Reset the Revenue Funnel for Revenue Forecast Accuracy

by Chuck Besondy

In case you didn’t notice your customers are buying differently today than they did last year. The differences could be subtle or obvious, but if you observe closely you’ll see that the process they follow to make a buying decision–the buyers’ journey’–has changed.

If your selling process and sales funnel structure haven’t adapted to the buyers’ journey the efficiency of your sales and marketing efforts will be down and so will the accuracy of your revenue forecast. This is what I call the new “Funnel Economics”.

Here are the major variables in a sales funnel (which I am now going to refer to as the revenue funnel because it should be co-owned by marketing and sales).

1. Stages of the buyers’ journey
2. Lag time between stages
3. Leakage rate at each stage
4. Advancement rate at each stage
5. Number of meetings required in each stage
6. Number of meetings that each sales person can expertly handle in a week
7. Number of available sales people
8. Average revenue per order

Any change to any of these variables has an impact on how many deals get closed in a period of time. The marketing and sales effort required to generate a level of revenue last year is very different from what it takes this year.

If you’re still trying to plan and forecast based on last year’s funnel structure, you’re not just flying blind you’re flying with the wrong instruments.

Reset your revenue funnel by analyzing and observing the customer’s current buying process and behaviors. Dial in the new metrics into your revenue funnel and monitor carefully over the next several months. The accuracy of your revenue projections will improve. What’s more, you’ll have a more realistic preview of what type and level of activities are necessary to achieve a certain revenue outcome.

Chuck Besondy is a principal at One Accord Partners and is co-author of Leadership on Demand: How Smart CEO’s Tap Interim Management to Drive Revenue. You can read more about Interim Sales and Marketing Management by Chuck Besondy at his blog The Sales Funnel Fanatic.

Photo by Jake Rome