Friday, March 17, 2017

Shotguns are for home defense...not funnel managementt

There are FOUR primary variables you can control that DIRECTLY influence your Sales measured by REVENUE and GROSS PROFIT in a period of time.

They are as follows:
  • # of Opportunities (0)
  • Deal Size (S)
  • Win Rate (W)
  • Length of the Sales Cycle (L)

Your current Success Rate is 1....derived by multiplying O*S*W and then dividing this by other words CURRENTLY your (1*1*1)/1...this is your AS IT IS NOW position. These four levers are how you INCREASE or decrease your REVENUE and GROSS PROFIT from your current position.

It's a simple exercise...if you increase O, S, & W by 5%, the cumulative effect is to increase your REVENUE & GROSS PROFIT by 15.76%...NOW, suppose you FOCUS on what's winnable, not the quantity; and by doing this you increase your WIN RATE (W) and you increase your DEAL SIZE (S) both by a factor of 10%. Coincidentally, since you are more FOCUSED, your projects close FASTER, by a factor of 4%. But in the process of CULLING THE HERD, you drop your # of Opportunities by does the math work out.

  • (.8 * 1.1 * 1.1)/.96 = 1.01

What does this means if  you REDUCE the number of Opportunities in your funnel by 20%, but increase the Deal Size and your Win Rate by 10%, expecting to reduce your Length of Sale Cycle by 4%, then you end up 1% HIGHER than your CURRENT REVENUE & GROSS PROFIT position.

Now...suppose you REDUCE the number of Opportunities in your funnel by 10% to .9, INCREASE of DEAL SIZE and WIN RATE by 10%...with your CURRENT Length of Sales Cycle

  • (.9 * 1.1 * 1.1)/1.0 = 1.09

You've INCREASED your REVENUE and GROSS PROFIT by 9% by FOCUSING on what's winnable and improving your chances to WIN by FOCUSING. Here's a few more examples, just for Grins & Giggles.

  • (1 * 1.1 * 1.05) / 1 = 1.16
  • (.9 * 1.2 * 1.1) / 1 = 1.19
  • My Favorite (.9 * 1.05 * 1.3)/.95 = 1.29

Shotguns are for birds and home defense, not for managing your funnel!

What I told my Sales Team today - My Cousin Revitalized Central Park in NYC

My mother is an unintentional revisionist historian, which means she typically gets the gist of a story correct, but sometimes flips around ...