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The test-driven sales funnel

Your sales funnel and its stages can be a little complicated, but it must not be ambiguous. While this one’s for our friends in the technology product and services industries, the fundamentals underpinning our approach to sales operations apply across domains.

One of the most frequent “oh, by the way” questions we face goes like this:

“Hey, you ran a large tech sales team, how do you structure your sales funnel?”

Beneath that question lies the asker’s true concern: how can I ensure our sales process has an effect better than chance?

We’ll show you how!

The sales funnel

“Sales funnel” is a fancy jargon for “the steps a buyer takes from awareness to purchase” as perceived by the seller and selling organization. Most funnels include stages that cover a buyer’s:

  • Awareness of the company’s offering
  • Interest in it
  • Qualification to buy
  • Evaluation of said offering
  • Intent to buy or not
  • Negotiation and/or formal proposal process
  • Closing/winning of said proposed deal
  • Loss of said deal
  • Nurture for buyers who might come back

Mapping a particular customer’s purchase against a series of known, quasi-measurable stages helps marketers and/or sellers act in an intelligent and customized way to help that customer buy (or not).

Sales operations in brief

People think "process" and “tools” when they think "sales ops", but it's really more about context management. Sales operations serves two masters:

  1. Sales team
  2. Executive leadership

With three recurring goals:

  1. Drive effective behavior
  2. Provide meaningful intelligence
  3. Eradicate fantasy

In support of sales based on tested fundamentals:

  1. Every interaction must be valuable for the client
  2. Any sales theory you employ must be uncomplicated but advanced and/or differentiating from the norm
  3. Keep sales actions as simple as possible
  4. Ensuring that data outputs to the rest of the business are coldly realistic and pessimistically accurate

For now, let’s think of sales operations as opportunity management and activity management, but we’ll focus strictly on opportunity management today.

Opportunity management

Most time-tested funnels can drive effective behavior and most provide meaningful (if surface-level) intelligence. Unfortunately, traditional funnels quickly fill up with putative opportunities that either don’t advance or can’t be acted upon. In other words: fantasies.

To eradicate fantasy, we need to create a test-driven funnel with explicit advancement criteria. Each stage includes criteria, forecasting probability, and a potential next step from here after being worked. For any hypothetical software product sales funnel, we start with this model and add/remove/modify from here:

1. Possibility

Any potential opportunity that should be worked and not forgotten by a salesperson. Should cycle into Closed lost, Need identified, or Nurture from here.

☐ Entered funnel via web, or

☐ Manually entered via another lead gen method

10% probability. Equivalent to marketing qualified lead in standard parlance.

2. Need identified

We have identified a plausible customer need and can describe it. This would occur after any qualifying call. Likely to move to Demo scheduled, Nurture, or Closed lost.

☐ We understand the prospect’s past and present situation

☐ We understand the prospect’s basic requirements

☐ We have captured enough intel to customize a demo

30% probability, equivalent to sales qualified lead.

3. Demo scheduled

No product sells itself—your seller needs to connect your prospect to it, and most product organizations do that (right or wrong) through a customized demo. At this stage, we're tailoring a demo specifically to this customer and will demonstrate how it meets their initial need. At this point, additional support staff may need to be notified. Afterward, this opportunity should move to Genuine, Nurture, or Closed lost.

☐ We have a demonstration scheduled and confirmed with the prospect

☐ We can act on the collected intelligence to tailor our demonstration

☐ We have an internal demo customization meeting scheduled

Note: Several other steps in the sales process can occur while an opp is in this state, but those steps occurring don’t actually change the opp’s disposition or probability.

40% probability, no standard equivalent.

4. Genuine

After you’ve given your demo (or provided a ballpark plan in services), an opportunity may become very real. However, a truly genuine opp must pass several tests:

☐ We confirm that this opportunity is real, urgent, and describable

☐ This prospect is interested in our products and services and we can name which ones

☐ We understand this opp’s qualifying logistics: decision makers, timelines, and budgets

☐ We’ve created and presented a solution our prospect found valuable

☐ Prospect has agreed in principle with our pricing or ballpark estimate

Note: As before, multiple steps in the sales process occur while an opp is in this state.

50% probability, equivalent to new business opportunity. Many amateur salespeople think they’re inches from a close by now but there’s a long way to go after “yes”!

5. Quote

Your salesperson obtained verbal commitment against a ballpark estimate and is:

☐ Writing and sending purchasable proposal documents, and/or

☐ Executing other meaningful documents like service level agreements in furtherance of a genuine opportunity.

70% probability, equivalent to proposal.

6. Closed won

Hopefully this one’s obvious:

☐ You have a signed quote

☐ You know why we won and have recorded it

100% probability, equivalent to closed won.

Note: Quick reminder, your salespeoples’ goal is to book, not collect. Your customer goal is to set up an excellent experience.

7. Not no, not now

An opportunity or relationship that was not ready but isn’t truly dead. This opportunity:

☐ Still has value

☐ Should be revisited

☐ Has a specific next action that your responsible seller has recorded and scheduled

10% probability, equivalent to nurture.

8. Closed lost

An opportunity has died at any stage for any reason, or was a phantom to begin with. Therefore we believe:

☐ We’re confident there’s no useful next step

☐ We know why we lost and have recorded it

0% probability, equivalent to closed lost.

Note: If it comes back to life, that’s OK. Many opps need to die before they truly live.

Opportunities can skip stages but shouldn’t and usually won’t.

At Next Mile, we’ve helped new digital offerings go from inspiration to realized revenue multiple times. With limited resources, a clear view on where to spend your effort can make all the difference. Contact us to set your new offering’s sales effort on the honest path.

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If this speaks to a problem you’re facing, we'd love to see if we can help you further.