When companies look to create a strong sales structure, typically they look at the revenue generated. However, that measurement tells you the work you already did.
In economics terms, this is called a lagging indicator. An indicator that tells you what has happened. Most companies aren't interested in knowing the work that was already done, but rather what to expect. What do they need to watch to know what cash flow, revenue, and deals will be coming in? In this case, we need to be watching the leading indicators - the predictable measures. What should a sales management or sales professional watch on a CRM dashboard to know they are doing the right activities to crush their sales quota?
The Sales Funnel on a page
Great leaders will continuously work on improving an individual's product competency and time management: timeliness, sales strategy, product knowledge.
Developing a great sales funnel requires more monumental blocks. On top of the standard three above you’ll add goal setting and a bit of math to the sales funnel plan (I know math isn’t my favorite either, but I’ll make it easy).
The math portion will assist in your sales funnel planning. Proper goal setting will enable you to envision that success that you want.
Sales Goal Planning
To understand what activities will bring the largest impact to the business we will reverse engineer our goal.
To set your goal you’ll need to understand where you want to be. Goals need to be SMART: Specific, Measurable, Achievable, Realistic, Time-Sensitive.
With your goals, you will want both a financial and a personal goal. Goals are more meaningful when we are personally tied to what it will mean when we achieve them.
Once you have found your financial goal let’s focus on it for a minute. We are going to start at the very end. I know it seems odd however I would like you to look at your overall goal and envision yourself achieving that goal.
With your end goal in mind, we can reverse engineer to see how many clients you will need to build a proper sales funnel foundation for your business.
What is a Sales Funnel?
At a high level, a sales funnel is a tool that is used for prospects before ultimately graduating to become a client.
What does a funnel look like? It’s an upside-down triangle. An empty triangle that’s big at the top and smaller at the bottom.
Each stage within the sales funnel brings a prospect closer to becoming a client.
Sales Funnel Stages
The very top of the funnel is for prospects (also known as leads).
This is anyone and everyone that you will want to get in contact with regarding your product or service.
Moving down the funnel is the meeting stage. This is when you get to qualify prospects and book a meeting to discuss and create value.
The proposal follows the meeting stage. At this stage, the prospect has already given you the intent to buy and you should already know their needs will be met with your solution.
Finally, After they have said “yes” to your proposal they become a client.
Reverse Engineer Your Sales Target
Once you have your monthly sales target take the average price for your product or service (if you have multiple then choose the most common).
Now, let’s go ahead with some math.
Starting with your monthly financial goal divide that number by the average price of your product or service. This will provide you with the number of clients you need to achieve your goal.
For example: say your monthly financial goal is $25,000 and the average price of your product or service is $5,000.
Financial Goal = $25,000 = 5 clients
Average Price = $5,000
From the number of clients we need every month, we will calculate the number of weekly meetings and the number of monthly proposals.
Prospects > Meetings > Deals
Typically the number of prospects you need to engage with before getting one meeting is ten.
Every four meetings will get you to one client.
Every two proposals should lead to one client.
Prospects = 10:1
Meetings = 4:1
Proposal = 2:1
Client = 1
If you are finding your activities are not reflecting these ratios, there is work to do. Companies will come to us and say they are doing an average of five or more proposals before they are able to convert a client. That's too much!
A 20% proposal to closing ratio tells us the client isn't ready to make a decision. If it takes more than one hour to create a proposal, spend that same time building value in the meeting phase - not creating a proposal that is unlikely to close a new deal.
How Many Meetings Do I Need?
Sales 101 says there are four meetings needed for every sale. With an average of 4 weeks in a month, the number of sales per month will equal the number of meetings per week.
Financial Goal = $150,000 = 6 clients (or deals per month)
Average Price = $25,000
Financial goal $150,000 per month
Average Deal $25,000
$150,000 / $25,000 = 6 deals per month
6 deals per month divide four weeks in a month = 1.5 deals per week
1.5 deals per week multiplied by four meetings per deal = 6 meetings per week
6 deals per month = 6 meetings per week
two proposals per closed client = 12 proposals per month = 3 proposals per week
10 prospects per deal = 60 prospects per month = 15 prospects per week
Now that you’ve seen the example, this is the biggest point:
We can't make any sales without meetings. Meetings are the only thing that matters.
Nothing matters if we aren't able to secure the number of meetings we require every week!
Education is not Application
You can go to school, get any certification, take any course, however, if you don’t actively apply the knowledge it will be forgotten and you'll never see the results in your daily use. Use it or lose it.
Your sales goal and funnel need to be top of mind in order to reach your ultimate level of success.
Fail to prepare, prepare to fail.
Prospecting = More meetings
More meetings = More proposals
Meetings = Everything
The speed at which you achieve your goal is up to you.
Follow the recipe and find easier success when funnel planning.
Find out more on how KO Sales U can work with you and your team to Sell More. Faster.