How to close more deals by closing less often

 

The harder you work on closing, the less successful you are at it. That has always been true for sales and I am going to show you why it’s true for marketing, as well.

In a recent blog I showed you why trying to make your funnel flow faster is folly. Apologies for the alliteration, but basically, we can’t go faster or slower than the buyer wants us to go and I showed you why that was the case in a recent blog.

In this blog, I am going to show you why our focus shouldn’t be on closing, but on opening. How, and with whom and about what we open is the key. I want to start by talking about why we need to focus on failure and not on success. If you have a 25% success rate, one in four moves forward, that means you have a 75% failure rate. Well, isn’t that just semantics? 75% failure rate, 25% success rate? Is it a glass half full glass half empty thing? Well no, it’s not. The reason it’s not is that, if you focus on success the 25% that did move forward, then you forget to focus on the 75% who didn’t. The funnel, leaks and because it leaks, we need to do something with the leakage and get it back into the top of the funnel. I want to start by talking about leakage, not success rate. It’s the inverse. 75% leakage is 25% success. But I’m going to talk about leakage. Now is it better to leak early? Or leak later in the funnel?

So, imagine two funnels, two different companies perhaps. The first company has a 25% leakage rate in the top of the funnel, and a 75% leakage in the bottom of the funnel. Now, that may sound extreme, but 75% is a one in four closure rate which frankly is what most B2B sales organisations enjoy. So we’ve got a 75% leakage in the bottom and 25% at the top.

Let’s look at a second company. They’ve got a 75% leakage at the top, and only a 25% leakage in the bottom. Now both companies will get the same number at the bottom of the funnel, compared to the top. Start with 100; you’ll get the same number at the bottom in both of the scenarios. Second company sounds like it’s got good sales, only 25% leakage rate, but bad marketing a 75% leakage rate. I’ll argue it’s got good both.

Good marketing identifies who’s going to leak late anyway and leaks them early. So I’d actually encourage the leakage to be high in the top of the funnel, to prevent leakage in the bottom of the funnel. Of course, the trick is to work out who it is that we should leak. I’ll come to that shortly. But let’s start with a premise that leakage in the top of the funnel isn’t a bad thing particularly, if it reduces the leakage in the bottom of the funnel. Why is that the case? Well, there are two reasons: the first one is that, it costs a lot more per movement forward or per progression if you like for sales tactics compared to marketing tactics. Sales is just more expensive than marketing, per progression. So I’d want to have a small number of progressions executed by sales and then the large number by marketing. So, I want my failure rate at the bottom of the funnel to be as low as possible. That’s point number one. Point number two is, if you leak them early, you can get them back into the funnel for reconditioning, re-nurturing, re-education, concept education through your marketing nurtures, earlier. Again, I’d rather get them into that process sooner than later. Long story short, early leakage isn’t a bad thing. Late leakage is expensive.

Well, how can we actually reduce the leakage? There are a number of really practical things that you can do to reduce your leakage. Firstly, target really well. Find out the type of buyer likely to be able to be troubled by the problem that you solve and focus on them. Secondly, position with that group really effectively so they trust when they’re in a conversation with you they feel like they’re working with the leader around this problem. And secondly, when they begin that process of realising they have the problem all on their own; they’re more likely to be talking to you. We all know that inbound inquiries have a very high success rate compared to outbound. So, target the right group, position with them really effectively around that problem, thirdly, trouble them about that problem really effectively and by the way, pick the right problem. Some problems, I can solve better than you. Some problems, you can solve better than me. Clearly, you should be focusing on the second group of problems or that second problem.

Next, help them transition really well from gap to need or from problem to need. It’s all around shaping the concept of what they need. You’re not offering a solution yet. You’re helping them understand what it is they need from any solution before they go to market. That need shaping is critical. And finally, propose really effectively, as a solution to that problem. It’s all around how you open the conversation not on how you close it. That is how you reduce the leakage.

In a moment or two I am going to show you how we build that leakage into the funnel plan so that you’re go-to market plan has the right expectations and the right dimensions to it. I’m going to show you though, before that, two things. Firstly, I’ll draw on our research and show you some very specific things that you can be doing to reduce your leakage and I’m going to invite you to receive additional blogs like this. But let’s get to the research first.

What does the research and our experience tell us is the best way or are the best ways to reduce leakage? Start by focusing on a single problem, the one problem that you can genuinely become the best in the world at solving focus on that. When you have found that problem, identify the right group of buyers most likely to be impacted by that problem. There’s simply no point in talking to buyers not likely to have that problem or more likely to be troubled by other problems. Find the group most likely to be troubled by this problem and that’s who your target audience is. That’s the first practical step. Secondly, increase your marketing training. We found in the research that businesses that increase their marketing training from the average of three days, up to around 8 or 9 days, increased the probability of their MQL’s closing by 67% . So, again, the probability of marketing generated leads closing, increased by 67% for companies that have invested heavily in marketing training. So it’s a practical thing that you can do. Increase the visibility on the process. So a lot of companies go through a fairly normal transition around process. They start with a sales process, then they add marketing process then they kind of tie the two together into a single process and then they start to improve it through kaizen-like thinking.

