Agile transformed engineering teams. ABM is transforming marketing. Yet, we are still running forecast and funnel reviews just as we did decades ago … interrogating and inspecting deals to assess the quality of the funnel to meet the number. I believe that technology is now available that will fundamentally change our approach!
Forecast vs Funnel Review
First, a bit of grounding on two key meetings within your sales management system: forecast reviews and funnel reviews, and more importantly, the differences between them.
A forecast review is an inspection of the portfolio of opportunities in the funnel that underpin the current month and quarter’s forecast. It is a tactical inspection to determine confidence and identify risk in the forecast. Forecasting the business accurately is critical to job security, and as result, this element of our sales management system is taking an ever increasing amount of a sales leaders’ time. A funnel review is more long-term focused—intended to assess the build and development of the opportunities for the subsequent forecast periods (typically next months or quarters funnel).
In businesses with longer sales cycles of 90+ days, best practice is to separate the forecast and funnel review meetings as they are fundamentally different in scope. When implemented effectively, these one-hour meetings should only be conducted monthly, as there would typically not be enough change to warrant a weekly review.They are best held one-on-one between the sales manager and sales rep, making the meeting most productive for the sales manager to use this forum to coach the reps on tactics and strategy on the opportunities within the rep’s territory.
Businesses that try to combine the forecast and funnel reviews typically spend most of the time on the tactical forecast and not enough time on the longer-term strategic development of the business. Separating these meetings ensures enough time is spent on the tactical execution as well as the future development of the funnel.
Neglecting the Early Funnel
As I look back on my career as a CRO, I admit I rarely spent significant time on the opportunities in the early stage of the sales cycle. The truth is, making the forecast has become a “term of employment” for sales leaders (as evidenced by the fact that the tenure of a CRO in a VC/PE backed company is now down to <18 months). The result is immense focus on the here and now—and the morphing of forecast and funnel reviews into tactical deal inspection processes—designed solely to validate opportunities and assess the risk within the forecast! This translates to the focus most often being on the mid to late stage opportunities.
The only time I spent on the early-stage of the funnel was typically early in the quarter as we assessed whether or not we had enough funnel coverage to make the quarter, based on historic conversion rates. It was rarely a deep inspection of specific early stage deals at this point and more focused on the question of whether we had enough funnel coverage to make the quarter. After month one of the quarter, the focus quickly shifted to mid to late-stage deals to ensure the sales teams were progressing the opportunity to deliver the required bookings.
While we all understand the need to prioritize mid to late funnel opportunities, the reality is we are missing a chance to improve skill sets that will drive improved results over the long term. I submit there are several questions to assess our reps’ effectiveness at early stage execution: Is our team effectively qualifying and doing discovery to move the deals into mid and late stages where the sales team has the highest win rates? Do I know what my early early stage conversions rates are and by rep? Are they qualifying out deals too slowly and/or wasting time on opportunities well outside of our ICP that will rarely close? How many meetings should it take to qualify an opportunity out of the funnel?
Improving Funnel Throughput
Here at InsightSquared, we have the unique opportunity to partner with our customers to improve the analytics of their early stage effectiveness. While it’s common for businesses to see their lowest funnel conversions rates between the qualification and discovery stages—I find that very few companies are spending the appropriate time to identify the execution gaps and develop field enablement plans to improve early stage execution. Increasing the conversion rates in the early stages of the funnel drives significant improvement in business outcomes—as the more opportunities that make it to the mid and late stages, where the reps win rates are the highest, will translate into more total wins.
Here are a few best practices to break this cycle and improve the throughput of your sales teams.
1. Assess the cadence of your sales management system.
Are you focused on both the near-term tactical goals as well as longer-term strategic improvement? Are you able to drive the discipline needed to improve sales stage progression? Sales reps’ behavior will align to the priorities their managers focus on through the inspection and review process. Without deeper inspection of the earlier stage, the business will not effectively assess the skills and process improvement plans needed.
2. Capture your revenue teams’ engagement activity without burdening them.
With more engagement occurring in digital channels (emails and virtual meetings) than ever before, it is imperative to capture these activities to be able to analyze your team’s effectiveness. Deploying an automatic activity capture technology to update opportunities in your CRM with all the email, meetings, contacts and file shares between your team and customers, including the customers responses, is critical to getting the data to provide the analytics of the engagement tactics that convert deals through the sales process. It is time we stop relying on and burdening the sales teams with the manual data entry requirements to get the activity data into the CRM system.
3. Apply Machine Learning (ML) to get deep analytics.
Once you have the data, recognize traditional analytics tools will not be able to process the amount of data you now have access to. Not only is the data massive in size, but in most cases, it contains unlike datasets as well as both structured and unstructured data that traditional tools cannot process. Deploying machine learning is now critical if you want to truly get the insights out of your data. ML-driven analytics produce insights and visibility to what the winning activity levels are to convert opportunities in your sales process. The ML models will provide the insights on how your best reps are engaging and where the friction points are in the early stage funnel conversion processes. Do I need different approaches for different industries, market segments, and lead sources? Knowing the answers to these questions is critical to improving your early stage funnel conversion rates.
4. Establish a cross-functional sales-cycle review process to drive alignment.
Improving the sales team’s early-stage conversion rates requires a coordinated approach between sales, marketing, product management, field enablement, and the sales/revenue operations teams. Aligning the focus of these functions requires a set of robust analytics using a common set of activity data. Too often, each function has its own data set with their own qualitative analytics. We can no longer afford to waste time trying to align different data sets and priorities between functions! One data set enables the cross functional discussion to be constructive and aligned!
At InsightSquared, our mission is to enable Revenue Leaders to take control of every step of the revenue process. By using a Revenue Intelligence Platform, you gain complete visibility into your revenue processes—including those at the early stage—to effectively transform operations and improve execution. Get started today.