The reverse sales funnel

The long-version, for those who prefer detail

Scenario:

• Your leads come through your website
• You would like to win £1m of new business, and one customer is worth £50k to you.
• You probably know how many quotations turn into work, let’s say it’s 1 in every 3 quotations.
• It’s likely that you know some other metrics too. Such as how many meetings turn into quotations, how many discovery calls turn into meetings and how many web-visitors turn into discovery calls.
• You know how many hours those meetings, quotations and discovery calls take to carry out.
• You also know how much your marketing company will charge you to drive traffic to your website.

So if you have awareness of the numbers for every phase of the sales funnel, you can flip the funnel upside down and work backwards to calculate how much money needs to be spent on your sales and marketing to hit your revenue goal of £1m new business.

A run-through of the process

1. A customer is worth £50k, so you need 20 of them to hit your goal
2. Every 3 quotations you send out will win a customer. So you’ll need to send out 60 quotations to hit your goal.
3. Every 2 meetings will get you to the quotation stage, so you’ll need 120 discovery calls to get those 60 quotations.
4. Every 3 discovery calls will lead to a meeting. OK, so that’s 120 x 3 = 360 discovery calls (so at around 48 work-weeks per year that’s about 8 discovery calls per week)
5. What’s your website conversion-rate? Let’s say one in every 100 visitors fills in the form and answers the phone on the discovery call. So… you need 360 calls, meaning you’ll need 36,000 visitors to your website.

The short-version, for those with short attention-spans

1. Take your annual Growth Target, and the Lifetime Value (LTV) of a customer
2. From “we got that customer!”, run your entire sales process backwards.
3. That will tell you how many leads you’ll need to generate the required numbers of discovery calls, resulting in meetings, resulting in quotations, resulting in customers.
4. And finally, that’ll tell you how much to spend on lead-generation.

The big takeaways

1. Know your process (you need to know what does the sales process look like? does the team know it?)
2. Know your numbers (what’s the end goal? what is a customer worth? how many visitors turn into enquiries? etc.)
3. Have visibility (do you have a system at the core of everything logging the enquiry as it moves through the system? do you have visibility of your numbers so you can measure if targets are being hit?)
4. There are lots of levers to pull (there are lots of ways to improve the whole process. Can you automate the discovery phase? is the meeting really required? what will improve the conversion rate? etc…)
5. Better data (by using the process above, you can now calculate the costs and staffing resources required at any stage of the process, so you know what investment of money, time and training you’ll need to hit your goals – it may even tell you that to hit that £1m revenue goal, you’ll need better management processes in place to look after the staff you’re going to need!)

Further reading:

If you’d like to dive a little deeper then either arrange a call with me or fire up Google and check out the items below!

• LTV – Lifetime Value of a customer
• CAC – Customer Acquisition Cost
• Conversion Rate on website
• CRM – a Customer Relationship Management system, so incredibly critical to obtain visibility of your sales process, and one of the most important investments you can make
• Sales Funnel
• Rule of 72 – I didn’t go into this in the example above as I didn’t want to overcomplicate it. But the rule of 72 is incredible important for a company looking to hit a recurring revenue goal.