How to fix the weakest link in your sales process
Stage-to-stage conversion analysis
Every sales process can always be improved. However, knowing where to start can be overwhelming:
Do you work on discovery skills that get buyers to open up about their problems and decision making criteria?
Do you work on giving effective demos that prescribe solutions to their problems?
Do you work on making your proposals higher impact?
Do you work on negotiation skills?
Do you focus on data hygiene?
The list of possibilities is endless. On thing’s for sure. You can’t do them all at once.
My favorite ways to tackle this are:
A closed lost analysis (as described in last week’s post)
A stage-to-stage conversion analysis, which is the topic of this post.
I love the stage-to-stage conversion analysis because it gives context to the closed lost analysis, resulting in a more actionable output. Here’s how to put it together:
1. Identify your process stages
Most sales processes are some version of the following stages.
If your stages are different, or you have more than 5, don’t worry! This approach works on any linear sales process.
2. Get the data from your CRM
The simplest way to get the data or a stage-to-stage conversion analysis is to run an Opportunity History report, which is a standard report in Salesforce:
While the default fields are sufficient for the analysis, if you have a large number of salespeople, or a large number of deals, or a mix of inbound and outbound, adding the following three fields to your data set will unlock more insights:
Loss Reason—enables you to see how loss reasons vary by stage. Helpful for validating the default assumptions.
Lead Source—enables you to separate inbound from outbound, as the two motions produce prospects with different levels of intent.
Opportunity Owner—enables you see where individual salespeople are struggling, so you can provide more tailored coaching.
3. Calculate your Stage-to-Stage Conversion Rates
The steps are:
Create a pivot table on your opportunity history data
Put the From Stage field into Rows and the To Stage field into Columns
Put the Opportunity ID field into Values.
Create a filter on To Stage and select Closed Lost.
Separately, calculate your total number of deals won and add it to your deals lost.
Your resulting output should look something like this:
Then simply calculate the % of total deals lost at each stage:
Note that the denominator decreases as you go through the stages, as you need to subtract losses from prior stages.
For example, the Stage CR for 2. Demo = 1-(30/(190-80)) = 73%.
You’ll also find that multiplying the Stage CR values gives you your overall win rate, which in this case is 27%.
4. Validate the weak spot
In theory any stage could have the lowest Stage CR, however in practice there are two scenarios that are the most common:
Losing in Discovery—where the lowest Stage CR is in Discover.
Losing in Proposal—where the lowest Stage CR is in Proposal.
I like to plot the Stage CR on chart because it brings the analysis to life for the team.
1. Losing in Discovery
Your chart will look something like this:
Losing a large number of deals in discovery is a sign that your salespeople are over-qualifying prospects and only choosing to work with those that exhibit very high intent to purchase. Think of it as cherry-picking, or goal-hanging as we Brits like to say..
Three ways to validate this are:
Your top loss reasons in discovery are “timing not right”, “price too high”, “not the decision maker”.
Your Discover Stage CR is lower for outbound than inbound when you further slice it by Lead Source.
You frequently hear your salespeople moaning that “the leads aren’t qualified”.
The remedy is to define the exit criteria of your discovery stage as identifying the buyer’s pain points you can solve, the impact you can deliver, the critical event to drive urgency, the group of people involved in making the buying decision and their decision criteria. You can’t always establish this in a single initial call, however with the right set of in-stage actions it is possible. For example:
Preparing a set of discovery questions to ask in order to surface pain, impact, critical event and the decision process. I like to prepare these as part of building my ideal customer profile (ICP), as it forces me to make the ICP clear and actionable.
Using active listening to make your buyers feel heard and understood so that they want to tell you everything you need to close the deal.
Training your salespeople on the differences between inbound and outbound prospects and how to handle them differently.
Lastly on this scenario, if you think you are losing due to the prospect not showing up for the meeting, it’s important to track it separately as it is a completely different problem. A simple way to do this to create a Stage 0 for a Sales Qualified Lead once the meeting is set and then move it into Discover once the meeting has happened.
2. Losing in Proposal
Your chart will look something like this:
Losing a large number of deals in Proposal is a sign that your salespeople are single-threading deals—that is, relying on a single contact to sell a deal internally to their boss or an economic buyer.
You can validate this in two ways:
Your top loss reasons in Propose are “customer non-responsive” or “price too high”.
Your time in stage for closed won deals is longest in Propose.
The remedy is to establish multi-threaded communication early in the sales process, as follows:
Identify all the likely stakeholders that match your buyer personas and prospect them all in parallel. The data shows that doing this increases the likelihood of generating an opportunity.
Use the discovery stage to identify your buyer personas and bring them and their needs into your sales process. I wrote a post on this topic recently.
Cheek your pricing is comparable to market so that the economic buyer doesn’t get sticker shock when your champion shows them your proposal.
Finally, a some quick notes if your Stage CR is lowest in Demo or Trade:
Losing in Demo is due to one of two things: 1) you aren’t tailoring the demo to the impact the customer is looking for (i.e. giving all prospects an identical demo) or 2) you have a critical feature gap. This latter reason should show up at the top of your loss reasons.
Losing in Trade is usually due to having unrealistic contract terms and being unwilling to negotiate them. This is less of a sales process issue and more of a legal issue that can be remedied by hiring a commercial lawyer.
I’d love to know how you get on with your stage-to-stage conversion analysis!
Thanks for reading! If you found this email useful, please share it and if you got forwarded it, please consider subscribing! I write weekly about the common sales, marketing and leadership issues holding back startups from growing faster.