- The purpose of this model is to facilitate the setting of key leading indicators of sales performance – what kind of funnel metrics should you be seeing on an ongoing basis if you expect to “make your numbers”
The model is constructed as follows:
- 2 phases for the lead funnel: Identified and Pre-qualified
- Leads are individuals/contact information that meet some pre-set criteria/definition
- 2 primary phases for the sales (opportunity) funnel: Qualified and Closed
- Sales funnel phases between Qualified and Closed are also shown for some of the metrics as described below
- Opportunities are potential deals that have an established need, solution, value and decision horizon
- Decide the level you want to model – sales rep, region, total company, etc. and then enter the annual sales target in dollars for that entity.
- Next, enter the most likely deal size (dollars per closed deal), hit rate (% of qualified opportunities that close) and sales cycle (number of months to go from qualified to closed).
- Note the monthly and quarterly targets that appear.
- The targets indicate the # and $ of new opportunities that must be qualified and closed each month and quarter, the # and $ of opportunities that would be contained in a “full funnel”, assuming a funnel-like distribution, and the # of opportunities that should be in each phase for an ideal distribution.
- The model also produces the $ for a “discounted funnel”. This is the $ sum of all opportunities in the funnel discounted by a set factor based on funnel phase.
- If you next input the success rate and cycle time for converting pre-qualified leads into qualified opportunities (PQ-Q), a target for pre-qualified leads appears. This would be the number of pre-qualified leads required to generate the required number of new qualified opportunities per month and quarter.
- Likewise, if you enter the success rate and cycle time for converting identified leads into pre-qualified leads (ID-PQ), a target for identified leads appears. This would be the number of identified leads required to generate the target number of new pre-qualified leads per month and quarter.