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: , , |

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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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Stop Qualifying, Start Disqualifying

Posted on February 24, 2011. Filed under: Lead Generation, Pipeline Measurement, Sales Funnel, Sales Management, Uncategorized | Tags: , , , , , |

Every seller has been told, trained, coached and coddled to qualify his sales opportunities. The better you are at qualification the more productive you’ll be.

The past several years I’ve seen a few books and sales methods that recommend ‘getting to no‘, ‘starting with no’, or just ‘saying no.’ No kidding.

I like this theme in general because in a different, potentially very effective way it reminds us to do things that make us productive when we sell. Things like qualifying effectively, doing discovery, getting to the right stakeholders, and getting commitment throughout the buying process.

Adopting an attitude of ‘no’ is like adopting an attitude of disqualifying sales opportunities instead of qualifying.

For example if you call on a stakeholder who has a problem but no authority to change and you don’t uncover this lack of authority you risk spending way too much time on this person. Repeated calls back to this person might feel like you’re making progress but structurally it’s simple. You’re not. You’re doing a poor job of qualifying. Qualifying questions for me in my business might take the following form:

“So tell me, what is it about your sales funnel process that you’re not satisfied with?”

“It’s affecting your forecasting accuracy you say? How far off are your forecasts typically?”

“Have any of your sales managers mentioned how much time it takes them to do funnel inspections?”

If I hear what I hope to hear I’m tempted to walk away thinking I’ve got a qualified opportunity. I’ll get some valuable information but if I stop here I could be wrong. If I take a disqualifying approach I walk into the call prepared to ask questions that challenge the stakeholder to tell me why they would take the time and energy to act on these needs. These disqualifying questions are looking beyond need to incentive and motivation to change.

Most VPs of Sales will agree or admit that their sales process isn’t 100% satisfying and delivering desired results. There’s always room to improve. But for me to sell the VP the VP has to have energy and motivation to change.

My ‘disqualifying’ type questions might uncover that if they look like this:

“I appreciate you telling me that your forecasting isn’t as accurate as it needs to be. But you said it’s been like this for as a while. What’s the incentive to do something about it now?”

“You said you expect a record year of sales this year. Congratulations. May I ask, what’s the business case for making changes now to your sales process?” Wouldn’t you be concerned that making changes now could jeopardize a good thing?

Let’s say I’m meeting with the stakeholder who has a problem but no authority. Here’s a disqualifying question I might ask:

“I appreciate that you’re having some issues that you’d like resolved. Who else in the company would have to be sold on taking the time and possibly money to fix these issues?

“How would you go about selling these people on a need to change?”

“What incentive would they have to change right now?”

These questions might be subtle but I think they’re subtly significant. Let’s put the burden of proof onto the stakeholders we’re calling on to show us that they have incentive and energy to sponsor change.

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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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The Missing Link in Opportunity Management

Posted on January 19, 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: , , , , , |

If you want your salesforce to be more effective at working sales opportunities through the process, the missing link could be the sales funnel.

Let me say it another way – using the funnel can help your sellers be more effective at qualifying and winning sales opportunities.

Recently I talked with a prospect, the VP of Sales of a successful high tech company.  He said he was using a method of selling from a well known company and wasn’t completely satisfied with the results.  His people were trying hard to follow this method, defining the opportunity, identifying the right people, getting to the decision makers, and learning their needs.  They’re doing ok but he thinks they could do better.

He wanted to know how a funnel could possibly help with opportunity management.   After doing some discovery I told him the funnel, when designed right, is the missing link.

This wasn’t obvious to him and I know it’s not obvious to much of the larger market, including some of you reading this blog.  There’s a clear explanation for this.  But first, why is it the missing link?

Sales pros have always had a mental map in their minds of the steps they need to take to advance and win sales.  Using this to guide their sales efforts for each deal is a great way to stay organized.  Being organized is valuable.

