Sales managers looking to improve and optimize their sales processes can begin by looking at any number of areas – their sales pipelines, their reps’ daily sales activities, etc. However, for our money, we think the best place to look first is the team’s sales funnel. More specifically, sales managers should be intently analyzing the conversion rates between different stages of the sales funnel.
But where do we even begin in terms of sales funnel conversion analysis?
Start at the top and work your way down
A natural place to start would be at the top of the funnel. From there, you want to work your way down through to the closed-won deals at the bottom of the funnel, calculating the conversion rates between stages.
These conversion rates refers to the percentage of opportunities that your team of sales reps is progressing from one stage to the next, and so on all the way down to the bottom. Take a look at this example below:
Of the 1005 opportunities that entered this company’s pipeline at the top of the funnel, 206 were closed-won as deals. That provides a sales manager with his team’s overall win rate – which is great information to know – but what is really interesting to him is what happened between those two funnel stages.
Look at the second stage – demo. Of the 1005 opportunities created and worked on by the sales reps, only 704 (70%) made it to this second stage. From there, 45%, or 314 opportunities, made it to the third stage (Technical Fit). Of those 314 opportunities, only 190 (79%) made it to the Closing stage.
These are incredibly valuable insights! Now, the sales manager conducting this sales funnel conversion analysis can determine at which stages the team is losing the most opportunities. They can go to work plugging the leaks that have sprung at those specific stages. In this case, it is clear that the Demo stage is where reps are struggling to convert.
Now that they have this actionable insight, the sales manager can go about applying it and solving the problem. They can sit down with their reps during demos and look for what they’re doing wrong. Perhaps they are spending too much time promoting features, rather than looking for pain and talking solutions. Maybe the reps are making off-hand comments that are making the potential customer feel uncomfortable.
The key is that, with the sales funnel conversion analysis, the sales manager now knows where to look to diagnose the problem. All they have to do now is keep digging deeper to find it.
Comparing individual reps against the team
Sales funnel conversion analysis doesn’t have to stop there. Instead of looking at the entire team on an overview, the sales manager could also compare the sales funnels of individual reps against other reps, or compared to the sales team’s averages.
Look at this side-by-side comparison between Josh’s funnel and the company’s funnel. It should be crystal clear here where Josh is struggling, performing considerably worse than the rest of the sales team in several key sales funnel stages. Instead of lumping the whole team together into one sales coaching session, the sales manager can now craft and customize individual sessions that better suit the sales rep’s needs.
Every sales manager worth his or her salt should understand the basics and best practices of sales funnel conversion analysis. If you need more help with your sales funnel conversion analysis, check out our FREE Sales Funnel app, on the Salesforce AppExchange.