| It is an important forecasting tool that all businesses | | | | making a decision (thus easiest to close) by looking |
| should use even if you don't have salespeople, as it | | | | through prospects in the negotiation or solution |
| clearly shows how many sales to expect and when | | | | evaluation stage. |
| to expect them. If your not sure what a Sales | | | | The sales funnel is a great tool to help you determine |
| Pipeline or Funnel is; it is simply a list of all the | | | | if you have enough prospects and to reduce the |
| prospective customers that have indicated some | | | | impact of lost or delayed sales on meeting targets. |
| interest in buying your product or service. They will all | | | | It's all in the numbers and that's why sales is called a |
| be at different stages of the sale depending on their | | | | 'numbers game'. To work out how much you need, |
| interest level and buying cycle and some will drop | | | | follow my example: |
| eventually drop out. | | | | |
| Information such as total sale value, probability of | | | | 1. Start with your monthly sales target, lets say it is |
| sale and expected close date should also be included | | | | $25,000. |
| to complete the picture. The term "funnel" is used | | | | 2. Work out what the average sales value is, even if |
| because you need to continually fill the top with new | | | | it is a rough estimate. |
| opportunities to ensure you have an even and | | | | 3. Determine your sales conversion i.e. of all the first |
| consistent flow of closed sales coming out the | | | | meetings you had or enquiries received how many of |
| bottom. The stages can differ from business to | | | | those where you successful in 'converting' from |
| business (i.e. can be simpler with fewer stages), | | | | prospect to customer. e.g. If you received 20 |
| depending on how you sell to customers and what | | | | enquiries and made 5 sales, you have a 1 in 4 sales |
| the buying cycle is. | | | | conversion rate. |
| It is important to make sure the funnel is always | | | | 4. So you will need '4 times' the amount of your |
| being topped up with new opportunities, that | | | | monthly target in your funnel at any time. If we go |
| prospects are moving through the stages and sales | | | | back to the example, you will need $100,000 worth |
| are being closed. When you need to close some sales | | | | of quotes or opportunities. |
| quick, it is easy to identify who is the closest to | | | | |