Tag Archives: Funnel economics

Do you know your sales funnel like the back of your hand, or the back of your head?

If your CEO, head of marketing, and head of sales can all agree that the following information is known than step to the head of the class.  However,  I suspect that you won’t pass the test, meaning your company is like 90% of other B2B companies that are:

  1. Struggling to align marketing and sales,
  2. Struggling to hit their revenue numbers,
  3. Struggling to develop a believable plan and budget for 2010,
  4. Struggling to achieve a comfortable level of transparency into the sales forecast.

Often you’ll know:

  • The size of your market
  • How much revenue you need to generate out of that market

But do you, or the team, know:

  • How many deals you need to close each month?
  • How many proposals that will take – for each month of 2010?
  • How about first meetings (you know the one, the “Hi, thanks for making the time, tell me about your business”)? How many do you need in month 1,2,3 and next year?
  • And how many leads will that take from Marketing, and how many must Sales generate itself?
  • How about the market? Do you know how much of that market you need, and whether (and how tightly) you can (or must) focus?
  • Does everyone in Sales, Marketing, Finance and Operations have the same view of these numbers? Or are there disconnects?
  • How do these planned numbers compare to your current numbers?
  • Which of these do you know, and which of them are gaps in the understanding of your funnel?

So, how well do you, and your team know all of the numbers, and what does the future hold?
You need to have a simple, single model of your demand for 2010 (and beyond), outlining
your total funnel – top to bottom.

If you’re wondering where the gaps are in your ability to plan and execute a revenue plan effectively contact me. As a certified Funnel Coach in North America for MathMarketing there are many ways I can be of service to you this year, and some are even free.

My colleagues at MathMarketing in Melbourne have a nice habit of hitting the nail on the head when it comes to discussing funnel management, revenue planning, and marketing training, which is why I boldly lifted the above (in italics) from their literature. Thank you, mates.

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Why the CFO Should Be Funnel Savvy

The revenue funnel isn’t the sole domain of sales or marketing. CFO’s should be as familiar with their company’s funnel structure and metrics as any sales executive or marketing executive.  Here’s why.

  1. Funnel modeling tools provide the best way for marketing, finance, and sales to talk the same language during planning and reporting.
  2. The variables of the funnel make up the actual metrics of the revenue engine. These variables are the levers and dials over which management has control.
  3. The funnel, over time, enables the sales forecast to be made with higher and higher degrees of accuracy.
  4. Requests for more resources from Marketing and Sales can in part be justified or refused based on funnel economics

CFO’s should be trained in the use of sophisticated funnel modeling tools right along side their marketing and sales colleagues.

An excellent source of this training is the FunnelAcademy(tm), which includes comprehensive training on sizing a funnel and measuring progress. It also includes the most robust funnel modeling tool I’ve ever had the pleasure to use.

Reset the Sales Funnel for Revenue Forecast Accuracy

In case you didn’t notice your customers are buying differently today than they did last year.  The differences could be subtle or obvious, but if you observe closely you’ll see that the process they follow to make a buying decision–the buyers’ journey’–has changed.

If your selling process and sales funnel structure haven’t adapted to the buyers’ journey the efficiency of your sales and marketing efforts will be down and so will the accuracy of your revenue forecast. This is what I call the new “Funnel Economics”.

Here are the major variables in a sales funnel (which I am now going to refer to as the revenue funnel because it should be co-owned by marketing and sales).

  1. Stages of the buyers’ journey
  2. Lag time between stages
  3. Leakage rate at each stage
  4. Advancement rate at each stage
  5. Number of meetings required in each stage
  6. Number of meetings that each sales person can expertly handle in a week
  7. Number of available sales people
  8. Average revenue per order

Any change to any of these variables has an impact on how many deals get closed in a period of time.  The marketing and sales effort required to generate a level of revenue last year is very different from what it takes this year.

If you’re still trying to plan and forecast based on last year’s funnel structure, you’re not just flying blind you’re flying with the wrong instruments.

Reset your revenue funnel by analyzing and observing the customer’s current buying process and  behaviors.  Dial in the new metrics into your revenue funnel and monitor carefully over the next several months.  The accuracy of your revenue projections will improve.  What’s more, you’ll  have a more realistic preview of what type and level of activities are necessary to achieve a certain revenue outcome.