One of the most powerful tools in the sales profession is a funnel. (pipeline)
big challenge sales pros and sales managers have is trying to figure out what their activity level and their opportunities levels need to be in order for them to consistently make plan. In this post we will reveal a powerful formula to help you manage your time and crush quota.
This is one of the simplest and most powerful sales training ideas you will ever come across.
It is called the funnel formula.
The purpose of the funnel formula is to be able to calculate exactly what your activity level needs to be and where you need to focus your effects in order to crush your sales plan.
The idea is to use math and think like an engineer.
How would you engineer a pipeline or funnel to guarantee it delivered quota busting sales numbers consistently and reliably?
The formula looks like this:
# of opportunities in your funnel x $ average deal size x your closing rate
time (sales cycle)
For example: let’s say you sell managed services as an IT re-seller/consultant
30 deals x TCV of $36,000 x 50% =
2 months
30 x$36,000 x 50% = $540,000
divided by 2 months (60 days) =
$270,000/month on average
x 20% GP
= $54,000 of GP per month
x 12 months
= $648,000 of GP
If your goal for this managed service is $1 million of GP per year then you are way off using this formula.
BIG IDEA: Let’s change some of the numbers. Let’s add 10% to the top metrics and subtract 10% from time.
33 x $39,600 x 60% = $784,080
divided by 2 months (54 days) =
$435,600 per selling cycle
x 20% GP
=$87,120 of GP per sales cycle
14.4 selling cycles x $87,120
= $1,254,528 of GP
If your goal for this managed service is $1 million of GP per year then you might be going to president’s club and hitting all your accelerators with this formula. YEEHAA!
This is a big idea for sales pros and their sales managers who want more sales, control and consistency when managing their sales business.
Key takeaways:
1. Get your four metrics to the best of your ability.
2. Think on paper and take control. It might be scary but at least you’ll know where you stand and what you have to do next to be on track.
If this sounds like too much or you have questions and you need help reach out to me here and together we can accelerate your sales.
