Most sales companies are motivated by the old-fashioned notion that sales are a game of numbers.’ This message is ingrained in every salesperson early during their career. If you expand the quantity of your pipeline for sales, you also increase your chance of closing business, thereby getting rid of your quotas and earning commissions. But if you’re based your future plans for your business on a volume-based selling strategy, it will negatively impact the efficiency of your business.
The fact that there’s a lot of deals in the pipeline doesn’t necessarily mean that the odds of winning profitable business increase. In reality, a large part of contracts that are in the funnel with a high volume is not able to be won due to poor qualification methods as well as significant gaps with regard to business intelligence and the lack of adequate sales cycle tools.
Figure 1 depicts scenario B: Use the volume approach.
10 Deals = $10,000,000.00
The Win Ratio is 20%. 2,000,000.00
Costs of resources (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 quantity of pipeline that is not reliable is likely to only produce an average win rate of, in this case, 20 percent. After the expenses, the actual revenue pipeline conversation rates are meager at five percent. Not only is the conversation rate insufficient, but also the return on investment is low and results in an overall loss of around $1M. This is not an excellent method of running your business.
A more effective approach that can maximize your revenue will only be facilitated by the sales strategy, which is supported by a strategic program that will enhance the quality of your pipeline and increase the chances of being successful—two suggestions I’d like to make.
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 valuable, high-quality business intelligence.
Then add it around the Win Probability Engine to create a consulting practice that will engage with and offer win-related solutions throughout the entire selling cycle.
Consider what the return would appear like in the same scenario, but only after your firm has adopted new processes, tools, and services.
2. Scenario A Selective Pursuit backed by the Win Probability Engine and Consultancy service
8 Deals = $ 6,000,000.00
The Win Ratio is 55%. of $ 3,300,000.00
Costs for Resources costs(10 resources) (150,000.00 dollars) 1,500,000.00 )
The Booked Revenue is $ 1,800,000.00
Net Profit = 300,000.00
However, under this scenario, as shown in Figure 2, you’ll notice a significant difference in the efficiency of this pipeline when compared with what is typically seen in an aggressive strategy for high volume, as shown in Figure 1.
While the overall worth of this pipeline could be less, the smaller portion represents an improved and more lucrative source of revenue filtering by the win Probability tool. The probability of winning the contract is significantly greater than in the previous instance. Additionally, your rate of winning sales increases as you increase the shared learning process, which refines and increases your capacity to develop relevant messages and customer solutions that combat threats from competitors.
As is evident in this instance,
Forecasting sales figures are more precise.
The rate of pipeline conversion goes from 5 percent to around 30 percent
Book revenues are 3.6 times more
There are net positive gains that support a very high return on investment.
Consider the additional benefits of SG&A cost reduction once you start optimizing your resources. A company can achieve better results using fewer resources. Reducing one or two resources can bring an additional $150K- 300K dollars in profit, nearly double the net profit.
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