Where is your sales funnel broken?
Is your sales funnel broken?
Reviewing your sales pipeline can tell you a lot about a business or individual sales reps performance. It can help you understand whether you are going to hit your bookings goals the following month/quarter, whether you have enough marketing activity to support future growth or where there are rep or team performance issues.
What gets measured, gets managed. What gets measured and fed back gets done well. What gets rewarded is repeated. John E. Jones III
It is imperative to measure these metrics as early as possible in your business……a quick hint for startups, it is never too early to manage these!
We are going to look at the sales funnel specifically through the lens of a sales team or individual rep performance. When doing this it can help identify certain problems or opportunities depending on where it occurs. These can only be explored when you start to listen and experience the interactions the reps are having with your customers.
Before we delve into a couple of examples let’s clear up a couple of definitions to ensure we are on the same page;
MQL — Marketing Qualified Lead
This when a prospect expresses interest in your product or service and raises their hand by downloading a whitepaper, requesting a demonstration, emailing the ‘contact us’ page, etc.
SQL — Sales Qualified Lead
Typically this is the moment when the sales team has an initial conversation with the prospect and identifies a real need and can book a time for a further conversation. For many people with an outbound lead development team this is the top of their funnel
SAL — Sales Accepted Lead
Once the prospect has been qualified according to your existing criteria this is when sales ‘accepts’ the lead and can formally begin helping the customer through the selection process.
WIN — The client comes on board
This one is pretty self explanatory. You have successfully helped the prospect through the selection process and they have made the right decision to select your product/solution.
Let’s get stuck in…….
Problem 1 — MQL > SQL Conversion Ratio
Firstly what is the industry standard ratio here. For most B2B SaaS companies this is in the 5–15% range. If it isn’t hitting those targets it is identifying two challenges, one is towards marketing the other towards your rep performance
- The quality of the leads is poor. Some typical things to look out for here are comments like “I’m not sure why you are calling me”, “where did you say you were from again?,” “how did you get my details?” Not great things to hear on a call and may signify that the lead capture campaign may not have been targeted correctly or that the prospect may need more nurturing.
- Your reps need to manage the conversation better. It is not uncommon for someone to not remember downloading a particular piece of content but that doesn’t mean that it is marketing’s fault. You need to set up the call, creating an agenda and get permission to ask questions
COACHING OUTCOME: Listen to your reps calls, make sure they are setting an agenda that gives them permission to ask questions to understand the prospects intent.
Problem 2 — SQL > SAL Conversion Ratio
The industry standard here is ~90%. With many high velocity sales environments this can happen on the one call with the rep taking the SQL and doing a great job on the initial discovery call to disposition them as an accepted lead.
For other organisations this takes place over two engagements, requiring a second meeting scheduled. This is where the main challenge arises, the prospect doesn’t turn up for the second meeting. There are a couple of things you need to look out for here.
- Business Development Reps (BDR’s) and 3rd party agencies are compensated on securing SQL’s not actual meetings. This means that your more expensive resources, your Account Executive, are often left twiddling their thumbs when the prospect doesn’t show up.
- BDR’s and sales reps don’t have a consistent meeting process. Very often we see that reps can sometimes forget to send the meeting invitation, forget a few details or don’t remind the prospect of the meeting causing in a no show
COACHING OUTCOME: During the call are they establishing clear next steps while outlining everyone’s roles and responsibilities? Check in on your reps meeting follow up and scheduling sequence, are they consistently engaging with their prospects prior to the meeting.
Problem 3 — SAL > WIN conversion Ratio
There are lot of moving parts in this conversion ratio, with many businesses breaking this down into milestones they can measure. The industry standard for this overall metrics is 33%.
Even though this a large step there are several common mistakes we see reps making as they fail to progress people through this stage of the funnel.
- They failed to uncover a Critical Event during the discovery. With many SaaS providers competing for the same budget you aren’t just fighting with your direct competitors but all of the other vendors. You need to be able to align your service with a critical event of the prospect, not your end of month timeline.
- Lack of a formal qualification process. With many people finding this the toughest part of the sale it is amazing how many people wander through this stage without a process they can test and iterate on.
- Show up and throw up demonstrations. A common misconception with demonstrations is that your prospect wants to see how cool your latest feature is. They don’t care! All they want to see how you solve their problem. Don’t show them anything else.
- No clear next steps. There are only ever three outcomes to a meeting with a prospect. A. Yes, they will buy it now. B. No, they don’t want to buy it. C. They want to explore further with clear next steps. So many people finish a meeting and don’t set any clear activities to progress the buying process.
COACHING OUTCOME: Once you have established a process to manage your meetings your need to listen to your teams calls to ensure they are following it. There are many things to look out for, some of they key items are;
- They need to create an agenda for the meeting
- Make sure your reps are listening more than they are talking
- Summarise your prospects situation and pain at every opportunity
- If there is something to explore further, ensure they set a date with a firm future commitment.
Hope this helps you understand how you can use the data in your sales funnel to improve your sales performance. A lot of the improvement we mentioned revolves around the discovery call.
To give you an example of what a good disco call looks like, here is a visualisation of the Winning by Design discovery process;