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By Chris Strandin August 21, 2015

Understanding The Sales Funnel


Understanding the sales funnel is one of the most important things that a sales manager can do for their team, for themselves, and for their management. Knowing your key metrics and monitoring them appropriately will improve your forecasting abilities, as well as increase the effectiveness of the entire sales organization.


What is a Sales Funnel?

A Sales Funnel is the buying process that takes a new lead through several steps, resulting in a sale or a lost opportunity. For every organization, this funnel consists of unique stages. Clearly outlining what these stages entail, and finding some of the related metrics between these stages can provide tremendous clarity to the sales process. Sales Result recommends at least understanding what stages are in your funnel, the ratio of lead retention between those stages, and average time a lead spends in each stage. Capturing and analyzing these metrics alone can vastly improve decision making abilities of sales managers.


The sales funnel is a great tool to get accurate sales forecasts. Once you have a set revenue goal, it is easy to work backwards to find the number of leads necessary to get there. Once you understand how your deals progress through the forecasting stages, it becomes much easier to predict how many deals will fall out and how long they will take to close. When sales managers find their funnel isn’t full, its an indicator that they don’t have enough coverage, and need to make adjustments immediately.


With clearly defined steps in the sales funnel, reports will show areas where sales teams and individuals excel, and areas that can benefit from coaching. Sales reps can be coached to improve the ratios in the funnel, resulting in more closed deals and faster close rataes. As a sales manager, it is your responsibility to find the bottlenecks of this funnel, and then give the sales reps the tools necessary to be successful.


If your organization does not have clearly defined stages of your sales funnel, it should be priority number one. Hope is not a strategy, so the more data driven visibility you have into the selling process, the more successful you will be. Improving forecasting abilities and increasing sales effectiveness give the company dependable revenue numbers that allow sustainable and predictable growth.

Topics: Sales Management, Sales Strategy


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