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 Success....as 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 L...in 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 20%...how does the math work out.

  • (.8 * 1.1 * 1.1)/.96 = 1.01

What does this mean...it 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!

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