Imagine how much effort and resource is wasted every year in creating and submitting sales proposals to prospects that end up buying nothing, were never likely in the first place to buy anything from the vendor, or stand no chance of ever being profitable.
The “funnel” is one of the most powerful metaphors in B2B sales and marketing. It describes the passage of prospects through a buying decision process that hopefully will (but often does not) result in your successfully selling something to them.
A flawed metaphor
For sure, the metaphor is flawed. Real-world funnels don’t leak, and everything that flows into the top tends to flow out from the bottom. And - unlike sales opportunities - the liquid they contain doesn’t normally flow back uphill again or evaporate completely.
But despite all its manifest flaws, the idea of a funnel is still a powerful way of visualising the sales process (or, for the more advanced readers amongst you, the buying decision process), and the shape formed by the different stages is a powerful indicator of the health of the funnel.
According to the latest research published by CSO Insights, less than half of all forecasted sales opportunities actually result in a sales win. Just under a third result in a competitive loss, and nearly a quarter result in the prospect deciding to do “nothing”. Just think about that for a moment. At a deal-by-deal level, the current state of sales forecasting in the average B2B environment is less reliable than simply tossing a coin.
Even at overall sales forecast level, when you might hope that some of the individual errors and inaccuracies would balance out in the overall revenue number, many organisations still struggle to come up with consistently accurate company-wide revenue forecasts. Now, I’m the first to acknowledge that successful selling is a blend of art and science, and that truly unpredictable changes in circumstance can sometimes trip you up, there’s clearly something going seriously wrong here.
Some companies are managing to do much better
If you’re a technology company with a high-value B2B offering that requires an on-going direct sales interaction with your prospects, you have three go-to-market strategy options. At certain stages in your evolution, they might all appear to be equally effective - but it’s hard to implement them all equally well.
So if your ambition is to lead your market (and if not, why are you in business?), you have to choose - and to execute your chosen option brilliantly. And it turns out that one of these go-to-market strategies performs head-and-shoulders above the rest when it comes to achieving clear and sustainable market leadership.
Your company is facing an increasingly strong competitor - yet you won’t find them listed in any Google search of the key players in your marketplace. But this competitor is playing a powerful and often-undefined role in almost every significant B2B buying decision. And it’s the reason why a growing number of your apparently well-qualified opportunities are ending up with the prospect deciding to “do nothing”.
Have you recognised the competitor yet? It’s the status quo - and in today’s increasingly risk-averse decision-making climate, where it may be harder than ever before to get approval for discretionary investments, your prospects might think that sticking with the status quo is the safest option open to them. You need to persuade them otherwise. And you need to make the case for change before you make the case for your solution.
Is the status quo holding you back?
I'm very pleased to be able to share another must-read guest article from the ever-insightful Swayne Hill of Data-Driven Sales Management. If you're looking for reliable ways to drive sales performance, sales rep scorecards can help you identify key areas for improvement and stimulate healthy competion between sales team members. Over to you, Swayne...
Homayoun Hatami of McKinsey is one of the co-authors of the widely acclaimed “Sales Growth - Five Proven Strategies from the World’s Sales Leaders”. I shared some of the key findings from the book in one of my latest blog articles - and recently enjoyed the opportunity to catch up with Homayoun and learn more about his experience of using micro-segmentation to uncover market hotspots.
How much demand do you really generate each month to hit your revenue targets? It’s a question that vexes many B2B sales and marketing organisations - and the answer isn’t always “the more the better”.
I recently suggested how B2B companies could apply smarter metrics to their sales and marketing funnel. I’m delighted to let you know that the accompanying webinar is now available on-demand (just scroll down to the bottom of this article or follow this link). By the way, when you watch it, I recommend that you choose the full screen option at the bottom right of the webinar screen - you’ll find the images clearer.
What would happen if you were able to double your sales and marketing resources overnight? Assuming that you haven’t already saturated your target market, how confident are you that you could at least double your revenues - and how long would that take? What if you were able to quadruple your resources?