Understanding Your Sales Funnel

Analyzing the relationship between prospects and closed deals will allow you to determine key metrics that will help you grow your business and add a degree of predictability to your sales process.

The sales funnel is an important tool for determining how many leads you typically need to generate certain sales levels. Yulia Khansvyarova, head of digital marketing at SEMrush, a competitive intelligence platform, describes the sales funnel as “the quantity and the type of interactions between your company and your customers before they make a final purchase.” The particulars of a sales funnel vary depending on your product or service, but regardless of its size, there is always room for improvement.

To determine your sales funnel, calculate:

  1. The number of potential deals in your sales funnel
  2. The average size of potential deals
  3. The percentage of potential deals that convert to a sale (closing ratio)
  4. How long it takes to convert a lead to a sale

Depending on the size of your business and sales team, these metrics can be monitored manually or with the help of software or online tools. At the heart of the matter is the definition of a qualified lead. The more information you have about the opportunity, the better able you’ll be to assess the likelihood of it closing. By identifying qualified leads, you will also help your sales team prioritize and improve their sales funnel metrics by focusing on deals that are most likely to generate revenue.

Understanding these numbers will give you greater predictability when it comes to your sales process, and that can help you do a better job of managing cash flow. You can also take a strategic approach to drive results by focusing on specific areas of the funnel. For example, perhaps there is a way to increase the percentage of prospects that turns into sales, or a tactic for shortening the sales cycle. At the very least, you can work backward to determine how many qualified leads you need to hit your revenue goal.

The Online Sales Funnel

To help you define your online sales funnel, consider Google Analytics, a popular tool for monitoring website traffic. “It will help you track customer behavior along the sales funnel and traffic sources to your website,” says Khansvyarova. “Set up your goals in Google Analytics for the most important interactions between your customers and your website. Then set up a goals funnel for those goals’ interactions,” she says.

By monitoring these interactions, you will glean key metrics, such as how much website traffic it takes to drive a purchase. You may also find ways to optimize your website. “Think about the phase your customers are at when they visit your page. If a customer is in the pre-awareness phase and is simply looking for information to better understand a topic, they don't want to see an offer like ‘buy now,’” cautions Khansvyarova. Reserve the sales promotions for customers who are farther down the sales funnel.

If nothing else, the sales funnel — online or off — reminds us that sales is truly a numbers game. If you want to grow your business, start by driving more qualified leads into your sales funnel.


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This information is general in nature and is provided for educational purposes only. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation. Information provided and statements made by individuals who are not employees of Regions are the views, opinions, or positions of the individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Regions. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.