The funnel intuitively sets up a way to organize the steps.  You can easily visualize a deal starting at the top of the funnel, wiggling its way down and popping out the bottom as an order.

The challenge is in knowing what happens in between.  And you’ve got to do something very important with the funnel first.   You’ve got to temporarily set aside your steps for selling and replace them with the customer’s steps for buying.

The steps as a whole are the customer’s buying process.  The buying process is simply how a bunch of people are working together to figure out what to do about a problem or an opportunity for their company.  This is what you’re trying to discover when you sell.  They’re looking for a solution, but first they’re looking to understand the situation better.  And then they want to know if the situation (problem or opportunity) is worth the trouble and expense of fixing.  Then they want to find a solution that best fits their needs.  Then they buy it.  There’s always been this buying process dynamic going on even decades ago when the common sales approaches were much less customer friendly.  Today there are so many choices and so much access to information and opinion that customers have more control over their own buying process.   That’s ok because you don’t need to control things to be successful at selling.

Let’s bring in the selling steps.  The goal of any sales activity is to move the opportunity further toward a sale.  The biggest productivity killer for sellers is doing selling activities that are ill-timed and have little impact on advancing a sale.   For example, doing demos when the wrong people are in the room, spending hours preparing a proposal that will not be read, giving samples that will not be used, and more.  But sellers often do things to stay busy or in the hope that something positive will come out of the activity.

The funnel, when designed right, is the missing link because it serves as the productivity protector, the ideal check and balance system for deciding what selling activity to do next.

When it’s designed right the funnel tells the seller what the customer has committed to and how far along the process the customer is.  It then tells the seller what activities are most appropriate to do for this stage of the customer’s buying process.  For example, if the funnel design says do a demo once the customer tells you enough about the problems or vision of better,  then you’re less likely to do a demo before the customer has committed to sharing information with you.  Or, if the funnel says prepare a proposal after the customer commits to a proposal review with you, you’re more likely to get the customer to commit to a proposal review instead of emailing it and letting the main contact read it on his own.

If this sounds simple and straightforward that’s because it is.  However, I can tell you that over the past 15 years I’ve seen many salespeople, even accomplished ones, that don’t consistently sell this way.

The VP of Sales I talked to was not getting the right performance from his current sales method because it is not linked to the customer buying process.   The method had ideas and concepts that categorize aspects of the sale, things like labeling the players and their motivations and whether or not they’re champions or coaches for you.  This can be helpful.  But these categories are at best a collection of good isolated ideas.  They’re in no way intuitively connected to the buying process.

The funnel, when it’s designed the right way, makes this link and gives the categories a lot more relevance.

Ok, so why isn’t this missing link obvious to more people?  The simple reason is because of the traditional funnel.  You know, the funnel where the stages are defined by seller activity.  It’s been around forever.  It’s a seller centric design.   It’s what most people think of when they hear funnel.

As I said three years ago it’s time to rethink the funnel™.   One deal at a time.  The BuyCycle Funnel™.

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Secret Sales Funnel Habit #1

Posted on January 11, 2011. Filed under: Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Management, Sales pipeline | Tags: , , , |

Top salespeople are well into planning mode now for how to achieve their quotas this year.  One way is to work back from the quota and break down the goals by quarter or month.  This tends to be less overwhelming than looking at the big number for the year.  It’s easier to track your monthly or quarterly progress too.

One problem with sales though is it is a lagging indicator.  You can’t do anything about it once it’s done.  What you need is a leading indicator like TVR.

TVR has nothing to do with recording the shows you missed on TV…TVR is part of the Funnel Principle system that stands for Total Viable Revenue.  It’s the dollar value of all sales opportunities on your funnel that have reached the Commit Funding stage.  TVR is the true value of your funnel and one of the most important leading indicators to manage to.  Intuitively you already know what it means so I’ll review it briefly.

