Tuesday, September 12, 2006

These Questions Had to Come Up

We are living in era of benchmarking and best practices. It is thus no surprise to me that after having given you an example how to derive a rudimentary forecast from the leaking sales funnel, questions like the following have arisen.

You might ask yourself how many stages a sales funnel should have? In the picture of the entry prior to giving the example, I used six stages. For the example later, I used only four stages. The short answer is: It depends? I have seen customers using four stages and others using six and more. I will devote a future entry to dwell further on the question.

As I have also very much insisted that the funnel stages should be defined by customer evidence of their buying cycle, you might wonder if your sales process defined by high level sales activities is no longer best practice. If activities to be carried out by your sales people to execute your sales process, are the only criteria, I tend to say yes. Experience shows that such sales process definitions have a higher tendency for biased forecasts. I do however not suggest that you have to throw out everything and start from scratch. What I strongly recommend is to add buying cycle oriented milestones to fix the rules for transitioning from one stage to the next. Your derived forecast will become more reasoned this way.

With sales processes defined solely by high level activities to be carried out by the sales person you might also be confronted with an adoption problem. How often have I heard that the sales process defined by management does not fit the particular and specific context the sales person has to operate in? I take these opinions as a symptom of a failed change management initiative for implementing a sales process into a sales organization.

Jim Kasper in his book Creating the #1 Sales Force suggests a series of questions to help to overcome such objections. It should be no surprise to you that the series of questions starts from a customer’s point of view. Actually the very first question he asks to people who think their sales context is widely different from anybody else’s is. “You do have customers don’t’ you?”, followed by: “Those customers start out as prospects don’t they?” What these questions do are demonstrating that there is probably more commonality between sales processes, when you take the customer’s view point instead of your internal procedure and product focus. Using the milestones in the buying cycle as the primary criteria to segment a sales funnel helps thus also in the adoption of a sales process.

In my experience this also helps with the next question: Does a sales organization have to have one single sales process to be followed by everybody in the organization? You might guess the answer by now. If you serve customers with quite different buying behaviors (e.g. buying trough an RFI/RFQ process versus buying on a spot type market) you might have more than one process. I will get into more details on this when I will discuss the question about the needed number of sales stages as those two topics are related.

Observant readers might have noticed that in the example I started to talk about forecasting orders instead of sales. I got a bit ahead of myself. I will have to explain to you in a future entry to this Blog that some of my clients have made the experience that focusing on order booking helps reducing forecast error. It actually raises the interesting question for what number you, as the sales executive should be held accountable for.

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