A healthy sales funnel, much like a healthy body, has all its parts running at optimal levels and contributing to the greater purpose.
In life, that’s good, painless living. In sales, that’s a steady stream of prospects that are turning into customers.
You have a healthy sales funnel if:
Sales reps are focusing on the right activities
It’s full of high-quality deals and opportunities
Your sales funnel is aligned with your company’s strategic goals
Your strategies are resulting in predicted and desired outcomes
Sales opportunities meet customers at the right stages of their journeys
The information about prospects is accurate and the prospects respond positively to opportunities
Conversely, your sales funnel is not healthy if:
Your sales reps are working on activities that they don’t have the skills for
You’re wasting time on certain deals, while others “linger” in the pipeline
Your prospect information is inaccurate, and they respond negatively to opportunities
You look at your strategies as guidelines and realize that you don’t achieve the predicted results most of the time
If you’re looking at your funnel sadly because it fits in the latter category, don’t worry! Funnel leaks and pains are actually staggeringly normal.
However, it’s time to plug those leaks up and make sure your sales funnel is as optimized as it can be!
KPIs for Healthy Sales Funnels
Opportunities for Deals Ratio
Let’s start from the top: how many of your opportunities result in actual deals?
This is an incredibly important KPI, as it shows you how effective your funnel is:
Are your leads qualified properly? (If not, you won’t have a high opportunities-to-deals ratio)
Is your sales funnel structure suitable? (If not, you may be meeting prospects when they’re not ready)
How many opportunities do you have? (If you focus on too many opportunities at once, you won’t give any particular attention, and it may result in poor closing rates)
Revenue to Deals Ratio
The Revenue-to-deals ratio will show you how much of your revenue depends on your deals.
For example, you may be earning a lot per deal, but if you only have a few deals in your pipeline, then you could risk major problems should that deal fall through.
This is a great KPI for monitoring your strategic alignment with the company’s goals.
Additionally, you can also monitor and benchmark performance.
For example, if you’re using Spinify’s sales dashboard, you’ll be able to set accurate goals in accordance with KPIs you need to keep your funnel healthy.
Complementary metric: Average deal size.
The number of canceled deals in your sales funnel is nothing to be ashamed about… if you cancel them early enough.
Pay attention to canceled deals in your funnel, and how you cancel them.
This KPI could identify underlying lead qualification problems or even performance problems.
If you have a lot of canceled deals at the top of the funnel, that’s normal. In fact, it’s desirable.
It shows your reps know when a prospect is not a good fit, and they’re not wasting their time or the company’s money.
However, if deals that go nowhere stick around in your sales funnel, purge them ASAP.
Complementary metric: Sales velocity and/or average sales cycle length. Understand how long it takes to close a deal on average, and set your purging rules accordingly. Don’t scrap a deal in 15 days if it usually takes 30 to close it.
If you want to understand your sales funnel’s effectiveness, it’s important to get really cozy with lead attrition.
It will show you how effective every stage of your funnel is.
It could even potentially alert you to some unnecessary steps, or misalignment with the ideal customer journey.
For example, if you lose the majority of your leads at the top, you might need to improve your lead generation processes.
If you lose them in the middle or at the bottom, you might be giving them wrong opportunities.
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