A common question in business, particularly directed at your sales or business development effort. Effective reporting should be able to answer that question, but no single report can answer the question in full.
Here is what is important to know:
How much have we sold?
At the end of the day, the effectiveness of sales comes down to this (in revenue), versus what it costs you to obtain those sales.
How much have we proposed or quoted?
It is also important to analyze how much has been quoted/proposed and analyzed against why you did not win each quote/proposal. This should be looked at on a quarterly basis.
Do you have an organized sales funnel?
An organized sales funnel includes companies/people at the beginning generally outnumbering those companies/people that are closest to purchase. Additionally, companies should be moving through the stages of the funnel (prospect, potential, meeting, proposal, hi-potential) regularly.
- Prospect: Those companies/people whom have been researched, discussed and or touched by your brand, that are likely to need your product or service. At this stage there is a 10% likelihood you will do business.
- Potential: Companies/people whom have expressed some interest in your product/service and have potentially involved other decision makers in the process. At this stage there is a 20% likelihood you will do business.
- Meeting: Companies/people who have accepted what you do as valuable, have a need for what you sell or do, and may have a defined budget for their need. Often multiple decision makers and influencers are identified at this stage and in the meeting. At this stage there is a 30% likelihood you will do business.
- Proposal: Companies/people who have clearly defined their need (often with sales' help) and have defined their budgetary constraints. The company/person moves to this stage in the funnel when the proposal has been sent and a dollar figure of potential value can be established. At this stage there is (should be) a 60% likelihood you will do business.
- High Potential: All objections have been managed and it is basically a matter of time until the deal closes. Only an "act of god" or other crazy occurrence should stop the deal from moving forward. At this stage there is an 80% - 90% likelihood you will do business.
What marketing campaigns have lead to sales?
Sometimes it is helpful to cross reference a marketing campaign against sales dollars quoted or sold (e.g. Trade Show attended). Analyzing this type of information on a quarterly basis is probably enough to analyze if the campaign is worth investing with in the future.
If you know what to ask for, it is easier to get an answer to the question that (as a business owner) should be one of the most important questions you ask.
-Chris Rudd, CEO RAYN Business Development