This post walks through a section of my on-demand webinar “Why You Won’t Hit Your Number” that’s available for free. Watch the 10 minute presentation in it’s entirety here.
Without thinking about it, quickly ask yourself: “Am I going to hit my number this quarter?”
What is your answer? If the word “yes”or “no” immediately springs to mind, that’s good. A “no” comes with it’s own concerns, but at least you know what you’re facing.
However, throughout hundreds of interactions with inside sales leaders I too often hear “maybe” or “we’re not sure yet.” This is bad. This tells me that these leaders don’t have a handle on their own sales data.
To properly understand your goal and if you’re going to hit it, you need to work backwards through the sales process. This exercise will help you understand three things about your sales and marketing: How Much, How Good, and How Soon. I’ll explain.
The “How Much” of sales and marketing is your lead inventory, also known as sales pipeline. Do you have enough inventory today to support your sales team and your goals going forward? A good way to answer this question is to chart your pipeline. Figure out at which stages of the sales process these leads lie. Create a simple table, like this:
Now that you know how much inventory is in each sales stage, you can chart it to a sales funnel. A common mistake is to map pipeline inventory in the shape of a sales funnel without much thought about past performance or future expectations of these stages, as shown below on the left. This will give you a false understanding of your pipeline.
Instead, you should analyze your historical conversion rates through each stage, and you’ll almost be able to predict the future. If you’re not sure how to do this, we have a free app on the Salesforce AppExchange that will do this for you. The funnel on the right shows the opportunity count in each stage combined with the historical conversion rates.
One tip: don’t limit yourself to just the sales funnel. Look at marketing, and at what rate you expect them to hand leads to sales. Looking at the sales and marketing funnel together will allow you to see even further around the corner.
Knowing how long it will take to move leads through your sales and marketing funnel will give you even further clarity on when deals can expect to close. However, be wary of looking at your entire sales cycle as one Average Sales Cycle number. Just as you can’t close 50% of a deal, Average Sales Cycle can be misleading. There is too much variability. Instead, break down “how soon” for each stage individually. A table like this can help:
Which you can then chart like this:
The Big Picture
By breaking down inventory, conversion rates, and sales cycle to the individual stages in your sales process, you will create a more realistic forecast and gain a deeper understanding of how many deals your team will close within a given period. At InsightSquared, we use this data to help people build forecasts like this:
The bottom line is with more accurate forecasting you can set realistic goals for your team. Using data-backed metrics takes the guesswork out of sales management and keeps reps more accountable for their pipeline at the sales stage level.
Of course there is a lot more that goes into hitting your number. There’s goal setting, sales and marketing alignment, and extra steps you can take once you’ve built your forecast. I cover these topics in a 10 minute webinar which you can watch on-demand here. I encourage you to give it a watch, actually dig into your own data, and know with confidence why you will or will not miss your number this quarter.