Sales Funnel 101: Pipeline Mathematics

UPDATED 5/8/2020

Nothing in business is guaranteed.

But we love, love, LOVE! to find predictability in numbers and metrics. It feels so safe and reliable because ... math.

However, the dangers of math are that it becomes quantitative over qualitative. Let me explain.

In a typical sales funnel you build from the bottom up. If you want 3 new clients this month, that doesn't just magically happen by wishing for it or pasting it on your dreamboard.

You need to go one step up the funnel to how many pitches (or phone calls or proposals or whatever your sales close looks like) you need to get your 3 new clients. And this number is the one that varies so much. I've heard people say they are 100% closers (self-reported) and I know people doing 1 in 10 and making a lot of money. A pretty achievable close rate to target is 1 in 3, so I'm putting in 33%. Your mileage may vary.

Great, you're closing 1/3 of all your pitches, so how many people need to raise their hand and show interest in your product/service to get to those 10 pitches (or sales calls or proposals...)? Again, you know your own process best, but for many of my clients—and the way it is built into the Relevant System, it's another 33%. It sounds coincidental, but it proves true that about one-third of people interested in your service will be motivated and able to pursue it.

So how do you find that magical one third of people interested in your service so you can pitch them? By making new connections! You have to always be adding people to the top of the funnel, making them aware of you and what you do so they can determine if they need your service.

It may seem like another random number, but across the 100+ clients using our targeted system to connect with their ideal audience, we consistently find that only about 10% of their audience (people who know about you and your service) are going to be interested enough to raise their hand and move forward at a given time.

So, the interesting function of these percentages is that they stack together. One-third of one-third of ten percent is one percent.

That's the math. About one of every one hundred people who know about your service will become a client. So, if you want 3 new clients this month, you have to tell 300 people, right? Not necessarily. This is where QUALITY becomes important. It can't be 300 random people or the percentages won't play out.

The quality of the targeting at the top of the funnel will improve the metrics all the way down the funnel. This is why it's so important to know your target audience, understand what they value, and let them know you know what you know!

The key factor we add to this typical funnel process with the Relevant System is to only connect with the most RELEVANT prospects at the top of the funnel using a micro-targeted audience list. Then, run a long-term, multi-touch and omnichannel messaging campaign to those prospects that allows them to keep seeing your name and service and lets them determine the depth and speed that they progress in your sales funnel.

Does this still work when you can't make a sales presentation? When people are focused on "tire kicking" and relationship-building because a purchase decision is 3 to 6 months down the road? Actually, it works even better when your prospect is in research mode because you don't have to aggressively sell the 99% while you're closing the 1% that reach the bottom.

It's not magic, it's math. But all metrics should be bench marked and optimized to make the math work better at every step of the process.