Several years ago Public Television sponsored a competition called Frontier House. Several families traded in their comfortable homes and modern day lifestyles to live a simulated life in 1880s Montana. This was no walk in the park, fake reality TV experience. From late spring to fall these families lived the frontier experience, Montana style 24/7.
The goal of the competition was to prove they could survive the coming winter. This meant stockpiling food in underground pantries they made with shovels; equipping the home to withstand the cold; chopping enough wood to heat and cook during the winter months. Without wood there’s no fire. And without fire there’s no heat and no way to cook foods. Like Jeff on Survivor tells us, fire represents life.
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. Of course back in the real Montana it was no game. Surviving was the incentive.
A panel of historical experts judged the competitors on how well they prepared. In the end only one family won, but the judges said even this family would have barely survived.
If you think of your sales funnel as a pile of wood to keep you warm throughout the winter, the question is are you chopping enough wood to survive?
Just as a furnace produces heat only if it’s full of wood your funnel produces revenue only if it has qualified leads that eventually close. Keep it full of enough qualified leads throughout the year and you achieve your quota.
The coming year is already here. Here are some strategies for keeping your sales funnel full and enjoying the fruits of that labor 12 months from now:
1) Manage to Target TVR. Measure the health of your funnel using TVR, Total Viable Revenue. TVR deals are only the deals that have reached a stage where the customer has committed to making a change or purchase. Working back from quota you can clearly define the Target TVR, that is how big you need your funnel to be. A $3M quota with a 50% win rate means your funnel needs to be $6M of TVR. As sales go up throughout the year the Target TVR goes down, but the key is to manage to the Target TVR, not to your quota gap.
2) Be selective in the opportunities you pursue. Nothing improves sales performance efficiency like purging the deals that take too much time to win and are not worth winning in the first place. Winning the right deals takes no more time than winning deals that are not a good fit or profitable.
3) Re-win the business you have at your best customers. Like the couples who renew their wedding vows after 40, 50, or 60 or more years go back to your current, best customers and show them how much you appreciate their business. Show them the love! This is an annuity that you cannot afford to take for granted.
4) Get into a Funnel Audit plan, do, check, adjust routine. There’s no better habit than one that commits you to a regular schedule of diagnosing your funnel and setting monthly action plans. Spotty diagnosis is a sure way for execution to suffer.
5) Every time you close a sale commit time to replacing it with 3-4 new opportunities. There’s no better time to add TVR to your funnel than after you have closed a sale. You’re feeling good, you can take the rejections, you’ve got energy. Get back out there and build funnel value now.Read Full Post | Make a Comment ( 3 so far )
In this corner…the challenger. Weighing in with strategy and branding. Just returned from a trade show where he picked up 1500 new leads is…MARKETING!
And in that corner…the champion. Completely focused on closing the next sale. Sometimes accused of operating in a silo. Looking for new, qualified leads all the time is… SALES!
At the recent Sales 2.0 conference in San Francisco the new theme was sales and marketing. In fact, ‘Marketing’ was invited onto the conference stage and title.
If you’re as ‘seasoned’ as me you grew up in a corporate household where marketing and sales duked it out all the time. Call them kissing cousins or strange bedfellows or whatever. Attracted to each other, they definitely had separate rooms in the house.
Marketing was part brochure builder, part communications creator (think marcom), part trade show tycoon, part branding advocate and advertising angler – and even product management porfessional. Sales was simply about net new business. You can tell who wore the pants in the family.
Marketing was about the big picture and sometimes didn’t get as much credit for demand generation as it deserved. And in some organizations marketing didn’t deserve any credit for demand generation.
Today Marketing is under pressure to contribute more to the demand gen side. Who could possibly find a problem with this? But working together with sales is not easy. I’ve got the perfect tool for both groups: the sales funnel.
Instead of focusing on how they disagree, how about focusing on how and where they agree? Marketers and sellers can easily agree on this: the customer has a buying process. The most effective way to generate new sales is to interact efficiently with the customer throughout its buying process.
The funnel, when designed the right way, is the perfect tool to do this.
Starting with pre-funnel and continuing through the last stage before a purchase order or contract is signed, the funnel gives marketing and sales a way to get on the same page – be aligned. Each stage represents a key to the puzzle of how the purchase happens. Armed with that context marketers and sellers can identify the best selling activities at each stage that will keep the prospect engaged and advance the opportunity toward a purchase.
You can start by defining the customer’s buying process stage by stage. It’s not as easy it seems because of the deeply rooted legacy of seller activities and sales processes. Then, you should identify key selling activities at each stage that are instrumental in engaging and moving the opportunity along. These might include demos, or walk throughs, or samples or executive sponsor meetings. Marketing obviously can help with these resources by building collateral or tools that impact the buying process.
I see marketing’s impact mostly at the early stages of the buying process. This is when prospective clients are surfing the net, tweeting, joining discussion groups, and doing research on their own. It’s too expensive for salespeople to interact there and clients don’t want them to. B2B marketing companies perform this service if you don’t have the expertise.
At some stage there’s a hand off to sales, which is nothing new. But what is new is the quality of information that now gets handed over. The ramifications of poor handoffs can be severe in lost sales, low sales productivity and more.
I don’t suggest this is a simple or complete solution. It is the best place to start though. There’s nothing mysterious about getting marketing and sales on the same page, when they are aligned around the customers’ buying process.
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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.Read Full Post | Make a Comment ( None so far )
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.
There are three key metrics that are key to producing high sales results year after year. They are win rate, velocity and push rate.
Win rate is the percentage of all sales opportunities you pursue that actually result in a sale. If you pursue ten opportunities and win three of them your win rate is thirty percent.
Win rate is important to know because it tells you how many opportunities you need on your funnel at any time. If your funnel has only five opportunities then your 30% win rate could expect to win between one and two of the deals. If you need to win five more deals then either your win rate will have to increase (and fast!) or you’ll have to fill your funnel with more deals. As you set your strategy for this year you’ve got to anticipate changes in your win rate, perhaps from new products you’ll be selling or a new territory you’re taking over. Be prepared to adjust your funnel approach accordingly.
Velocity is the time it takes for a sales opportunity to become a sale. It’s easy to see why this is so important. First, any sale that isn’t expected to close in the current year doesn’t belong on this year’s funnel. That could have a dramatic effect on your funnel value. Also, you could have a funnel that looks healthy with plenty of opportunities on it, but if too many have been sitting on that funnel for too long you could be misleading yourself. Deals that are on your funnel for longer than the typical sales cycle are suspect and should be re-evaluated for integrity.
Push rate is related to velocity but it’s worth separating and tracking as a metric. Push rate is the percentage of deals that are forecasted to close within a time frame that don’t close in that time frame. This isn’t good for all stakeholders in the sales supply chain. I’ve seen quite a few salespeople who take this situation lightly thinking they’ll make it up in a later period. What commonly happens though is the seller relaxes and lets up his selling effort on these deals. He becomes too confident that they’ll eventually close. They stop or cut back on prospecting and building a healthy funnel. If the deals don’t close as expected the seller finds out too late and has run out of time to reverse course.
What you should do is use last year’s results to create a factual baseline for things like win rate and velocity. Commit to documenting win rate and velocity and push rate for the new year and you’ll have some good data to build your funnel management around.Read Full Post | Make a Comment ( 3 so far )
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.Read Full Post | Make a Comment ( 1 so far )