The sales process is often compared to a funnel where new leads coming into the system (prospects) are placed into the top of the funnel (the widest part) and then worked through the system. The salesperson may then use a number of techniques such as informing, persuading, providing information, demonstrating until, at the narrow end, an order is placed and a sale is closed when payment from the customer is received. A sales funnel report presents a "snapshot" of your sales function at any given point in time.
The funnel framework works fairly well because for all new leads that are generated by marketing, there is a closing rate that represents the sales that ultimately result. The number of resulting sales is usually significantly less than the number of total leads generated hence it is useful to think that as leads work their way further down the funnel, there will be less and less of them until they come out the narrow end as sales.
One important thing to note is that organizations define each phase in the process (or, part of the funnel) differently based on their authentic sales process. The pre-defined ‘Sales Steps’ in an off the shelf CRM system rarely cover your unique sales process therefore sales people will not naturally follow it.
Each step working through the funnel should have clearly defined criteria so that there is specific knowledge about all the leads at that point (questions and rules need to be developed for each step). In other words, leads become more and more qualified as they work their way through the funnel, and at each step you will know exactly what that specific level of qualification is.
Another important thing to keep in mind is that the funnel is a great way to track and forecast sales (a great tool for sales leaders) as well as gauge marketing activity.
By running a sales funnel report, the sales manager can see how many leads are at each step, if there are any "bottlenecks", or if there are an insufficient number of leads at any stage. It allows the sales manager to check the sales effectiveness of the team. Armed with that knowledge, the sales manager may instruct his or her sales force as to where they should focus more attention to keep sales at the desired level. That’s great sales coaching! They can then also work closely with the marketing manager to ensure they are generating enough leads to hit sales goals, whether the leads are of high enough quality, or what needs to change to hit sales goals. That, of course, brings about sales and marketing alignment not warfare.
Get your sales process right, build an authentic sales funnel/pipeline and then coach it. Simple.
Stay tuned for the definition of CRM in my next post, just to completely clear things up.