Increase Deal Velocity and Conversions with Funnel Analytics
Getting ready for my conversation with BoostUp
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Now that we’ve entered Q4 it’s time to revisit Pipeline Management. For businesses with sales cycles greater than 90 days the die is case as they say. Conventional wisdom says you need to have at least 3x pipeline coverage walking into the quarter. I’m not a big fan of just taking nominal pipeline coverage at face value. You have the look at the quality of that pipeline. It leads me to a couple of important yet perennial questions for all sales leaders to look at.
On October 18th I’m joining BoostUp to talk about how to Increase Deal Velocity and Conversion with Funnel Analytics. If you don’t know BoostUp, they have a killer offering in the pipeline management and forecasting space. They're also a great partner and sponsor to this newsletter. Ahead of the webinar I thought I’d jot down my thoughts to prep for the webinar.
Believe it or not, I don’t just show up to these webinars and wing it! Preparation is key.
So it’s Q4. Ask yourself the following questions.
What does a reliable pipeline look like?
How do you leverage funnel analytics for sales velocity?
How do you increase conversions with data-driven insights?
What does a reliable pipeline look like?
Every company’s funnel will look different. Here’s a few ways to describe a bunch of them:
Top heavy pipeline: over 80% of opportunities are in your first or second stage
Bottom heavy pipeline: over 50% of your opportunities are in your penultimate or ultimate stage
Pear shaped pipeline: over 80% of your pipeline is in the middle stages
These shapes don’t necessarily mean a bad thing at face value but they make much more sense when thinking through your sense of timing.
At the beginning of the quarter it’s more acceptable to have a top heavy pipeline. A bottom heavy pipeline could indicate many of your late stage opportunities slipped out of the previous quarter. You’ve punched a hole in your year-to-date attainment figures and you might also have a starvation problem at the top of your funnel. The pipeline needs new opportunities to sustain itself.
Here are a few ways to think through your pipeline from week-to-week during the quarter. This framework below applies better to firms supporting mid-5+ figure deal sizes (i.e. Mid-Market or Enterprise level deals) AND has a quarterly target.
Average contract values of $10K or lower the framework below may not make sense. Instead I would focus on your marketing and sales development capacity as a starting point.
Companies who have monthly targets may want to alter how they use the framework below.
Week 1:
All close dates are current (no past due close dates)
Nominal pipeline coverage (in-quarter close date) is at least 3X - 4X. Nominal just means that you’re summing up the total amount of your pipeline dollars for deals with a current quarter close date
Weighted pipeline: within +/-30% of your quarterly target.
Deal hygiene: very high. Get your team to update their book of business and reduce stale information. Pipeline management is highly susceptible to garbage in, garbage out.
Week 2 - Week 4
Nominal pipeline coverage remains at 3X-4X.
Pipeline generation: team creates above average weekly opportunities. Reason I say this is that if you ‘re going to close any deals in-quarter than they’re likely going to be generated in that first month of the quarter.
Weighted pipeline: within +/- 30% of your quarterly target.
Presumably all deal slips from the previous quarter are marked as won.
Week 5 - 8
Nominal pipeline coverage remains at 3X-4X.
Pipeline generation: team continues to hit their averages and focuses on deal progression
Weighted pipeline: within +/- 20% of your quarterly target.
Presumably some business has already closed outside of the deal slips in Month 1.
Deals in the middle of the funnel! It’s time to get moving. Get to that proposal stage so you can line up legal, finance, and infosec. If your deal cycle is over 90 days then this should already have been in play.
Week 9 - 12
All deals that will close have kicked off procurement processes (i.e. legal, finance, infosec)
Pipeline generation: this tends to take a hit for any sellers who have deals that will close. Pipe generation may shift to reps who are below their coverage targets
Weighted pipeline: within +/- 10% of your quarterly target
Deals stuck in Stages 1/2/3 (whatever you call your early pipeline) with no line-of-sight to commit or advancing. Move to next quarter. Don’t hopecast!
Week 13
Snowplow those will-not-close-deals into the next quarter
Last second signatures should be coming in… and hopefully you don’t have any of these
Get your CRO and your Head of RevOps a drink. Businesses like predictability, not heroics.
How do you leverage funnel analytics for sales velocity?
When I drive my Tesla on auto steer I let the auto drive do much of the heavy lifting on the long stretches of the trip. But once I get near the offramp and need to do some urban driving I switch off the auto steer and take over manually.
I feel the same way when thinking through funnel analytics. I play the percentages in the early weeks of the quarter but really start to lean into the deal narratives.
Who are we engaged with at this stage of the deal? Are we working with someone with authority?
Are we working with someone who is an experienced buyer?
If they’re a first time buyer, how confident am I that they are well positioned to co-sell our solution internally? Do we need to arm them with more tools to go to bat with us?
Have we presented pricing? How is our proposal received?
You get the idea. This is where we don’t completely shift to the “art” of sales but we also need to put our hands on the wheel and trust our training. We’re adding in manual mode.
Why?
As we near the end of the quarter our sample size begins to shrink. We’re down to the wire. The data might tell you that 75% of Stage 5 deals move to Close Won. If your operations team and sales management are strict about your entry and exit criteria then I would have a lot more trust in that 75%. Even with that, imagine you have 5 deals.
Deal #1: $100,000
Deal #2: $200,000 but rep say there’s upside to $260,000
Deal #3: $150,000 but rep says prospect is hemming and hawing for a deeper discount
Deal #4: $50,000
Deal #5: $500,000
Total committed deal amount is $1,000,000. With a 75% weighted forecast you’re looking at $750,000 in bookings.
Do you trust your forecast?
What if you win deals #1 to #4 but lose #5? You have $500,000 in won bookings give or take?
Do you call that a success? Just days ago you were calling for $750,000 in bookings.
Instead, you’re off by 33%!
This is where context and narrative can help set expectations with where the business is going to land.
How do you increase conversions with data-driven insights?
My two cents here. Use the data as a baseline. Like every financial fund manager out there, you need to know where the S&P 500 Index is. That’s your benchmark. Beat it and you win. Lag behind it and you lose to the market. Same goes for looking at conversion rates. You have to know your numbers.
Here are a couple of hypotheses which I think are always worth refreshing to drive higher conversions:
Service Level Agreements: how quickly are you following up with your inbound leads? Under 5 to 10 minutes is considered world class. I talk about speed to lead here.
Lead Routing: who you route your highest quality leads to can matter a great deal.
There’s one school of thought that focuses on equality. With this philosophy, you round robin leads equally. Rep 1 gets the same number of leads as Rep 5. This might be great for team culture, but it is literally leaving money on the table.
On the other spectrum, RevOps routes the best leads to the best reps. The goal here is categorize each of your reps into performance tiers. For example, Rep 1, 2, and 3 are in Tier 1. The rest of the reps assigned to other tiers. Here, you might segment your leads based on a lead score. Leads with a score of 90% will round robin between your Tier 1 reps until the reps have reached capacity. Lower quality leads will then route to your Tier 2 and so forth.
Sales enablement / coaching: depending on the deal stage you might bring in deal coaching for the rep. Enablement can swoop in to diagnose areas for improvement and provide tailored coaching to the rep.
Executive sponsor: late stage and big dollar deals could receive a boost in the arm with an executive presence. The goal is not to turn your executive into a closer, but to instead sell the vision of the roadmap. Partnering with your firm is not a one time purchase, it’s a lifelong exercise to drive ROI for the customer.
If you have more thoughts please share with an email reply!
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