Sales funnel management for scientific and engineering entrepreneurs

March 1, 2010 at 6:00 am 3 comments

To many scientists and engineers the sales process can seem like a dark art.  The sales person tells us gripping stories of their quest for revenue.  After they leave we try to reduce what we heard to things we understand – numbers – and find it difficult if not impossible to do so.

As my companies have grown, and the number of sales people has increased, my fascination for the actual stories from the front lines of sales became a luxury that I could no longer afford.  I had to create a system that allowed me to understand systematically, quantitatively and efficiently whether our quest for revenue was getting closer to our goal for the month.  This is the system I use for tracking direct sales.

In my post, Managing your Sales Funnel by the Numbers, I introduced how I set goals for what the funnel should contain at any instant.  In this post I describe my weekly checklist for reviewing the flow through the funnel.  The basic idea is simply to account for the flow of opportunities into and out of each stage of the sales funnel.  All of the interesting flows are depicted by arrows on this diagram.
Sales funnel with arrows showing the flow of opportunities between stages an the leakage of opportunities into the lost-opportunity bucket.
While conceptually simple, establishing and sticking to the discipline of accounting for your funnel each week takes work but I have found it to be an invaluable tool in cutting through the stories and knowing where you really stand.  The surprising thing I have realized after doing this for a few years is that the sales people who resist this systematic accountability fail to deliver results.  This tool saves me a lot of cash and time by letting me identify early those who just tell good stories but cannot produce revenue.

I hope you will try this tool and let me know how it works out for you.  Here is my entire checklist for the weekly review:

  1. Leads
    1. What new leads do we have + count
    2. Where did they come from
    3. Which leads were disqualified, why + count
    4. Count total leads + change
    5. Do we have any stale leads
  2. Named opportunities
    1. What are the new named opportunities + count
    2. Which named opportunities were lost, why + count
    3. Count total named opportunities + change
    4. Are any named opportunities stuck
  3. Qualified opportunities
    1. What are the new qualified opportunities + count
    2. Which qualified opportunities were lost, why + count
    3. Count total qualified opportunities + change
    4. Sum qualified opportunity amount + change
    5. Are any qualified opportunities stuck
  4. Near-term opportunities
    1. What are the new near-term opportunities + count
    2. Which near-term opportunities moved back to qualified opportunities
    3. Which near-term opportunities were lost, why + count
    4. Count total near-term opportunities + change
    5. Sum near opportunity amount + change
  5. Order
    1. What are the new orders + count
    2. Count total orders + change
    3. Sum order amount + change

Entry filed under: Sales Skills, startup.

Managing your sales funnel by the numbers What should you pay a reseller?

3 Comments Add your own

  • 1. paul  |  March 3, 2010 at 4:10 am

    fine concept and practical approach. As a salesman I am measured in reality: what have I sold. If I meet my goals I am where I need to be, if not then i need to understand why. Sales is not a black art, it is i disipline like any other that requires attention to these details, a vialble business plan and regular measurements.

  • 2. Alex  |  March 3, 2010 at 5:21 pm

    I am having trouble distinguishing between leads and named opportunities. Can you elaborate?

    • 3. firstsalefirst  |  March 3, 2010 at 7:18 pm

      It depends on the business — in my business, the following are categorized as Leads:

      • an inquiry on our website
      • someone who we meet very briefly at a trade show, a conference or some other event and asks us to follow up with them
      • someone referred to us by a partner or a customer

      When we follow up on a Lead and are convinced that there is actually some pain (compelling Need) then we call it an opportunity. When we establish that they have Budget and Authority to make a purchase, and a Timetable or deadline for solving the problem (BANT) we call it a Qualified Opportunity. Until that happens we just call it a Named Opportunity.

      Hope that helps.


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