Me Out to the Ballpark, Part 2: Stop Swinging at Bad Pitches

Posted on May 27, 2011. Filed under: Lead Generation, Sales, Sales Funnel, Sales Goals, Sales pipeline, Sales Velocity | Tags: , , |

baseball bat

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Stop swinging at bad pitches

Otherwise known as learn to qualify better. 

Qualification has always been an important skill for sellers.  Now the stakes are even higher.  For many sellers there are fewer opportunities to chase than before when the economy was booming and sellers mainly took orders.  The more time sellers spend on leads that will go nowhere is less time available to chase leads that could become sales.

Our clients have learned to improve qualification by understanding it from the customer’s perspective.  From the customer’s perspective they go through a series of three significant stages in the buying process.  Our BuyCycle Funnel™ gives sellers the guide to get inside this customer perspective.  The seller is more productive – he loses faster, he avoids overcommitting, and he avoids overestimating the value of his or her sales funnel.

The first stage of qualification (Stage 1) is Problem Recognition.  The customer needs to express an issue, a need, an opportunity or a problem clearly enough that the seller knows he or she can solve the problem.

The key to Stage 1 qualification is knowing how much the customer knows about the problem.  Vague comments about wanting to ‘reduce costs’ and ‘get better’ have to be explored and challenged.  For a software client of mine the seller might learn from a CIO that his medical supply company is spending too much time tracking certain assets once they leave the warehouse.  The CIO might say “we’d like to improve our efficiency.”  Has the CIO or his staff spent time understanding this problem?  What do they know about it?

The software rep needs to challenge the CIO’s intent to act now.  He could reply “Do you have a target performance goal for improving efficiency this year?  Or, “Where are you seeing the inefficiency the most? A vague reply could indicate lack of a commitment to take action.  It can also be your opening to suggest that the stakeholder be more aware of the real consequences at play.

The second stage of qualification (Stage 2) is Defining Economic Consequence.  In this stage the customer is deciding how costly the problem is or could become if it doesn’t change.  It’s largely a dollars and cents kind of assessment.  Problems that cause enough economic distress or anxiety for key stakeholders are more likely to be acted on.  The software rep might ask these questions:

  • Is the efficiency problem costing you money that you’re aware of? 
  • Does it threaten any key customer relationships?  Could it if the problem worsens? 
  • Is it a top 3 problem?  Have you reached a point where you can’t afford to run your business this way?
  • Do you know how it affects other parts of the business?  
  • What’s at stake for you if this issue doesn’t get addressed? 

If the economic consequence or impact is not great enough and if the anxiety isn’t high enough then the stakeholder continues to live with the problem.

Knowing what type of stakeholder you’re talking to is important.  If the PFA is ambivalent there will be no change.  If the stakeholder isn’t a PFA he could be pulling his hair out with frustration but will have to live with the problem.

The third stage of qualification (Stage 3) is Commit Funding.  Here the PFA has committed funding or significant resources to fix the problem.  The PFA is expressly saying “we choose to no longer live with the problem.”

Yeah this is big deal when the PFA commits!  It’s almost as big as signing on the line that is dotted.  The key here is to be sure you’re hearing correctly that funding has been committed.  You can hear it directly from the PFA or from a highly reliable source that knows this has happened.

Don’t complicate your selling.  It’s already tough enough.  Stick to these fundamentals as you evaluate how qualified your funnel of opportunities is.

Looks like we’ve got a base hit!  See you next time for our third and final tip in the series.

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Are your sales reps chopping enough wood to survive the winter?

Posted on February 3, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales Metrics, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , , |

(animated stereo) A 19th Century Sod House in ...

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Would your reps survive a life on the range in the 1800s?

Several years ago Public Television sponsored a competition called Frontier House.  Several families traded in their comfortable homes and modern day lifestyles for a life in 1880s Montana.  From late spring to fall they lived the frontier experience, Montana style. No modern nothin.

In the competition they had to prove they could survive the winter.  This meant stockpiling food and wood and equipping the home to withstand the snow and cold and elements.  One husband built a complex root cellar, an inventive chicken coop, and a labor-saving water system for irrigation.  Another one built the home from scratch.  They worked night and day with one goal in mind – surviving winter’s fury.

