Most of my client conversations, or I should say, prospect conversations, start with this concept of somebody coming to me and saying, “Hey, I have got a sales problem. I have got a revenue problem.” And the topic of today’s conversation is quite obviously, I don’t believe there’s any such thing as a sales problem, and I don’t mean that companies don’t have a challenge with sales or selling or revenue generation, but the problem really is that we talk about it the wrong way.
We talk about it like it’s this big blob of things, of stuff, like sales are sort of a magical black box, and what I am really hoping that today is going to illuminate is a different taxonomy, a different scheme, a different way of thinking about what problem are you trying to solve because I do believe that with language we can harness the power to solve our problems, but we have to learn to think about it in a specific way.
So rather than thinking about sales as this giant mass of stuff, let’s talk about it, let’s think about it as something far more specific. So at the top end in the most general sense when we’re challenged with revenue generation, the first question we have to ask ourself is, have we identified an appropriate target market? Do we have an audience that we can focus on? Do we have a clear set of ideal target profile characteristics that we can go after? And do we know who our ideal customers are?
Once you’re past that point, assuming you’ve got a target market that’s viable, legitimate, etc., the question is, are we getting enough inquiry? And for some folks on the web that might be things like site visits, traffic. It could also be leads. People like to talk about the leads they get or don’t get. So is there enough top of the funnel? Just basic activity?
Next, and this is a concept that I use that is a word that I enjoy, and that is, are we getting enough hand raises? And I think of a hand raise as something that a prospect does to signify (try to draw my little hand here, weee! There we are…) that a prospect does, (Maybe a watch will make him look better) a prospect does to let us know that they want to engage in a conversation. It’s not necessarily a buyer, but somebody who’s interested, somebody that downloads a web form, somebody that stops by your trade show booth or something like that.
Well, hand raises are only useful to the extent that we can convert those into first conversations. You have to talk to somebody. You have to have an interaction, and those of you who’ve followed my articles and these videos know that by first conversations, I am really, really, really referring to scheduled conversations. So my first scheduled conversation for me is a key metric in the sales process in an area where perhaps if you’re trying to solve your revenue problem as a whole, this is a specific question you’re going to want to dig into an answer.
Next in our schema here is the concept of what I would call “new opportunities.” Sales organizations have a challenge or often argue a lot about, when should we create an opportunity? When is an opportunity created? My simple definition for opportunity is essentially when we start the sales clock (and I will draw my little clock right here, maybe a stopwatch is a better metaphor).
So the idea is I want to track opportunities from a consistent point in time in the process for me, my clients, the models that I deploy. That starting point always takes place after the first scheduled conversation if we’ve moved forward and agreed to schedule a discovery, essentially our first discovery. So new opportunities in the pipeline, a key metric for me to follow.
Second, what percentage of these opportunities, or how many opportunities are moving to a qualified stage? In my world that is 20%, but let’s not get hung up on the percentages. The point is as we progress in the opportunity stage model, we can move them into a qualified stage—for me it’s 25%. Typically, when we talk about a qualified opportunity, we have an idea about the amount, the services and the timing. We’re not certain about it, but we have a good, at least initial, sense of what that’s going to be.
After qualified opportunities, what we’re going to talk about, and what we need to focus on is, do we have enough in the pipeline? And when I talk about pipeline opportunities, I am talking about those between qualified and closed.
If you think about selling, it’s not all that complicated what we spend our time on. We have top of the funnel activities designed to put stuff into our pipeline. We have bottom of the funnel, things we’re trying to close, and we have all the stuff in the middle. So in my mind this is going to be all the stuff that’s in the 20%, to 80% or 90%, however you manage your pipeline.
Pipeline opportunities, having a sufficient amount in your pipeline in each of the stages is a critical success factor. You can almost look at selling as this nice flow from all these steps, and wherever you’ve got a gap is going to be a problem for you, providing the metric.
Finally, well, not finally, next to finally, do you have enough closed-won revenue? And of course, this is the metric that most people gravitate towards. Do I have enough deals coming in? Are they the right size? At this point I want to look at revenue. I want to look at margin. I want to look at sales cycle. And there’s lots of ways to kind of evaluate how that’s going, but as I said, this is not the last stage.
There is one more component of this puzzle that I need to measure, and that is, what is my quantity of and what am I doing with my closed-lost opportunities? Why do I focus on these? Well, I will tell you, it’s not to deal with a close ratio. This is not about close ratio. This is about the fact that the majority of deals that come through this process, if you will, result in no decision or they are stalled.
So my question always is, what am I doing with these? So for me, understanding the entire ecosystem all the way to what am I losing or, stated differently, not winning because nobody is getting them, and then how am I going to go after these opportunities again and get more money?
So hopefully this short, sweet little video gave you a framework to think about your sales challenges, your revenue challenges in a little more specific way. Go through your environment, go through your company, go through your ecosystem and ask yourself, where out of these eight, excuse me, nine different sections am I really struggling, or if you’ve got problems everywhere, how are going to prioritize one or two or three of these for the most bang for the buck?
And always if I can be of assistance, if I can help, please leave a comment or reach out to me. Thanks so much.
By Townsend Wardlaw