How To Analyze Your Sales Funnel

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Apr 102010
 

As described in my previous post, the historical funnel development shows how the opportunities transit to the next sales stage. Therefore, how many opportunities make it to the next stage determines the shape of the historical funnel. This shape can be visualized and can be compared with some typical shapes that I identified in my experience: I differentiate between three main funnel development shapes: Cone, Bottle, and Tube. These idealized shapes characterize the funnel development and can be used to compare with your actual funnel development shape. The Cone shape is considered to be the ideal shape. Such a shape means that there is a more or less linear screening out of some opportunities in … Read more

Forecasting Your Sales

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Mar 272010
 

In Sales, you are dealing with probabilities for closing deals. You will never win 100% of your prospects as customers. This is important to remember when it comes to sales forecasting. Therefore, at the beginning a few basics regarding probabilities: Chance or accident we usually call something for which we don’t know the probability of outcome. However, events with assessable probabilities we can forecast. If the outcome of an event has a certain probability, e.g. 30% it means that, statistically speaking, 30 out of a 100 events have such an outcome. (On a side note, “luck” and “bad luck” are terms only related to outcomes with low probabilities and either positive or negative events. We … Read more

Leads vs. Opportunities

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Mar 122010
 

When you talk about prospects, many differentiate between leads and opportunities. But what is actually the difference between them and why does it make sense to distinguish between leads and opportunities? Let’s first look at the typical sales process in high-tech sales in the IT and telecommunications industry. There are probably more books on the topic than actual sales people out there, but in my experience the following process has been proven to be valid: Now, if you look at the process you can see that the prospect goes through various stages along the process. At any stage they can decide against your solution and therefore abandon the process. The further the prospect moves along … Read more

What SaaS Means… (Part II)

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Feb 212010
 

Some of the implications of recurring revenues for ISVs resulting from the SaaS model (see previous post) are the following: 1. You as an ISV don’t start at 0 revenues at the beginning of the fiscal year anymore. You already have a revenue base from the customer contracts of the previous years. That has a great advantage for your sales forecast – it makes it a bit robust. The risk of closing new deals only applies to the new revenues on top. However, there is also a flipside to it: Since revenues from new customer projects are no bulk revenues anymore, but usually monthly revenues stretched over the contract term, your forecast for the year … Read more