Are you wondering where your next sale is coming from? If you are, then you may NOT be using a sales funnel. This simple tool can help you identify new sales opportunities within existing customers as well as get you thinking about which new customers you should start working on next.
What is a Sales Funnel?
A sales funnel is also called a pipeline. It’s just a visual way to map the road your prospects take toward making their decision to choose you. The best way to describe it is to literally show you how to build your own sales funnel or sales pipeline using a basic spreadsheet.
- Create a list of “Opportunities” and their total dollar value. This is really what you’ll be tracking. It means that you might have multiple opportunities per client and that is good. Each opportunity will have it’s own path toward becoming a paying project and its own dollar value, and that’s why we want to document them. While you may not know the exact dollar value, make a best-guess estimate. When you get through this process, you’ll see how unbelievably motivating it is.
- Document the steps in your sales process. This is critical because each step is a milestone toward a finished sale and dollars toward your revenue. You want to keep this process as short and sweet as possible. Just list the milestones; first contact, needs assessment, presentation, sample/concept approval, closed. That is a generic 5-step process that you can adjust to match your cycle more closely. Note that with each step through the process, your probabilityof closing the deal increases.
- Attach percentage probabilities of getting the sale to each step in the sales process. For example, at first contact, you’ve converted a lead into a warm prospect (at least they see enough value to visit with you). You might decide to give that a 10% probability of closing at that level. Then as you move toward the end of the process, say sampling or concept approval, the prospect is now increasingly vested in working with you and that probability might be 80%; assuming the samples are good, they will sign the contract. As you might expect, a closed deal is worth 100%.
- Your job is to lead the prospect through the cycle. Here is where the power of the sales funnel/pipeline comes in. Most deals get lost because we don’t follow through and help our prospects make decisions to get them to the next phase of the cycle. I think this happens because we often haven’t DOCUMENTED what our selling cycle IS. Once you’ve documented it and have plotted your opportunities and their value at each stage of the process – WHAM – you can SEE if any opportunities have been stuck somewhere in the cycle and now you can do something about that.
- Review Your Action Plan: No matter where each opportunity is in the selling cycle, you need to come up with your next “action” that will help that opportunity move forward. If you’re reviewing your pipeline every week, you should be reviewing what actions to take to move the opportunities forward. These go on your to do list and when they are complete, and your opportunity has blipped over into the next step in the cycle, you’ve just increased your dollar value for that phase of the funnel. Watching this is very motivating and will get you spending time on opportunities that build your bottom line.
- Use Tools. You can make this process as simple or as complicated as you like. If you’re using a sales CRM tool like salesforce.com or ACT, you will find that they have wonderful sales management tools including a pipeline or sales funnel. I highly recommend that. If you’re not sure where to turn in that area, check out All Things CRM, they have lots of terrific articles and insights and can help. Because I need to understand the basic mechanics of a tool before I get all fancy, I started with basic Excel sheets. Here are a few templates I found on the Microsoft template site: Pipeline management- Solution sales worksheet, Pipeline management- Streamlined worksheet, Pipeline management- Tactical sales worksheet.
Regardless of which tool you use – or even if you make your own pipeline on paper — just be sure to do it. The year I started using the sales pipeline, I literally doubled my revenues for the year. I’m convinced that the critical success factor was my ability to see whatopportunities were available and to regularly move the opportunities through the cycle by planning my next action steps. Another surprising benefit was that I was able to brainstorm new opportunities that I hadn’t thought of.
If you haven’t used a sales pipeline or funnel, then this is the time to start. You will see an increase in sales opportunities, revenues and the time you spend on money generating activities.