Wednesday, 30 May 2012

Solving problems with the sales funnel

Solving problems with the sales funnel: by Jason Li 2012 ©

There’s nothing worse than having a lot of prospective customers but nothing is progressing. Have you ever look down your prospective customer list and thought well I should have X amount of business coming in? Or I should definitely have such an amount of orders either this week, if not next week or the week after at the latest. Or I have a load of hot prospects and just waiting for them to place an order.

Without having a method to work out realistically who is likely to place an order, you will only have a ‘pipeline full of dreams’. We all like to dream what if or what could, but dreams don’t always turn into reality, hence they are called dreams.

Sales funnel

Most people are familiar with a sales funnel. But what puzzles me is working with businesses and sales colleagues who say they have so many hot leads – especially when only a small amount of the hot leads turn into orders.

In my time I have trained a few sales people: some by colleagues just listening to me and what I do, and others by me just giving a few useful pointers or when people ask me how to deal with a certain objection or scenario. Either way, they all know from me that you need to know where people are in the sales funnel and there really isn’t a hot lead.

What is funny is that some sales manager also asks: “What is hot?” It’s not specific enough. It also teaches sales people to think about just what is hot and what is not. Hot is really a subjective qualification.

Sales qualification

To work out where your prospect is, you need to go back to basics. Yes you can qualify them at the beginning to see if they are firstly the right type of prospect. But most people just do this initial sales qualification and think that is job done, hot or not. That’s not really the case.

Let’s do an example of a funnel with different levels of sales qualification:

So you have spoken to the decision maker(DM) or one of the DM’s and there is interest. This is just level one.

If after further consultation you find what your business can offer can help your prospect, then you could say that is level two qualified.

Level three is when all the DM’s say they will be taking action to get a product or service like yours

Now the DM’s say your product or service is the match for them is level four.

Price and contract details are workable to suit both sides are level five.

Order placed, payment and implementation is the final level six

Lead generation

As you can see, just saying you have a hot lead is not right for the sales professional. Truly hot would surely be level five or six. How can you be at level five without a prospect knowing your prices or if every DM says your offer fits what their business requires best? Anything less than this is a tyre kicker; not very hot then, you must agree.

Why not try to work out where each prospect is in the sales funnel by working through each step in your sales process. Every business is different, so tailor your own sales funnel to realistically match the way your business runs. Then allocate all your prospects into each pot. Now you will know exactly how your flow or prospects are doing in your sales funnel.

So now you know how your sales funnel is, you can work out which types of customers are progressing through your sales funnel, and which ones qualify as good for you. You can see more by using the 80/20 Pareto’s law principle together with the sales funnel method too.

By using the sales funnel, your lead generation will be more focused on knowing which prospective leads will suit your business. Imagine knowing that when you come across a prospect you can tell straight away how they will typically move through your sales funnel, what per cent of this type of lead profile will go on to be a customer, and even if you should carry on trying to work with this prospect depending on past success or failure? Sounds pretty much more scientific doesn’t it. Now you can even find out which prospective lead types gives you a conversion average of 2 out of 10 or 8 out of 10... And so on.                                                                                                                                                                                  

Daily Money Actions

At each touch with a prospect you must find a subtle way to know if they have moved to the next level in your sales funnel. Hard selling doesn’t work; I hate it be used on me.

Every time a prospect moves to another level it’s called a money action. Eg, a director gets the board in a room for a meeting or they start to talk about a quote and give you information in exchange. Work out each day at each level in the sales funnel how many you are moving along and tally them up.

Now you can work out how many money actions you need at each level in your sales funnel as an average to do decent business. This is not to criticise your performance. It is to give you a realistic measure of where you want to be to gain a satisfactory amount of regular orders.

Where you are over achieving then you can learn what you did well, and which skills helped this. Where you are underachieving you can spend time working out what needs to improve the outcomes. As an example for me, I had a period where I was good at educating a prospect on the initial call about how a product would help their business and the DM would then go on to view the whole of the market. It’s just what these professional buyers did. To improve my odds, I emailed over our best testimonials about other DM’s using our product to give me a better call back ratio to speak to the DM again.

Buying Commitment

The end game is to get the DM to buy the concept of what your offer can do to help their business. Hard selling won’t work on someone who you think is a hot lead because you will just get pushed back.

So work on the sales funnel and money actions above. Get commitments to each level from the DM. No buying commitment to the next level will mean ultimately no buying at all and no money coming in. On the positive side, if you are good at understanding your sales funnel, money actions, and work with the right type of prospective leads to buy commitment to each level - then your sales will increase significantly. You can scientifically prove this if you go and do it!

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