Do you understand the metrics around the "Sales Funnel" for your industry?
How many prospects do you need to chase (top of funnel) to get one piece of closed business?
When I first moved into a sales role I found the terminology to be a little intimidating ... prospecting, qualifying, closing, trial closes, sales funnels etc. It all seemed to foreign to me, and in some respects there was this "magic box" that existed between all of those prospects "out there" and business actually happening!
Here is the deal ... sales is a very simple concept, and the ONLY thing that stands between you and success is hard work!
You don't have to be "Mr/Ms. Congeniality" ... clients want to deal with people they like, but they will deal with people they respect, people that treat them well, people that listen to their needs and are responsive!
You don't have to be "Einstein" ... clients want you to be able to understand their issues, respond with appropriate solutions and in a thoughtful way.
You don't even have to be an expert in the field in which you are selling ... you just need to be able to understand what is needed as a solution, NOT how to fix it yourself. If you can have intelligent conversations with your clients about their business needs then you can help them to solve those needs.
So back to the sales funnel.
At its most basic level you need to be able to identify enough prospective clients, each of which will go through a process resulting in a (small) percentage of them actually buying what you sell.
Sales is very often a numbers game ... whatever you are selling, there will be "rules of thumb" to determine how many "prospective clients" you need to meet in order to close "enough" business to meet your targets.
If you want to increase your sales, you can (a) increase the number of prospects; (b) improve the ratio such that you close more business from the prospects you have; or (c) a combination of the above.
The sales funnel uses slightly different terminology in different "sales methodologies" but is actually a visual representation of the effort required to get a sale.
Here is how it works.
1. Potential Prospects (other names might be New Leads or Research) . The top of the funnel (the widest part) represents the number of "potential prospective clients" you contact. These will be people that you think might be interested in what you have to offer. You will contact these people to understand if there is any interest in your offering, and if there are business issues they have which you might be able to solve. (In Eagle's case we want to understand if these people hire professionals into their organization on a contract or permanent basis.) You will go through an "education process" understanding what their business needs are and explaining what your company does. Your goal will be to find "qualified" prospects.
2. Qualified Prospects (potential clients, . Some percentage of the people we contact who are at the top of the funnel will actually be people interested in what we have to offer ... at some level. They might not need our product/service right now, they might already have an existing group of suppliers, they might be resistant to working with you for any number of reasons ... but they are buyers of your product/service. At some point you may be able to earn the right to do business with these people.
3. Opportunities (the negotiation, proposal, activity part of the funnel). Of the qualified prospects above, there will be some percentage that will have a need of your product/service now or in the foreseeable future. These are the people who are willing to give you a shot. Over time you will develop relationships with a group of these buyers. Your goal will be to develop as many of these types of buyers as you can successfully service. Very often to get work from them you will be included in a bidding process.
4. Closed business. (The bottom of the sales funnel ... the result of your hard work). As a salesperson this is what you are paid to do ... this is what pays your mortgage! Of the opportunities you are given, you will win a percentage. As a rule of thumb if you are one of 5 suppliers bidding on a piece of work you have a 1 in 5 chance of winning. You can improve your win ratio by being better than the other 4 suppliers. In the staffing business I would suggest that a 20% close ratio is not uncommon ... so for every order you win you need to bid on 5 opportunities. The ratios in the stages higher up the funnel will vary based on markets, experience of the sales person, company viability etc. But for an established company with a decent salesperson that is building out new territory ... you might need to talk to 5 qualified prospects to get 1 opportunity. If you are building a new business then you are likely going to have 5 conversations with potential prospects to find 1 qualified prospect.
If you work these numbers backwards: 1 close = 5 opportunities = 25 qualified prospects = 125 potential contacts. In theory this means if you are brand new, starting from scratch you will need to talk with 125 people just to get your first closed business!
The reality is that there are many ways to narrow that funnel ... and the name of the game is to (a) get enough opportunities; and (b) win more than your fair share of them.
The funnel is a great tool for understanding the level of effort needed to win business.
It is also a great tool to measure your success, and thus give you ideas for how you might improve.
When you become established you will have a much shorter funnel, because there will be less "prospecting" for new clients.
So ... work really hard and you will develop a group of qualified prospects with whom you will have a relationship and thus will understand their cycles, their needs and even be ready to anticipate their demands.
But never forget that you always need to be filling that funnel, to ensure that you always have enough opportunities.
PS. You will notice that the funnel depicted uses the AIDA sales methodology ... a different description for doing the same thing. Contacting enough people to move through the funnel to close enough business!