Why not jump right to the end? Build a single process that sales and marketing both honour and increase the visibility for marketing into that process. Why? Well, if marketing knows what’s closing and knows how it’s closing, marketing is going to change what it does. If you keep that a secret from marketing then how can marketing fix it? So a single process that everybody has visibility on is a good step. Naming, (I spoke about this the other day in a recent blog) naming your CRM and marketing automation stages according to the buyers’ journey is a big step. So, you get your CRM or your marketing automation platform out of the box and its stages that typically are ‘doing’ stages or internal stages. Change that. First change them to worst case, change them to your own stages. Best case, change them to stages that describe where the buyer is up to in their journey. As a buyer I’m trying to get you here to here. That’s the kind of language we want to see. So, buyer-centric language. Things like, positioned meaning, they have positioned me as a vendor in a category, things like, gap acknowledged so that is the buyer has specifically acknowledged the gap. The effect of doing that is that we saw the probability of an MQL closing from an average of 16 % up to 31% so nearly double the closure rate by focusing marketing on the buyer’s journey, not the seller’s journey. Simple thing to do, big effect. Next, measure marketing. Not just on the early stages of the funnel but also in the late stages. If marketing is generating leads that are very interested and very willing to meet with sales but then don’t close. Then marketing is doing nobody any favours. Give marketing visibility on the closure rates at every single stage all the way through to closed deal. Finally, spend around 35% of your total marketing budget on demand generation we used to argue for 40% or more, we’ve found that 35% is the sweet spot these days. Pushing more than that, creates a fairly pushy kind of conversation. Which we have proven doesn’t work doing less than that means that you might be positioned but nobody’s talking to you. 35% is the sweet spot. They’re the practical steps I can offer to you, based on our research and on our experience.

Well if you enjoyed this blog then hopefully you’ll enjoy others. Can I encourage now if you haven’t already done it go to align.me/blog and to subscribe to the blog there’s two ways you can do it. At that site the first one is Funnel Vision Monthly, where you get a collection of all of the Funnel Vision blogs, the video blogs that we’ve done for the month. You can also subscribe to Funnel Vision Weekly where we send you out twice a week this blog as it’s produced as well as another blog from one of our funnel coaches. Frankly, what most people do is subscribe to both. Can I encourage you to do that now and then to come back and then I’ll finish this off this for you. By the way, last think I forgot. You can also go to YouTube and subscribe to the YouTube channel. YouTube will tell you when future blogs come out. Again, that’s every week. So there are three options for you. Why don’t you do that now come back and then I’ll show you how we do this in a funnel plan.

Well, I promised to show you how we do our own funnel plan. So, let me do that now. let’s start by taking a look at the overall funnel plan. You can see that at the centre we’ve got this velocity model. I’m going to zoom in on that shortly, but the overall importance of velocity once the objectives and strategy are really clear; of course we want to move into tactics as quickly as we can. Before we identify what tactics we’re going to use for each stage of the journey we need to understand two things. Firstly, how effectively we need to move buyers through each stage. That’s the leakage, and we need to understand how many buyers need to move through each stage (because we need to choose tactics good enough to be that effective, and good enough to work at that scale). So we need the numbers. The velocity is really quite key. Now, lag that we spoke about in the last blog is important leakage also. Let’s take a look now at the velocity model. You can see that this here is showing a three year view of the overall velocity. That’s most impacted how much you will leak between each progression, between each stage of the buyers’ journey and how quickly you get them back into the funnel. So, let’s now take a look at the application itself. So we go to Funnel Velocity and I’ll start with this simple funnel math. Now, let’s take a look in the advanced funnel math.

Here is the wonderful flip of that. If you’re working with a small or targeted market, you will enjoy lower leakage rates. One’s cause one’s effect but they’ve kind of got this cyclical effect on each other. Long story short, focusing on a small market and trying to dominate that is a lot smarter than spreading your love too thinly. They are the sort of indicators that funnel math lets you take a look at. Start with a simple funnel math, spoon it out into a slightly more advanced fashion across all of the stages in the journey, sense check the over probability, sense the total velocity for the next three years, and sense check your market depth. Then, you’ll be able to select tactics, good enough to move buyers through at that stage. How we do that? That’s certainly for another day. But before that I am going to show you on another day, how we handle all of those buyers who’ve leaked back and how we get them back into the funnel and that’s just recycling and evaporation. We’ll come to that on another day. But for now, may your funnel be full, and always flowing.

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