Are your sales reps putting you out of business? This was the key question at a recent CEO roundtable that Kevin Hourigan, the president and CEO of Web design, Web development and Internet marketing agency Bayshore Solutions, participated in.
“What we uncovered was an eye-opening misunderstanding of the processes and support systems required to achieve sales expectations,” says Hourigan.
Smart Business spoke with Hourigan about how to use a straightforward sales funnel model to make sure your sales prospecting and marketing strategies (both online and offline) are helping you successfully reach your sales goals.
What is the sales funnel model?
The sales funnel is a graphical representation of the flow through your sales process from many general prospects in your target customer population narrowing to those that become your customers.
From the top of the funnel down, the general layers of narrowing phases are as follows:
■ Targets. The prospects, suspects or online searchers that are in the market for your product or service.
■ Leads. The people that have indicated interest or acknowledged a need for your product or service. Completing a quote request form on your website clearly defines a lead.
■ Opportunities. The people that are qualified and to whom you will present a proposal.
■ Sales. Your closed deals and customers.
Each business entity has unique conversion percentages for their funnel stages. Your historical sales data will show your specific rates. By way of example let’s use these: a conversion rate of 10 percent of targets who progress to leads, of which 25 percent qualify as an opportunity to receive a proposal, and of that 25 percent of these deals are won as sales.
How can you use this data to meet your sales goals?
Given these conversion rates, the key is to take your sales revenue goal and your real historical average sales deal amount and work back up the funnel stages to get a clear picture of how much you need to pour into the top to achieve your goals at the bottom. For a business-to-business firm example, if your annual sales target expectation per sales rep is $1 million, and your average deal size is $15,000, then you need to win six deals ($90K) each month to achieve that revenue. Applying the conversion rates back up the funnel, this translates into 24 proposals ($360K) per month and 96 leads per month with marketing and prospecting systems support to influence $160 million worth of prospects per salesperson.