Your sales funnel is more than just a fancy graphic.
It may be a term you know, it may not, either way your sales funnel is a critical element in understanding how you currently perform and where you need to improve your process.
Put simply, the sales funnel is a momentary snapshot of the number of enquiries you have tapering down to the number of closed deals. Hence the term ‘funnel’.
Let’s take a look at a simple sales funnel of prospects:
Here we see a count of the number of prospects that we are currently trying to sell to, these 35 are at the very start of our sales process. We then see that we have 15 clients that have quotations open and current. The final part shows the 10 orders we have won and are currently processing.
This is a simple overview and, aside from the numbers, would represent almost any sales process for any business. It doesn’t matter if you are a large multinational or a one-person trades business like a landscape gardener or plasterer.
So, now let’s go a little deeper and begin by looking at some of the terms within the context of a process:
- Prospect – A client that has expressed an interest or fits a profile for your business.
- Qualified Lead – A client where we have engaged, verified need, budget, suitability and timescale.
- Quoted – We have moved to the next stage in the process and provided a quotation or estimate.
- Negotiation – Our quote is accepted in principle but we have some work to do to close the deal.
- Closed/Won – We have received the order form the client and are now moving into the delivery phase.
Like most businesses you will be aware of the order book, the number of jobs waiting to be fulfilled, but many will lump quotations/estimates together with negotiation. These are probably the same businesses that will lump prospects with qualified leads, as in our first funnel; however, taking a little time to add in some finer detail can, and will, reveal a lot to you about your sales process.
For example, by simply separating quotations into two parts you can quickly see what is undergoing review and what is in a negotiation phase and help you focus your efforts in moving towards the close. Likewise, splitting prospects into two parts allows you to see just how many of your ‘prospects’ are actually qualified as truly potential buyers, as in this example:
Rocket science it is not, yet it is so often overlooked. Knowing what is in your sales funnel and at what stage enables you to quickly assess an area that needs addressing and deal with it. For example, if you have nothing in the prospect stage you will have nothing to progress towards the quotation stage. Conversely, if everything is in the prospect stage you need to put some energy into qualifying your prospects into sales leads so you can work on those that are the most likely to buy. You can also divide the work. Perhaps someone not familiar with your product or service can focus on prospecting to fill the funnel for someone else to qualify?
There is a ‘gotcha’, though. A sales funnel will not show what falls to the wayside. Not all prospects will become qualified leads, not all quotations will turn into orders and that is something we’ll cover in another blog, very soon.
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