Friday, November 26, 2010

Are you suffering from “Top of Funnel Myopia”?

Bob Apollo recently launched a poll on LinkedIn asking: “Which one of the following initiatives has the greatest potential to boost your organisation's sales performance in 2011?”
a) Finding more qualified opportunities
b) Shortening our average sales cycle
c) Increasing average sales win rates
d) Qualifying bad deals out earlier
e) Improving sales & marketing co-operation

Finding more qualified opportunities as well as improving sales & marketing co-operation are “top of funnel” initiatives. Three quarters of the respondents to Bob's poll consider that this is the way to go to boost sales performance for 2011. For those, Bob has since written a post giving ideas how to shape such initiatives.

A different look at the results
Shortening the average sales cycle, increasing average sales win rates and qualifying bad deals out earlier are sales effectiveness initiatives. I believe the quarter of the respondents who gave priority to these sales effectiveness initiatives to boost sales performance have an important message to tell.

When parsing the responses according to job titles, 'owners' as well as 'C-level &VP' focused exclusively on “top of funnel” initiatives. While 'owners' gave about the same weight to finding more qualified opportunities and improving sales & marketing co-operation., 'C-Level & VP' want to focus solely on finding more qualified opportunities.

Respondents carrying a 'management' title were split about into equal parts focusing on the ”top of funnel” initiatives and sales effectiveness initiatives. They only mentioned finding more qualified opportunities as “top of funnel” initiative. Among the sales effectiveness initiatives, they mentioned increasing average sales win rates twice as often than shortening the average sales cycle.

In the 'other' category “top of the funnel” activities were equally split between finding more qualified opportunities and improving sales & marketing co-operation. A quarter of the respondents falling into the 'other' category see qualifying bad deals out earlier as top priority to boost sales performance.

The differentiation of the results by job function is also very interesting. Half of those being either in a sales or marketing role want to boost performance by finding more qualified opportunities. The remaining half in marketing sees shortening the average sales cycle as the top priority. The remaining half in sales wants to put the priority on increasing average sales win rates.

Although the poll sample is very small, I think this look at the results by job title and job function is revealing.

What are these results telling us?
The results seem to suggest that the executive level does not believe in effectiveness initiatives such as shortening the average sales cycle , increasing average sales win rates to boost sales, while mangers are well aware, that these measures can also boost sales performance.

Possible explanations for this are: The distance to the front line where sales really happens and the different time horizons.

Management knows very well, that sales effectiveness initiatives improve results faster than “top of funnel” activities., especially with long sales cycles. Management also seems to be aware that blending sales effectiveness initiatives with “top of funnel” initiatives is the way towards sustainable, superior performance.

Top of funnel” initiatives fit though better with the long term view of executives.
This sole focus on “top of funnel” initiatives can though be dangerous when executives start to intervene because they see an urgent need for improved sales performance. If they then insist on giving priority to finding more qualified opportunities as the measure to improve performance, they might actually cause a momentary drop in sales performance. On longer term, performance might return to what it was before the dip.

Following the order of executives, managers and salespeople will spend more effort on “top of funnel” activities. This will go to the detriment of sales effectiveness initiatives.

It would though be wrong to associate only a short term effect to sales effectiveness initiatives. A more effective sales force also needs fewer new qualified opportunities for sustained superior performance. Too much focus on “top of funnel” initiatives though leads to a vicious circle, inhibiting sustainable sales performance improvement.

Conclusions
Executives having doubts about these mechanics should look at how top sales people work. Top sales people usually pursue fewer opportunities than average performers. The sales effectiveness initiatives mentioned in the poll can thus be considered best practices to increase sales performance

Executives wanting to boost sales performance should thus make an effort to better understand “funnel mechanics” and abandon “top of funnel myopia” which furthermore could be taken as still believing that sales is just a numbers game.

Acknowledgments
Thank you Bob for having launched the poll and sorry for the different twist I added to the interpretation of the results.

The poll can be found here (you might need to log into LinkedIn) and this is the link to Bob's article triggered by the results of the poll.

4 comments:

  1. Christian,

    You've added an interesting and important analysis to my admittedly unscientific poll. I too was surprised by the lack of awareness of the impact of sales effectiveness initiatives.

    Even from a small poll like this, there's lots of raw material and I plan to return to the topic of sales effectiveness in future articles.

    Just for the moment, though, I'll share my perspective. Of all the 5 initiatives, the one with the fewest responses (focusing on shortening the sales cycle) actually drives some of the largest gains.

    Here's why: when you concentrate on shortening the sales cycle, (through selling smarter, not closing harder!) if naturally exposes the issues that affect win rates, qualification and finding more of the right sort of prospects - and depends upon great sales and marketing alignment!

    ReplyDelete
  2. Bob,

    I fully share your view on the importance of shortening the sales cycle. When discussing this aspect with sales managers, I though often encounter a push back like "the customer determines the length of the sales cycle, how do you want to shorten it then?". My response goes along the lines you mention above.

    I also found it interesting that in your poll it is marketing who mentioned this initiative and not sales. which invites for further comments.

    As you said, there is so much raw material serving for several articles and discussions.

    ReplyDelete
  3. Excellent analysis. As a top sales person I always had a smaller well qualified funnel. It is amazing how difficult the corporate executives were about this until I proved it out. This only happened when I was new at a company. Many tended to look at quantity and not quality

    ReplyDelete
  4. This is amazing list like the previous one..
    Thank you for this post..

    ReplyDelete

I am not a regular blogger you migth want to receive new articles per e-mail

Enter your email address:

Delivered by FeedBurner

Most Popular Posts (last 30 days)

Previous posts (by date)