Ideal Sales Funnel / Pipeline Ratios
Sales success is virtually 100% dependent on keeping your lead funnel full and maintaining an active sales pipeline. To begin, it is important to distinguish between the two relative to our own sales process.
Before diving into it, recognize that many organizations use either term to describe all sales activity. In other words, the entire sales process, from prospecting, through the final sale can be described “the pipeline,” or “funnel.” Some may use both terms, but in a slightly different context than we do.
Often, whether the term sales funnel describes the entire sales process, or just prospecting-related activities depends on context. For the purpose of discussion, it is convenient to reference lead generation, acquisition and conversion as “top of the funnel” activities. “Mid-funnel” activities include such things as exploratory calls, goal setting and planning. Finally, the “bottom of the funnel” involves presenting proposals and closing the sale.
Here (OCG), we officially use “lead funnel” in reference to prospecting, and all activities leading up to the “conversion” of the lead. Using CRM parlance, conversion means that we’ve identified a solution for the potential client that includes OCG services, and have begun the process of quantifying and developing a specific opportunity.
“Pipeline” refers to all activity after the conversion. Depending on the context, this is mid-funnel and bottom of the funnel (BOF) activity. OCG’s pipeline is made up of the quantifying and developing stages mentioned above, with the addition of the final closing stage. The entire sales funnel and pipeline looks like this:
Sales Funnel
Identifying prospects/leads
– Researching companies and their competitors
– Identifying contacts, influencers and decision makers
– Initial contact
– Preliminary needs assessment
– CRM conversion to “opportunity”
Pipeline
Sales Stage: Quantifying
– Exploratory calls (refining needs assessment)
– Competitive analysis
– Identify possible solutions
– Goal setting and planing
Sales Stage: Developing
– Additional discovery by department (engineering, design, IM, etc.)
– Defining scope of work (SOW)
– Pricing
– Creating proposal
– Approval of proposal
Sales Stage: Closing
– Final presentations
– Contract signing
– Payment
Maintaining Sales Funnel / Pipeline Health
Regardless of the time period, movement through each stage of the sales process occurs in ratios. As long as prospects have been adequately and appropriately qualified, meeting sales objectives is a simple matter of keeping each sales stage full. Attention must be given to each stage in order to maintain the related ratio.
For a given time period, making one close requires the following:
(1) Target and qualify at least 60 new leads (sales funnel)
(2) 10-12 exploratory calls (quantifying)
(3) 4 Goal setting and planning calls (developing)
(4) 2 Final presentations (closing)
Meeting Sale Goals / Quotas
Once ratios are known, meeting sales goals becomes a repeatable, scalable process. For example, let’s assume the monthly sales goal is to close $10K in new retainers, with an average contract value of $2,500/mo.
Using the above defined ratios, reaching the $10k goal requires qualifying 60 new leads per week, along with all activity moving them through the pipeline. As it happens, this is a typical pace for most sales organizations.
Individual sales people often find their own strengths, and make adjustments to the pipeline ratios accordingly. Regardless, the critical success factors are (a) maintaining a steady flow of qualified leads, and (b) diligently working through quantifying/developing/closing process.
It is also important to utilize the tools available. Here, we use vTiger CRM (alfred.ocgcreative.com) and HubSpot for lead/funnel activity and several other tools for research, IM and project management.