Because you don’t have a 100% win rate, you need to chase more opportunities to win the number of sales needed to achieve quota.  If you have a 50% win rate then you need to have roughly twice as much funnel value in opportunities.  If you have a $1M quota you’d better have $2M on your funnel.

The $2M is your Target TVR.  If you find yourself with a funnel of anything less than $2M when you still have $1M left to close you’re at risk of not achieving quota.  While most sales people understand this, many of them don’t actually manage to it.  If you’re one of these salespeople, stop now.  Start managing to a Target TVR.

When you manage to a Target TVR two positive things happen.  One, you’re constantly aware of the true health of your funnel.  If the real funnel value is more than the Target TVR then your funnel health is adequate.  If the real funnel value is less than the Target TVR then your funnel value is inadequate.  Either way you’re completely aware of funnel value and this knowledge puts you in the driver’s seat.  You can act on this leading information to your advantage.   Second, you’re focused on what you can control – adding value to your funnel.  Nothing’s stopping you from devoting time next week or right now to adding one more Viable Opportunity to your funnel.  On the other hand, controlling the customer’s buying process is not something you can do.

Early in the funnel year your funnel value might be a lot less than the Target TVR.  Don’t be too alarmed by this but let it be the wakeup call you need.  If your TVR for a $1M territory is $400,000 in February I don’t have to tell you what your sales priority is.  Start filling your funnel with TVR!  Every day that goes by where you aren’t adding value to your funnel is a day lost to the TVR crusade.  If you let that go too long into the year you will pay the price in missing your quota.

Managing your funnel to the Target TVR will prevent you from ever being surprised about the likelihood of achieving your quota.  If you know your win rate then you know how big your funnel has to be for that win rate to do its job.

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Sales Funnel Check-Up – 2 Key Indicators

Posted on January 6, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Management, Sales pipeline | Tags: , , , , , |

This week’s blog posts are focused on hitting the ground running in 2011.  Click here to go back to and start at the beginning of the week.   Today’s post wraps the week with two metrics that indicate where leads are coming from, and when in the buying process the lead is discovering you.

Since the global financial crisis that started in late 2008 most salespeople re-evaluated their sources of leads. Their customers and prospects were so slow to buy again that sellers had to rethink how and where to get new business.

This could be the most important part of your review because the source of your leads has likely changed dramatically the past five years.  What percent of last year’s leads came from the same sources that leads came from the year before?  And what about where leads will come from in the new year?  If you don’t know where they will come from then you can only hope that your expensive marketing and selling efforts will magically pay off.

Social networking continues to play a big role in lead generation.  Referrals remain the king of high value lead generation since they reduce the cost of sales significantly.  Win rates for referrals tend to be higher than for leads coming from other sources.  Even trade shows have changed a lot.  The web is where many prospects go to begin their search for a new solution.  I hope your company is easily findable and has an active presence on the web to produce leads for you.  However, without an effective way to process web leads a percentage of those leads lose their value quickly.

Finally, the funnel can help you with one more valuable metric.  This one doesn’t have a convenient name so I’ll just describe it this way:  the funnel stage at which you are finding your leads.

This has to do with the customer’s buying process.   Because of greater access to information and more information available, it’s becoming more common for customers to not seek out salespeople early in the buying process.  This means that salespeople are finding leads later.  This could have a dramatic effect on funnel management and lead generation.  How do you respond?  You either find new ways to get involved earlier in the process, or improve your effectiveness at qualifying and winning leads that are already somewhat developed.

There’s a lot of information here to help you quickly review your results and performance from last year.  Don’t take a lot of time doing it – you’ll be amazed at what you learn in a short time.  This insight will produce a better strategy for tapping the potential of your funnel for 2011.