It was critical that the families correctly calculated their needs to get through the winter.  Then they worked back from that to know how to spend their time every day preparing.  If they calculated wrong, or worse just got lazy in their execution their lives would be in jeopardy.

A panel of historical experts judged them on how well they prepared.  Only one family won, but the judges said even they would have barely survived.

So here we are in February and I’m wondering:  What are your salespeople doing today to survive the coming winter?

The coming winter I refer to is this year’s selling season, 2011 for those of you on a calendar fiscal year.   There are several reasons why your salespeople must commit selling time now to building a healthy funnel:

1)     Delayed decisions make for longer sales cycles.  Let’s say your average cycle went from 6 months to 8.  That means your reps have 2 fewer months in the funnel year to find, qualify and win net new sales.  Anything they find after April will now be less likely to close by year’s end, instead of anything they find after June.  The two month loss in sales could be a staggering 16.667% of annual sales.  A territory that does $1.2M a year could lose $200,000 in annual sales for any rep who waits too long to prospect.

2)     Funnels took a beating in the recent economic slowdown. Getting funnels back to a pre- slowdown state can take more effort.  It’s like an athlete coming back from an injury and taking longer for her to regain her pre-injury level of performance, let alone achieve higher performance.

3)     Less low hanging fruit to make up quota deficits. Every salesperson gets his or her share of deals that seem to come from no where.  Maybe it’s a small percentage of the overall sales, but it seems to be even smaller.  No rep admits he relies on that ‘gift’ business but his funnel might tell a different story.

4)     A bunker mentality by customers shrinks the overall size of the opportunity pool. Some companies froze spending to survive, and some haven’t transitioned out of that mode.  Your reps may have to dig deeper and wider to find the same number of opportunities to chase.

So what’s a sales manager to do?

1)     Manage with facts. Don’t simply scream ‘prospect more!’  Help your reps see clearly how big their funnels will have to be to hit this year’s quota.  For example, if close rate is 25%, multiply by 4.  A $2M quota needs an $8M funnel of Viable opportunities.

2)     Help them be more selective in the opportunities they pursue. As they bring opportunities onto the funnel reward the volume of activity but use a filter to spend quality selling time on opportunities that meet high standards for fit.  Nothing improves funnel efficiency like purging the crappy, unreal deals.

3)     Help them target, set, and execute account plans for the best accounts. Now is a great time to invest in the long term account development necessary to penetrate new accounts.  Target a handful of accounts that are a good fit to everything about your company.  Develop a plan for introduction, penetration, and pursuing sales opportunities.

4)     Get into a Funnel Audit routine. There’s no better muscle memory to build than to get on a schedule of diagnosing the funnel and setting action plans.  Try it monthly at first.  Spotty diagnosis is a sure way for execution to suffer.  Don’t let that happen.

5)     Every time a rep closes a sale, remind him to evaluate his funnel condition. A sale is what we want, but it also takes Viable Revenue off the rep’s funnel.  That revenue likely needs to be replenished.  And there’s no better time to do that than after they’ve closed a sale.  They’re feeling good, they can take the rejections, they’ve got energy.  Help them channel that to produce future sales.

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Sales Velocity and the Funnel

Posted on February 2, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales Metrics, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , , , , , , , , , , , , , , |

One of my clients, a director of sales, gave me solicited input in a meeting I was preparing to facilitate for him and his colleagues and the VP of Sales last year.  This was an existing Funnel Principle client looking for ways to leverage the system they installed a few years earlier.  “Let’s make sure we talk about sales velocity”, he said.

“Absolutely”, I replied.  Then I asked, “If you had better or more information about sales velocity for your region funnel how would you use that information to manage better?”

He replied almost before I finished the question.  “I don’t know.  But it seems like I should know more about it.”

Metrics like sales velocity are valuable for many reasons.  Whether your company has a sophisticated system of metrics, or keeps metrics to a bare minimum, or has no metrics at all you all share a common need to make the information you gather meaningful to your troops.   Ultimately, their greatest value is the role they play in changing or reinforcing selling behavior.

