A Sales Funnel represents a sequence of steps that are necessary to sell products or services. The process begins with identifying a sales opportunity, and ends with closing it – wether as won or lost. Although sales funnels differ from industry to industry, they generally follow a similar path in terms of developing sales opportunities until they close one way or the other.
If you haven’t designed and applied your own sales funnel yet, we’d like to share with you the structure described in this article. This funnel represents the most common and logical sequence of sales stages we’ve encountered in many sectors and industries we’ve worked with over the years. You can now use this template as a starting point and customize the various steps into something that’s more suitable for your particular business needs.
1. Opportunity identified
This is where you record any potential sales lead you can reasonably identify. The source may be a conversation you had during a reception last evening with someone you met and who expressed a need for a service or product you offer, or it may have originated from a tender document you’ve seen in the papers. Be optimistic, but also realistic to make sure you don’t inflate your sales funnel unreasonably.
Related Article: Some great Sources for fresh Leads and Prospects
The probability factor in this stage is usually zero as you have no indication yet as to how likely it is for this opportunity to actually materialize. Nonetheless, you are now aware of this opportunity and have scheduled some form of follow-up activity so you can work on moving this into the next stage if there’s anything of substance.
2. Qualification
By now, you’ve either met with the lead or gotten your hands on a copy of the tender/ RFP document. You now have a reasonable amount of information on hand to review and decide whether you stand a chance in closing this opportunity successfully. Ideally, you will also have had a chance to conduct a face-to-face meeting to not only dig into the opportunity itself, but also read subtle messages that may be expressed through body language or statements made.
This is perhaps one of the most important and critical stages of your sales funnel. If you’re not diligent at this stage and take all the pieces of information you’ve acquired into account, you may risk wasting precious time on working on a proposal that is doomed from the get-go. Hence, your objective is to be as critical as you can be, and discount any opportunity that doesn’t sit right with you. Your instincts are critical here, so listen to your gut-feeling. Yes, you may end up giving up on some potential sales, but you’ll free lots of time to pursue more promising endeavors.
3. Identify solution
Unlike the previous stage, this is where you’ll do some serious internal assessment. Assuming the lead is legitimate and promising, does your organization really offer the product or service it takes to fulfill the need and as such, compete adequately with other contenders? Do you really have the expertise and experience to compete with the typical bidder on this opportunity?
Let’s say you’re in the software business and received – and qualified – a tender for the procurement of a customized CRM solution. Your company has been building applications for contact management solutions for many years now and has done pretty well. Yet, the tender document requires substantial experience and references for fully-fledged CRM systems with all its modules. You know you can get the job done, but there are some 30 points allocated to past experiences and references, and which – in the specific case of CRM solutions – you unfortunately don’t have.
This would weaken your chances drastically, especially since you know that this was a public tender and you’re pretty sure that company X – and which has been building custom CRMs for years – will be bidding as well. You’ll know at this stage that the only way you can make up for the points you’re going to loose at this end is by dropping your price drastically, hoping that by under-pricing your competitor your total score will win. As a result, you may end up winning a tender based on low price; a lose-lose situation for both sides.
4. Preparing proposal
You’ve now reached a reasonable level of comport in believing that your company stands a good chance in winning this opportunity, and you are confident in that your products, services, and credentials are up for the task. You are now at the stage where you’ve got to package all of this in the most convincing and compelling offering – a proposal.
Related articles: How to write a winning proposal and There’s a thin line between business development and providing free services
You will probably draw on a library of previously submitted proposals to serve as templates, but be careful. By relying too much on templates, you risk for your proposal to become too generic and as such lose its appeal. Also, errors you may have overseen during previous occasions can easily be repeated over and over if you trust your templates too much. Last but not least, market and background data that was current when you wrote that proposal originally back in 2009 is now old and outdated, and will reflect quite negatively on your proposal today.
Once you’re done with the writing and pricing part, proof read, proof read, and then proof read some more. After that, go through the whole thing over again and give it a serious revamp in terms of design, look and feel, and overall packaging. It won’t hurt of course to ask your marketing team for help at this stage. In fact, some companies that typically bid on large tenders have dedicated staff members who’s sole job is to format and package final proposals.
5. Proposal submitted
The tough part is done and your proposal has been submitted on time and in accordance to instructions. Now comes that dreaded waiting time, which depending on your industry could be in days or weeks. You need to have an exact understanding of the time-frames involved at this stage as you could otherwise easily repel your prospects by coming across as being over-aggressive.
Related article: Knowing when to give it a Rest
You’ll want to follow-up and stay on top of things, but you don’t want to come across as pushy. Some business developers get into the habit of calling the procurer frequently to ask if there are any news. This is not only very irritating, but could easily disqualify your company during the process. If you don’t hear back from the other side for an unreasonable time however, you have the right to pickup the phone and ask about an estimated time frame as to when you can expect to receive some sort of feedback. You did after all invest a lot of time and effort into designing a proposal, and are as such entitled to a transparent evaluation process.
6. Review and Negotiations
This is a great place to be at; your prospect has by now reviewed and evaluated several proposals, and deemed yours (amongst others) fit to pursue discussing. You are now in the phase where you jointly review the services or products you proposed, and fine-tune those as needed to make sure what ends up being delivered will satisfy the client’s needs and then some more.
You still need to exercise caution though; it is during these discussions that the potential client will try to get as much out of you as possible, and that at the lowest possible price. Accommodating reasonable requests is of course always good practice, but don’t give away too much as you may regret that later on once you’ve won the contract and may end up with more work than you budgeted for, and that for less than you would appreciate.
It is now very important to remain focused on the quality of your proposed services and products, and how those will help the client solve his/her challenges, and of which you have a meticulous understanding. And if you feel that reducing the price further is critical to closing the deal, try offering additional services (or add-ons) instead to increase the overall value of your offering as opposed to decreasing revenue.
7. Closed
This is the simplest stage of all; you either win the opportunity or not. If you win the contract, it moves on to the technical department. But if you’re not fortunate enough to land the contract, it doesn’t mean that all ends here. You’ve now gained valuable insights into a potential lead down the line.
Related Article: Making the best out of lost Opportunities
As such, all the intelligence you acquired during the sales cycle needs to go into your own CRM system for future references. Also, your marketing team needs to take over and implant the various contacts your dealt with during the process into your company’s content and drip marking programs. This is to ensure that once they have another opportunity in the future they need to procure, your brand name is not all forgotten about and you are amongst the first competitors to receive an invitation to the bid.
Conclusion
As a rule of thumb, a good sales funnel will help you in dropping out opportunities as early as possible. As difficult as it may come across, this will not only ensure you have a realistic sales forecast, but more importantly will help you in preventing time being wasted on pursuing business opportunities that have slim chances to materialize, or have already been ear-marked for another competitor.
Happy Business Development!
About the Author
Pinnacle Business & Marketing Consulting is a results-driven boutique consulting firm that specializes in providing clients with practical and pragmatic solutions to their business and marketing challenges.
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