The most important problem in any sales organization is managing the funnel to achieve an accurate sales forecast. Let’s look at two ways this core problem is typically handled.
Company A’s funnel process uses one of the most common approaches to forecasting, orienting your sales funnel to the steps of your sales process: qualification, opportunity identified, quote provided, demo delivered, and negotiation / closing. You already know what to do.
Company B uses a funnel based on the customer’s purchase process. Each stage of the funnel identifies specific actions that customers take as they advance in their buying process: accept a meeting, acknowledge their pain points, meet with the second decision maker, define the purchase criteria, request a proposal, etc.
Can you guess which sales funnel design leads to better forecasting accuracy? Right. Company B. By a large margin. If your company has a sales funnel more similar to Company A than Company B, here are three tips to help you get started on a more accurate forecasting path.
1. Define the steps in your CRM and sales funnel based on customer actions.
In Company A’s funnel structure, sales opportunities are tracked based on sales tasks performed by the salesperson. In a sales-focused sales funnel, it’s easy to be fooled – a rep is confident that an opportunity will close successfully because they’ve done everything they’re supposed to. But tracking the actions of sales reps doesn’t help you predict what a customer will do.
In contrast, Company B has specific criteria in its sales funnel that indicate whether a customer has completed a purchase step and is moving on to the next. The better a sales rep becomes at getting customers to complete next step actions, the more consistent and predictable the sales funnel becomes.
With a purchase-focused sales funnel like the one Company B has, if a buyer chooses not to move forward, alarms go off. Sales managers are alerted to the problem immediately and can intervene while there is still a chance to fix the problem and get the opportunity back on track.
2. Transform your reps’ perception of CRM from a pain to a profit
The job of defining a customer-centric funnel has a second benefit: Any rep who thinks negatively about the extra time and effort required to enter information into CRM will quickly see the personal benefits of a Company-type B approach.
Look at it this way: Company A’s sales funnel generates sales process statistics that are lagging indicators (data collected after a process completes), such as how many calls, appointments, demos, and quotes have been made (or not). ). By the time this data reveals a problem with a rep, it’s too late for a sales manager to jump into a specific opportunity and fix it. All managers can do is urge the rep to, once again, “try harder.”
Company B originally had a CRM system like Company A, but found that it was poorly used by the sales force. Punishing people for not using the system didn’t work, and the lagging indicators weren’t helping anyone improve. They found that having a more customer-centric sales funnel was just the ticket to turning their CRM into something both reps and managers would want to use. Salespeople can now be more precise in describing which opportunities are moving forward or not, and they know where the pain points are. Additionally, sales managers have better visibility into customer actions early in the sales cycle and can provide more timely advice to sales reps.
3. Refocus your sales managers on training opportunities from start to finish.
At Company A, forecasting is the process of tracking the opportunities that are closest to closing. That means sales managers generally get involved when opportunities are at or near the Negotiate / Close step, often to save the day if there is a sign of trouble.
Company B’s system places much more emphasis on sales managers mentoring reps through each customer milestone, from initial contact to post-sale follow-up. Managers more quickly recognize the importance of training sales cycle sales skills early, so their salespeople are better at getting more and greater opportunities down the funnel in the first place.
Proactive management of sales funnels and forecasts
As you may have learned, the real difference between Company A and Company B is that the former makes sales forecasts reactively, near the end of sales opportunities. Company B, however, is proactive. They see their funnel as a way to help them truly focus on the customer: During every step of the buying and selling process, their reps are thinking about what the customer needs to do to move forward with the purchase.
Better process leads to better forecasting, not the other way around. With a sales funnel focused on buying and training early (and often), sales managers and reps have a much better idea of which opportunities can actually be delivered and which ones are at risk, and they can be much more confident in predicting. what opportunities are being produced. to close successfully.