Why (Some) Managers need the Open Sales Funnel Report

Sales managers need full visibility into what percentage of their sales pipeline actually converts to deals – without this information, they can’t forecast accurately or plan their sales effectively. The problem lies with sales reps, who sometimes have their own agenda and don’t hew closely to the best practices of the sales process.

The thing about sales reps is that they like talking about their closed-won deals a lot more than they like highlighting their losses. You’ve never seen a rep move faster than when moving an opportunity to a closed-won bucket, but bring up the topic of closed-lost opportunities and you’ll see them dragging their feet.

The problem with this type of mentality is that it causes your win/loss ratio to be skewed and ultimately forces an inaccurate forecast. Sales managers need to enforce a tight sales pipeline – failing to do so is dangerous and can cause disparities between the win rate on the sales funnel and the win rate on ALL sales pipeline opportunities.

Which brings us to the open sales funnel report.

The difference between both sales funnel reports

Take a look at this sales funnel report below. You’ve probably seen this before. This report is a measure of your conversion rates between each sales funnel stage – and your eventual overall win rate – on all opportunities that closed within the selected time frame. Opportunities that closed refers to both closed-won and closed-lost opps. In this time frame, this company won 31% of its opportunities (418 deals out of 1,358 opportunities worked).

However, what this sales funnel report does not account for is opportunities that slip – those that have their close dates changed or pushed out. Managing close dates on opportunities in Salesforce reports is a problem that many reps struggle with. This leads to inaccurate information that can sabotage a team’s forecast, while inflating a rep’s or team’s win rate unrealistically.

For a company that doesn’t enforce a strict pipeline or one that suffers from poor data quality due to the work habits of their reps, forecasting and analyzing their performances based off the sales funnel report above isn’t exactly accurate. That report only takes into account the number of wins and losses; a true win rate consider wins, losses and opportunities that slipped or had their close date changed.

What they should use instead is the Open Sales Funnel report, like in this example here. Notice that there are significantly more opportunities in the qualifying stage, as well as a handful more in each subsequent stage. This is because this sales funnel report actually takes into account all opportunities in the pipeline – including those that have had their close dates pushed. When factoring in these opportunities, notice that the win rate – on the same number of deals won – is substantially lower, 23% compared to 31%.

Is this the best way of doing sales funnel analysis and sales pipeline management?

We would say no. This isn’t the best way to manage your sales pipeline. Sales managers need to be strict on their reps when it comes to effective and efficient sales pipeline management. They need to control their team to close out bad opps (as closed-losses).

Yet, even when they can’t, they still need to be able to forecast accurately. This means having a win rate that they can extrapolate to their other opportunities. In that case, using the 31% figure from the sales funnel report above wouldn’t be a true representation – that is misleading and would produce a higher-than-expected sales forecast.

Instead, the more realistic number to use when calculating that sales forecast should be the 23% win rate. Until your reps become more disciplined on entering high-quality data and effectively handling close dates in Salesforce.com, this is how you will have to do your sales funnel analysis.

While the Open Funnel is a fine substitute, it is ultimately not the best tool for effective sales pipeline management. Coach your reps to be more discerning and honest in closing out bad opps and pushing close dates when necessary, while accepting losses when they happen.