The majority of sales companies are motivated by the old-fashioned notion that sales are a game of numbers.’ This has been ingrained into the minds of every salesperson early throughout their career. If you expand the quantity of the sales funnel, you will also have a better chance of closing business, thereby getting rid of your quotas and earning commissions. But if you’re planning the future of your business on a volume-based sales strategy, this could affect the operational performance of your company.
Simply because there are a lot of deals that are in the pipeline doesn’t necessarily mean that the odds of winning profitable business increase. In fact, a substantial part of contracts in the high volume funnel cannot be won due to poor qualification methods and areas of inefficiency regarding business intelligence and the lack of adequate sales cycle tools.
1. Scenario A Use the volume approach.
10 Deals = $10,000,000.00
The Win Ratio is 20%. 2,000,000.00
Resources costs (10 Resource costs) (150,000.00) 1,500,000.00 )
Booked Revenue = $ 500,000.00
Net Profit = ($1,000,000.00)
In the case above, a considerable amount of pipelines that are not reliable is likely to only produce an average win rate of, in this instance, 20 percent. After expenses, the actual revenue pipeline conversation rate is meager, at around five percent. This is not only a conversation rate not high, but the return on investment is inadequate and will result in an overall loss of about $1M. This is not the most efficient method of running your business.
A more efficient approach that can maximize your revenue will only be facilitated by the sales strategy, which is supported by strategic programs that enhance the quality of your pipeline and increase your odds of being successful—two suggestions I’d offer.
The first step is to create. First, a Win Probability Engine, this tool is a shared-learning system that continuously synthesizes different sales, marketing customers, competitive and commercial data into superior business intelligence.
Second, add it around the Win Probability Engine in a consulting practice that can be used to engage customers and offer win-related solutions throughout the entire selling cycle.
Then, think about how the return could appear in the same scenario, but only after your firm has implemented new tools, processes, and services.
2. Scenario A Selective Pursuit backed by the Win Probability Engine and Consultancy service
8 Deals = $ 6,000,000.00
Average Win rate = 55% of $ 3,300,000.00
Resources costs(10 Resource costs (10) (150,000.00 dollars) 1,500,000.00 )
The Booked Revenue is $ 1,800,000.00
Net Gain : $ 300,000.00
In contrast, in this new scenario shown in Figure 2, you’ll notice a significant difference in the performance of the business. This pipeline is compared to the typical design of the high volume strategy, as illustrated in Figure 1.
While the overall worth of this pipeline could be less but this subset is an increased chance of winning. A revenue stream that was processed by a winning Probability tool. The likelihood of winning these contracts is greater than the previous instance. Additionally, your rate of winning sales increases as you increase the shared learning process, which refines and increases your capacity to create relevant messages and customer solutions that protect against threats from competitors.
As you can see in this instance,
Forecasting sales figures are more precise.
The pipeline conversion rate rises from 5 % to around 30 percent
Book revenues are 3.6 times more
Positive net gains are evident, which support a very high return on investment.
Also, consider that there are other advantages of SG&A cost reduction once you begin to optimize resources. Your company will be able to produce superior outcomes with fewer resources. A drop of one or two resources could increase the value of $150K to 300K dollars in profit, almost double the net profit.
