Advanced pipeline analytics, informed decisions
Sales and marketing optimization starts with understanding your conversion rates. Ask "What's your win-rate rate?" and you will probably get a number. But think about it. Does it makes sense to state a win-rate without saying how long it takes to get there?
Computing win-rate sounds easier than it is. Long sales cycles complicate things. The denominator changes over time and mature opportunities can't be treated the same as new ones.
Two approaches to this are to simplify: ignore open opportunities (which over-estimates win-rates) and include all opportunities regardless of age (which underestimates true win-rates).
FUNNELCAST software learns from your historic data and takes all opportunities, stages, and time into account. This produces an accurate win rate as a function of time.
A deep understanding of win-rates underpins all that follows.
Right-goal with win-rate powered accurate forecasts
Win-rates combine with your open sales funnel to produce an accurate view of what to expect and when. Before you set a stretch goal, you can know how much of it will come from your existing funnel and how much from new activity.
Check out our video here to learn how quickly you can build and validate a win-rate and open funnel forecast with Funnelcast.
Set the right goals: by company, product line, geography, sales team, or even sales person.
Balance lead gen and sales staffing with bottom-up long-range forecasts
Most B2B sales leaders know how to interpret their funnel to build a short-term bottom-up forecast that they can deliver on. But this bottom-up approach is often abandoned for long-range forecasting.
The top-down approach is based on investor needs, total available market, market share expectations, and growth expectations. While these are important considerations, if the forecast is not rationalized to bottom-up capacity analysis, it can lead to unrealistic goals (usually too high, but it can be too low—we've seen both cases).
A bottom-up analysis is the foundation for how to meet your plan. It informs staffing, quota setting, and lead generation requirements.
Shown here, two bottom-up statistical forecasts (of new logos, the same analysis can be done for revenue) for a five-stage process. (Late stages at bottom, early stages at top.) The forecast shows where new business will come from—current funnel stages and future funnel (new opportunities not yet created).
Balance lead gen and sales staffing with bottom-up long-range forecasts.
The two charts show dramatically different business challenges. The dotted lines indicate the current short-term sales capacity rate.
In the first case, future business is bottlenecked at new opportunity creation. "What-if" scenarios (not shown) revealed that the shortfall could not realistically be filled through improvements in win-rates or accelerating the sales process. Business's like this risk spiraling into sub-optimal achievement as management usually focuses on the late (lower) stages of the funnel where short-term impact is greatest, but do so at the expense of the top of funnel. We call that "top of funnel attention deficit disorder"—TOFADD.
The second case, shows a business that is adding new opportunities faster than they have been able to close business in their funnel. Their challenge is to staff accordingly without affecting their win-rates.
In both cases, the analysis underscores that most future business will come from opportunities currently in early stages and from new opportunities not yet in the funnel (Future).
Right-staff based on forecast range
A forecast is not a single number. The FUNNELCAST machine learning system uses your historic win-rates, current funnel status, and opportunity creation rate to determine a distribution of possible outcomes.
Shown here is is the range of possible outcomes for the forecast above. For this business, the median is 13 new logos for the forecast period.
The chart also shows control limits for staffing. If staffed (based on productivity expectations) to output below 10 logos, they would be understaffed. If staffed to output above 16 logos, they would be overstaffed.
Given this insight, management was able to answer questions like:
What is the appropriate revenue new logo/revenue plan?
What is the right size sales force to support that plan?
What changes can we implement to move the curve to the right?
Right-focus and go granular with gap analysis by segment
Glengarry Glen Ross. Are all leads are equal? Or are some "more equal than others."
McKinsey found in one study that businesses can double their value through better resource optimization.. We agree but our data say that doubling is conservative.
McKinsey's number one recommendation is to "Go granular" by looking at different business segments. Stratifying your data into meaningful segments exposes exploitable differences in win-rates among various market segments.
FUNNELCAST analyses the productivity of opportunities for different segments—reflecting win-rates, time, and average contract values. It's not uncommon to find substantial differences among segments. Check out our video here to see how this works. We have seen real-life examples with over 30:1 differences between two segments. 34x compared to the least favorable segment.
See why we think McKinsey's 2x was conservative? Given this insight, management was able to allocate resources to the most productive segments and grow sales without increasing costs.