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4 Key Sales Metrics

Posted on January 5, 2011. Filed under: Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Management, Sales pipeline | Tags: , , , , , , , |

This week’s blog entries are related to Hitting the Ground Running in 2011.  Click here to go back to and start at the beginning of the week.  A good place to begin your review is with these four sales related metrics:

1-      Number of sales made

2-      Size of sales

3-      Percent of sales coming from existing customers versus new customers

4-      Mix of sales

Number of sales closed is important for several reasons.  Consider some extremes.  If you made one sale the entire year then your results were highly vulnerable.  If you win it, you’re a hero.  If you don’t, you’re a zero.   On the other hand when you spread your sales results across many, many sales you  could be losing some sales due to a lack of enough focused selling effort on each one.  You lightly skip from deal to deal doing just enough to be in the running but not enough to take it across the finish line.

If the number of sales you made this year was markedly different from the number you made the year or two years before then take the time to understand if your approach to the funnel also has to change. If you need a higher number of sales, then your funnel might need more opportunities on it too.  If you need fewer sales of a higher dollar value then you might need to improve your qualification of those larger deals.

It’s important to know the typical size of sale you win.  If you’re more comfortable winning smaller deals and now you’re being asked to win bigger deals you might want to get coaching on how to make that shift.  One of my clients had a sales force that was not equipped to sell seven figure deals.  The VP of sales wisely and quickly brought in ‘big deal’ talent that knows how to sell at that level.  If you typically win few big deals and now you’ve got to win a higher number of smaller sized deals you might have to prospect more than you normally do to fill your funnel full of smaller sized deals.

Knowing the percent of business coming from existing customers versus new ones can expose important things about how you should work your funnel and find leads.  If you’re a ‘farmer’ type seller you might be more comfortable getting incremental business from existing customers.  The focus of your lead generation might be selling more stuff to the base of relationships you have, or selling to sister divisions of the division you sell to.  On the other hand if you’re a ‘hunter’ type seller you’re probably turning over more sales from year to year and you’re active in filling your funnel with new leads.  Now, if you’re a farmer being asked to prospect more, or a hunter being asked to do more account management your funnel management approach will have to change.

Finally, knowing your mix of sales and how it has changed can lead to changes in how you manage your funnel.  One of my clients launched a new service that could be sold to existing customers but also could help them get in the door to new customers.  Generating sales from the new service will require new approaches to lead generation that might differ between existing and new customers.  Sellers that have a low turnover of sales year to year might be surprised at how much prospecting effort is needed to generate opportunities with the new offering.

Tomorrow we’ll look at last year’s results from the perspective of three key metrics, win rate, velocity and push rate.

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Hit the ground running in 2011

Posted on January 4, 2011. Filed under: Sales, Sales forecasting, Sales Management, Sales pipeline | Tags: , , , , , , , , |

With another year of selling behind you, the important thing to remember is it’s gone.

I salute you if you had a great year and I’m sorry if your year didn’t turn out as you wanted.  For this new year all runners line up at the same starting line once again.

The sales numbers might not lie but they don’t always tell the entire truth either.  Therefore, regardless of last year’s results the important thing to do is to learn.   I devote this entire week’s blog to last year and helping you learn from it.    This week I’ll discuss:

  • 4 key sales metrics to understand the raw numbers
  • 3 key funnel management metrics that every salesperson must manage to
  • 2 key metrics related to lead generation and the customer buying process

As you read through the entries and perform the review remember this:

  • Be honest with your assessment and answers.
  • Be factual.  The better ‘data’ you have about your performance the better your analysis will be.
  • Give yourself credit for doing the exercise.  The vast majority of sellers don’t do this.

Here are the 9 metrics I’ll cover:

1-      Number of sales made

2-      Size of sales

3-      Percent of sales coming from existing customers versus new customers

4-      Mix of sales (if you sell more than one product or service)

5-      Win rate

6-      Velocity

7-      Push rate – percent of sales that don’t close within the timeframe you originally state

8-      Lead source

9-      Funnel stage of discovering the lead

In the next blog post, I’ll tackle the first four.

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