When you hear about businesses that have high turnover of customers you might be tempted to think there’s something wrong with the business.
After all, why do customers leave their suppliers? Maybe it’s an operations issue like a product problem or delivery problem. Maybe it’s a sales issue. Isn’t sales supposed to retain customers? Maybe the customer has outgrown the capabilities of their supplier. They need ‘y’ and the supplier can only provide ‘x’.
Before taking any course of action companies would do well to know how their customer attrition rate compares to that of competitors. Maybe your competitors shouldn’t be the bar you set but falling behind is probably not optional. You might even compare your attrition rate to other industries.
Customer attrition of any degree is another reason to have a sound funnel management process. Reducing attrition gives you fewer lost customers to replace YOY but in the end you’re going to lose customers and you’ll have to replace them to get back to square one.
Build or test your funnel management process against the following 4 parts:
- Do your people have a funnel? A funnel is simply a list of opportunities that are getting selling attention. It doesn’t matter if the list is an excel spreadsheet (cost effective!) or a fancy CRM. The list provides visibility to you and them.
- Do you have a way to organize the list? The best way to organize the list is to define how qualified the opportunities are. We call these funnel or pipeline stages. Each stage has a definition of deals that belong there. This is critical for communication and valuing the funnel. Our clients organize their lists with our BuyCycle Funnel™ model.
- Do you have a way to talk about the funnel? If you speak Italian and I speak Dutch we’re not going to communicate very well. Or, if you’re the coach of a basketball team and you draw up plays to beat a press, and your plays look to your players like a 4 year old’s pre-school artwork, they won’t get your coaching. Every funnel management process needs terms and phrases for things like stages, funnel value, win rate, and more to enable coaching and understanding.
- Finally, do you have a funnel inspection process? Funnels need to be changing throughout the year. If they’re not they’re not healthy. If you’re not aware of how your reps’ funnels are not changing, you can’t coach to reality. They’ll get behind and backed up and in a corner that you can’t pull them out of.
So how does your company’s funnel management process stack up against this framework? If you have all four parts, you’re off to a good start. But – and I mean a big but – you still might have a long way to go.
For example, visibility is important but it’s not valuable if what’s visible is not real. When it comes to funnels it’s GIGO – garbage in, garbage out.
For example, if your funnel inspections are nothing more than going down the list of deals and asking ‘what’s next?’, you’re not coaching to the funnel. That will eventually catch up to you and your reps.
And if your way of talking about the funnel isn’t focused on where the customer is in the buying process then you’re swinging a golf club with one arm.
No one said it’d be easy. But the payoff is worth it.
Author, The Funnel Principle
Named a Top Ten Best Book to Read by Selling Power
Author, Blindspots: The Hidden Killer of Sales Coaching available March 2019
Creator of The BuyCycle Funnel