Secret Funnel Habit Number 4: Funnel Audits™
I have to admit. It’s going to be hard for me to avoid writing all day about my favorite topic, Funnel Audits. I’ll do the best I can. I believe this is the most powerful funnel habit you can have.
The reason I love Audits so much is that they’re proven to be the glue that holds much of the funnel process together. It takes a good idea and makes it practical and effective for the sales manager and seller. Novel concept, right?
First, let’s define the Funnel Audit™. These are the structured inspections of the funnel that are part of the Funnel Principle system. They’re simple, yet powerful. They don’t take much time but have a disproportionately large impact on the seller’s results. In an Audit you’re inspecting one thing – your funnel’s health. You end the Audit by defining goals and actions for the next 30 days.
Second, let’s review why you should inspect your funnel regularly. With your funnel changing all the time throughout the year you’ve got to stay on top of the changes and know where you should be committing your priorities and time allocation for opportunities. Doing this diagnosis and action planning monthly is suitable for 90% of the selling population. This has a dramatic impact your mission of achieving quota.
Without a rhythm or diagnosis and action planning you’re committing precious selling time and resources based on assumptions. It would be like setting out on a weekend long hike deep into the woods using your compass only once, at the outset, and never confirming during the hike that you’re still on the right track headed where you want to go.
Now, let’s review what you actually cover in an Audit. One of the first items is your TVR, or Total Viable Revenue. It’s the dollar value of all sales opportunities on your funnel that have reached the Commit Funding stage. TVR is the true value of your funnel and one of the most important leading indicators to manage to.
Because you don’t have a 100% win rate, you need to chase more opportunities than the number you need to win to achieve quota. If you have a 25% win rate then you need to have roughly four times as much funnel value in opportunities. If you have a $1M quota you’d better have $4M of TVR.
The $4M is your Target TVR. If you find yourself with a funnel of anything less than $4M when you still have $1M left to close you’re at risk of not achieving quota. While most sales people understand this, many of them don’t actually manage to it. If you’re one of these salespeople, stop now. Start managing to a Target TVR.
When you manage to a Target TVR two things happen. One, you’re constantly aware of the true health of your funnel. If the real funnel value is more than the Target TVR then your funnel health is adequate. If the real funnel value is less than the Target TVR then your funnel value is inadequate. Either way you’re completely aware of funnel value and this knowledge puts you in the driver’s seat. You can act on this leading information to your advantage. Second, you’re focused on what you can control – adding value to your funnel. On the other hand, controlling the customer’s buying process is not realistic.
Another part of the Audit is a section we call what’s changed. Knowing how your funnel has changed is key to knowing how those changes will affect your mission of achieving quota. Changes are also a great way to link cause and effect of selling actions – knowing if some selling action is paying off or not is obviously good to know. Since it’s common to see funnels that need more TVR you’ll want to monitor each month how much new TVR is being added. This helps you know early on if you’re on track to achieving your Target TVR or not.
Finally, the Audit ends with an action plan. Without it, the dialogue and diagnosis is like ending a wine tour without taking a sip. Yeah, that doesn’t work for me either. The actions hold you accountable and help you measure your progress. At the beginning of the next Audit you start with the actions from the previous one and proceed from there.
I’m proud of myself. Only a page and a half dedicated to the most powerful part of the funnel system.