Here is a secret I have learned from great sales teams; keep your sales stages few and simple. Why is this OK?
Because every component of the sales team, inside/directs, reps, and distributors, knows exactly what each stage means. Then the company can quantify, monitor and report. Think about this, if you got 9 sales stages, how do you makes sense of this?
Now with simplicity you can tie sales confidence levels to the sales stage. This practice can be argued and it is possible to edit the confidence level but tying to the stage is best practice here is why:
When consistent, quality data is flowing through your sales stages you can measure it. Most companies guess at what the close rate is at each sales stage. Using a good sale tool you actually will know the close rate at each stage. This will make your forecast super accurate.
Sales stages should be simple, work-flow based. Stages should be simple to understand and sales stages should be easily reported. Too many sales stages makes it difficult to report accurately. Here is a simple flow:
* Lead
* Working
* Quote
* Close
* Win
* Lose
* Rejected
Sales stages are moved up as the deal is qualified. As a company gathers data; the potential dollars at each stage, the close rate of each stage, accurate probabilities can build the forecast. A confidence level can be applied to each sales stage that makes sense. Most sales execs just guess at the close rates at each stage. Knowing this is powerful. Here is why:
Lead: 5%
Pain Assessed: 12%
Payback Quantified: 25%
Quote: 36%
Negotiation: 62%
The above stages tell you something. In Pain Assessed, the salesperson has diagnosed a pain, and in Payback stage, has quantified what financial impact the company expect if this pain is solved. “If we solve this problem we can expect this return.”
The percentages are the precise number of deals that are closed at each stage. A company can know this with the right tools. Now let’s take this further.
A new product line, introduced in January, has 12m USD in demand at the Payback Quantified stage. The forecast tells us that 4m USD SHOULD close. This is product group, sales amount, sales date, sales stage & confidence, all creating the Forecast. Now sales execs can back up each item by looking at opportunity sales stage durations and salesperson activity to monitor and to assist. If 4m is below plan, training, incentives, marketing can be kicked off to catch up.
Sales management can easily see across the organization, locations, salespeople, including sales channels. The sales data makes sense. How efficient is the selling process. Why does Expedx Tulsa close 15% of tradeshow leads and Xpedx Miami closes only 4%. This is real data and can be analyzed and understood easily. This type of use of an online sales tool gives a huge payback.
Understanding the real view of the sales enterprise drives management to learn and than to design training to improve results. Here is an example; an organizations Houston office is closing 40% of all Quotes and London is closing 20% this can be analyzed, can be understood and can be addressed. And maybe best of all sales best practices can be built and trained.
Apply the less is more theory to your sales stages. You will get more accurate information, speak and common language and close more deals.
Hey, tell me what you think?