Funnel value (we call it TVR, Total Viable Revenue) is probably the most common metric that I hear VPs of Sales say they want to have and provide for their salesforce.  I agree it’s a valuable metric but only if it’s acted upon.  I continue to see a gap in having that information and in driving change.  I see two reasons for this.  One is because the users don’t trust the data on their funnels.  Therefore, the funnel value has little credibility.  Two, there’s a lack of connection between funnel value and actions to run a territory.

TVR is a key leading indicator to the true health of a funnel.  It’s all the sales on the funnel that have reached a critical stage of the customer’s buying process called Commit Funding.  At this stage the customer has committed funding and possibly significant resources to making a change one way or another.

The best way to connect TVR to actions is to inspect the funnel regularly and use the information to plan, organize and execute.  Think ‘lean’ for a second.  If a rep’s TVR is in the red, the action plan has to include ways to get it to green.  These ways are tied to working specific accounts and opportunities at specific sections of the funnel, namely the non TVR sections.  These are the early stage opportunities.  You go there first to find more TVR.

An action plan to find more TVR if that’s what the diagnosis suggests is not a loose, airy, feel-good next step kind of thing.  It’s specific and therefore accountable.

It’s the sales manager’s job to help the seller define this plan and keep her accountable to it.

Ain’t rocket science.  But man it is powerful.

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The Sales Funnel – Much More than the Latest Technology

Posted on January 31, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales Metrics, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , |

Robert Plant of Led Zeppelin

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When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around.  But when I got to be twenty-one, I was astonished at how much he had learned in seven years.  ~Mark Twain

As I get older (just had another birthday) I am reminded that the son becomes more like the father each year.  Dad, this is meant to be a compliment.  Really.

For sons and daughters alike, this is the curse of every generation that it doesn’t like to admit.

Nowhere is this more public than with technology.  Every generation looks upon the next one with a degree of confusion and disdain regarding technology.  For my generation two examples are texting and music.   My daughters are model residents in the 24/7 texting community.   Landline phones are for old people. As for music, the hits, hooks and downloads have replaced the album.   Take Led Zeppelin’s The Song Remains the Same.  The marketability of committing an entire album side to one song, 27 minutes of Dazed and Confused, doesn’t stand a chance in a world of SSAS – Super Short Attention Span.

Don’t misunderstand me. I don’t see technology as an either or choice.   I embrace it.   On my terms.

I also embrace technology with the sales funnel.  The technology I refer to is mainly CRM because CRM is often perceived by sales leaders as the equivalent to ‘the funnel’.

When I’m prospecting I’ll ask a VP of sales to tell me about her funnel or funnel process and the reply often begins with “we use XYZ CRM.”  If this sounds like you, this perspective could be costing you a lot of money.  Let me suggest a Funnel Principle perspective.

CRM Technology has supported funnel management process mainly in two ways:  visibility and reporting.

With visibility salespeople and managers and VPs of sales can see any funnel at the click or two of a mouse.   Reports can be run on everything like the value of the funnel (TVR), or opportunities by stages or size or geography or key accounts, and more.  It’s powerful information.

As long as it’s real.

The fact is many funnels have ‘bad data’.  Reps routinely place opportunities at the wrong stages of the funnel.  I’m not indicting sellers; rather, they deserve the benefit of the doubt.  They’re often doing the best they can.  But without the right funnel process the placement task is hard and open to too many interpretations.  It’s a problem with minimal downside when it’s one funnel that’s off. But when most of the funnels are not real it’s a nightmare on Elm Street for the VP of sales.

Bad funnel data is not an indictment of technology either.   Don’t shoot the messenger.  It’s garbage in, garbage out.  It’s about selling behaviors.  Therefore the fix for bad funnel data needs to help sellers execute the right behaviors.  They need the right funnel process.

An example of this is funnel stages in the CRM.  Simply changing the stages, even to reflect a customer buying process like our BuyCycle Funnel™ will not by itself change selling behaviors.  Sending a memo to the salesforce telling it to start selling this way would be about as effective.

Sellers need context, training, coaching and reinforcement to sell to the customer’s buying process.  It’s a project because you’re undoing old habits.  Many of these old habits are older than, well me.

