Most of us know Pareto’s Principle or the 80/20 rule- 80% of your revenues will come from 20% of your customers. But often times, sales management does not follow this maxim. But what does working the 20% mean?
Managing your sales funnel is a practice whereby you can identify where each prospect is in their buy/sell process with you. Think of a funnel, wide on top, narrow at the bottom. Not all of your prospects that start out in the top of the funnel will make it to the bottom. The percent of those who make it the whole way through is your conversion rate.
And there are specific steps within your funnel that should move a prospect closer and closer to you, one step at a time.
To make sure you are managing your sales funnel, take these following action steps:
- Identify the steps of your sales funnel. List out all the steps you and your sales team take from the time your marketing stops or the deal is closed. It’s better to err on the side of too many sales steps than not enough.
- Make sure that your sales steps match your target market’s buying steps. For example if your target market uses the internet heavily, make sure you have a strong, education based website. Remember the rule “make it easy for them to buy.” You could be losing sales if you are requiring prospects to jump through hoops that they could find tedious.
- Decide your “moment of truth” in your sales funnel. Too many business owners who are also their own sales people think all the way to the end of the sale. Instead, I recommend that you back up and look for the critical step that will get them to the sale. For car salesmen, it’s getting the prospect into the car, for a hospitality business, it is getting the decision maker to see the facility. Clearly identify your own moment of truth sales step.
- Create a simple system that can chart the prospects and precisely where they are in the sale process. This way at any given moment, you can identify where your prospects are in your sales cycle.
- Implement Key Performance Indicators to measure your conversion rate. The simplest of KPI measurement is the conversion rate from lead to sale. You may want to consider additional indicators that measure a second conversion rate from the critical sales step to the sale.
- Create a fool proof system for your sales process.Give some thought to this by answering questions such as, “What happens when a lead calls in?”, “What marketing material do we send out to interested prospects?”, “Are all sales inquiries followed up the same way?”