Another example is having automated reminders and coaching tips embedded in the CRM.  This is an awesome idea that has been rendered ineffective by the lack of context, training, coaching, and reinforcement.  Both have value but one must precede the other.

Wisdom says we’ve got to strike the right balance between new technology and how we did stuff before the technology.  It’s more than about balance though.  It’s putting technology in its place.  It’s not asking technology to replace proven means for driving selling behavior.

This technology stuff has a lot of mojo.  If we’re not careful we’ll miss the real value it can provide.

Maybe Robert Plant was thinking about the sales funnel when he crooned in The Song Remains the Same, “I had a dream.  Crazy dream.  Ohh…hear my song, yeah…people won’t you listen now.  Sing along yeah.   You don’t know what you’re missing now. ..”

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The One Time Trust Means Nothing in Sales

Posted on January 26, 2011. Filed under: Funnel Audits, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales Metrics, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , , , |

I learn teaching from teachers. I learn golf from golfers. I learn winning from coaches.

Harvey Penick

If you Google ‘challenging assumptions’ you’ll get a ton of hits related to six sigma and lean production.  You’ll also see a lot on the topic of creative problem solving.

The irony of both of these is that it’s tempting to believe that the creative or ‘applied’ approach to a task like setting a sales strategy takes longer than doing it the way you’ve always done it.  The traditional path is the path of least resistance because it’s familiar – but it’s sometimes just a slow ride on the wrong train taking you to the wrong destination.

Your role as sales manager to help sellers get the most from their funnels is to challenge assumptions for the deals they pursue and for the funnel they’re relying on to achieve quota.  What does challenging assumptions look like?  Let me give you an example.

I was coaching a Funnel Audit with a manager and his salesperson.  The salesperson described a deal as being at Stage 3 so the manager simply asked for ‘tangible evidence’.  This is part of our process and both manager and seller were trained in it.  The seller replied but didn’t give tangible evidence.  The manager asked the question again. The seller didn’t give tangible evidence again.  The manager asked a third time and the seller replied in frustration “you’re killing me!”  He then said “Trust me, it’s at Stage 3.”

I’m a big fan of trust.  But I’m an even bigger fan of verifiable trust.  Asking for tangible evidence is asking for verifiable trust that the sale is at stage 3.  Without it the seller is making assumptions.  You must challenge this every time.

How do you challenge assumptions?  There are multiple ways.  One way is to use a process that’s credible in the eyes of the seller.  It’s even better if the company has adopted this process across the enterprise.

With a process it’s less about you the manager and what you think and more about the process tells you.  The process allows you remain independent and unbiased.   With a process you don’t have to get creative with your response a hundred different times – just stick to the process in how you would reply and you’ll be repeatedly effective, on point.  This makes you more productive.

This approach will never fail to produce the information you and your sellers need to set effective sales strategy.  They might push back.  They will test you.  They’ll strike if they smell blood.  Do them a favor.  Hold your ground.  Challenge their assumptions.  And if they’re driving too fast don’t hesitate to shout slow down!

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What a Teenage Driver Can Teach You about Coaching

Posted on January 24, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , , , , , |

I absolutely believe that people, unless coached, never reach their maximum potential. Bob Nardelli, former CEO Home Depot

So how do sales managers help their salespeople reach their maximum potential?   By channeling your coaching efforts down three different paths:

  • Promoting discovery
  • Challenging assumptions
  • Facilitating execution

Today’s post explores the path of promoting discovery.

I’ll relate this to my world which might be your world too. I have a teenager learning to drive.  In my state the teenager gets her ‘temps’ and has to put in fifty hours behind the wheel with mom and dad.  For each sortie my daughter takes my wife and I flip a coin to see who gets the wingman assignment.

With my daughter driving down the road, I sit in the crow’s nest playing the role of lookout boy.  Things I have been conditioned to process and assess when I’m driving have suddenly been elevated to orange and red threat level – watch out for people crossing the street at this crosswalk! – don’t assume someone won’t blow through that red light! – watch for black ice there it could be slippery!– look through the turn, not at the turn! – get your hands at 10 and 2 on the wheel! – slow down!

I realize she’s probably retaining 8 ½ % of what I say.  At least that’s an improvement over how much she listened before she started driving.

Your salespeople are in a similar, frenetic zone of selling every day.  They’re multitasking like mad,  managing multiple sales and at different stages of the buying process, trying to log everything into CRM, taking care of issues at key accounts, and more.  At this pace they can easily slip from the sales habits they know they should do.

You can help by promoting discovery.  Let’s say you have ten minutes at the end of a call with one of your reps.  Why not pick a sale she’s working on and go through a ten minute drill to make sure she’s on the right track with her strategy?  You could safely begin with the common mistake many salespeople make – selling to too few stakeholders.  Ask her to quickly state all of the stakeholders that she’s aware of.  If she gives you two you’ve probably found a hole right away.  One way to find other stakeholders is to look for bosses and colleagues.  If you sell to a VP of Sales who does that person report to?  It’s possible the VP will need approval.  What’s your plan to sell through the VP in this case?  Is there a VP of national accounts on a similar level?  Why wouldn’t that person participate in the buying process?  Is there a VP of sales in another region that might be looking at the same situation?

Promoting discovery is more effective when you position it as a ‘net’ to catch stuff the busy seller might miss.  Don’t make your conversations penal.

Your seller knows that personal motivations drive decision making big time, but has he thought through what the motivation might be right now for a key stakeholder?   It’s easy to toss out ‘wants a promotion’ or ‘be seen as a leader’ but the real value is not in knowing the information.  It’s in the stakeholder knowing that you know the information.  Does her strategy include a plan for that?

Finally, helping your sellers see the health of the funnel is critical.  The eye opener though is when you break down the tasks that have to be done to achieve even a short term action plan.  Let’s say your seller needs to add $1M of funnel value.  That could take weeks or months if the average sale is $50,000.  In fact, if he added one sale per week at this level it would take 20 weeks to reach $1M.  That’s 4-5 months, which might be too long.

You’re good at promoting discovery I’m sure.  Remind yourself to make time to do it.

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For all the Warrior Sales Managers out there…

Posted on January 21, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales Metrics, Sales pipeline, Sales Quota, sales training, Sales Velocity, Uncategorized | Tags: , , , , , |

This blog entry is for the warriors out there, the sales managers.

The past several blogs from The Funnel Principle have been directed at salespeople and the opportunity that this time of year gives them to review, renew, and refocus on the upcoming sales year.

I’ve suggested they take a little time to learn from the past year and not let the numbers fool them (good or bad).  I’ve suggested they renew or establish good sales funnel habits.

So how do you add value?

You’re their leader.  That’s a big responsibility.   You have to carrot and stick your way through each day with each of your salespeople.  It’s a challenging but potentially very rewarding job.

I’m curious as to where the sales funnel fits into your priorities.  Take a second to complete my poll before reading on.

When it comes to the funnel your leadership is mostly around driving process.   If you’ve been through other change management programs you know that some people will buy into it, some will resist it, some won’t really care one way or the other.  Every program is subject to this kind of response.  Because of this you must be the ultimate salesperson every day in selling your team on the need to embrace the tools and processes to help them succeed.  And for all of these constituents my advice is to find ways to constantly make the funnel relevant.

One of the ways to make the funnel relevant is to use it within the cycle of the year.

At the beginning of the year funnel focus is on building a healthy funnel steadily.  A healthy funnel sets the salesperson up for a successful year and avoids the stress of scrambling to make numbers.  Your messaging this time of year is building good habits.  Since the results sometime lag the effort be sure to encourage  your people to keep up the good work.

At mid year the funnel focus is on how to prepare for the second half push.  If their funnels are healthy you want to focus on advancing and winning the higher percentage deals.  You also don’t want them to stop building a healthy funnel because you never know what surprises could occur.  If the funnel isn’t healthy and there’s still time to reverse that there’s probably a very short window of time available.  You’ll have to be very focused on selecting the right accounts and opportunities to develop and eventually win.  Finally, this is a good time to remind your sales people about the next year.  It’s never too early to be building a healthy funnel for the following year.

In the last couple of months the funnel focus is on winning the few deals that will make their year, and making a hard shift toward next year’s funnel.

Don’t look at this as having to work so hard to convince your people to use the process.  This is your job. And your salespeople deserve to be sold.

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