Every business wants to be more predictable when it comes to bookings and revenue.  So why do so many companies consistently miss their forecast? It’s because they’re overlooking their most insightful data.

Sales leaders will often talk about the importance of pipeline distribution.  In other words, does the business have enough opportunity at each stage of the funnel to ensure the business hits their numbers.  This tried and true approach is a good starting point, but unfortunately leaves companies coming up short time and time again, scratching their heads to understand why.  

A big part of this is due to the fact that a typical funnel is time independent.  This means you understand the number and amount of opportunities at each stage of the funnel, but there is no ability to understand how and why opportunities progress through the funnel at different rates.

In the sample below, we see a standard sales funnel at a given point in time.  Most sales teams are trained to use crude ratios to attempt to project bookings through the funnel.  Phrases such as “we need to maintain a 5x coverage ratio” are common. This means if the business wants to book $10M in ACV for the quarter they need $50M in ACV at the top of the funnel.

Figure 1: Sample funnel for standard sales process

Again, this may be a good rule of thumb, but it tells us nothing about the momentum of deals through the funnel or leading indicators to problems between the sales stages.  Result? Missed forecasts or lower than expected growth rates.

The answer lies in the Technical Funnel, and leading companies know how to use this to their advantage.  

While sales account executives are often chartered with opening doors to new business and managing the execution of the sales process, their presales counterparts are the individuals responsible for delivering the work products which get deals done.  Think discoveries, demonstrations, value assessments, proof of concept implementations, etc. These work products are not only the single greatest indicator of the true status of a sales opportunity, but are telling signals when it comes to analyzing risk, uncovering the patterns that lead to closed business, and understanding momentum through the funnel.  

After all, what good is all of that late stage pipeline if few technical deliverables have been completed which are systematically shown to close business?

Technical Funnel Example

Figure 2: Sample Technical Funnel

The Technical Funnel brings these discrepancies to light and immediately highlights funnel momentum issues.  In other words, what are the leading indicators that tell me my stage conversion or deal closure rate is going to slow or flat out stall?

The first thing to highlight is that the Technical Funnel is time dependent.  This is going to help us uncover funnel momentum trends and issues.  Second, the Technical Funnel can have multiple deliverables under investigation based on the business.  In this example, our fictitious company relies on the presales team to deliver discovery sessions and proof of concepts.  Now we have a time dependent way to understand the volume of technical deliverables required to achieve a certain bookings target.  

We can further isolate each slice of the Technical Funnel to understand the time series trends which give us additional insight into momentum as well as leading indicators which may cause the sales pipeline to slow or stall.  

Technical Funnel Breakdown

Figure 3: Top of the Technical Funnel

In Figure 3, the ratio of Team Member Requests to Assignments is diverging at a faster clip.  Team Member Requests establish checks and balances between sales and presales organizations. In order to operate with best-in-class efficiency, presales needs to be selective in which deals they pursue.  This diverging trend is unfortunately common for most high growth organizations. This means that as the number of account executives is increased, the number of presales requests has followed suit, only to convert at a lower ratio.  The tenured presales team is saying that these deals are either not qualified or have a poor product to prospect fit. In a few months time this issue will manifest itself seemingly out of the blue in the standard sales funnel with a drop in conversion rate between stage 2 (qualification) and stage 3 (discovery) opportunities.  Leveraging the Technical Funnel, this fictitious company could have identified the problem early and put in steps to bolster the sales qualification and pipeline generation motions.

Figure 4: First Technical Funnel Deliverable

In Figure 4, the number of scheduled discoveries has dropped from May to June.  Once presales has been assigned and engages with an opportunity, executing a discovery is the critical initial step to run the rest of the sales cycle.  This means our deals are likely to stall in stage 3 (discovery) due to the inability to engage with the opportunities where presales is assigned. Stalled out opportunities means the business needs an even higher coverage ratio in order to hit the numbers.  Without using the Technical Funnel, the business may assume coverage is satisfactory while in reality their stage 3 (discovery) opportunities have started to stall.

Figure 5: Second Technical Funnel Deliverable

In Figure 5, both the number of scheduled POC’s and completed POC’s is declining between May and June.  Similar to the conclusions we can draw from Figure 4, this trend in Figure 5 is another key indicator to stalled opportunities.  By understanding the difference between deliverables that are scheduled vs. completed we can also conclude that while the deals are stalling, it’s also taking us longer and longer to execute and complete the POC’s meaning our deal cycle times are growing.  Using the Technical Funnel to systematically analyze where deals stall and what leads to higher deal cycle times is a practice used by the highest performing organizations. Steps can be taken to adjust strategy, change team structure, or even enhance the product offering to accelerate critical areas.

Figure 6: Bottom of Technical Funnel  

In Figure 6, the Technical Funnel is used to answer the question “what is ready to close?”.  Long gone are the days of buying purely based on relationships. Companies are no longer investing in “shelf-ware,” and the shift to a subscription based economy means buyers expect to get immediate value from the services they are purchasing.  This means that the deal is not going to happen unless there is a “technical win.” A “technical win” can simply be defined as “the prospect has agreed your solution is the technology of choice across all competitors and there are no remaining open technical concerns when it comes to supporting their business strategy.”  Manage to sell a deal without a “technical win”? It’s possible, but be prepared for friction during implementation and customer success, with a high potential of churn upon renewal.

On the road to forecast accuracy and high growth rates, the Technical Funnel is there as a guiding light that is consistently overlooked.  Stop relying on “rules of thumb” or the promise of artificial intelligence operating in a black-box to change the way you sell and execute.  The most insightful information has been with you all along. It’s embedded in presales.

Taking The First Step

We built Hero by Vivun based on our experience working with and building sales, presales, and product teams at companies of all stages of maturity.  Transforming the way product and sales work together is the single greatest key to igniting growth. Hero by Vivun was designed to help you operationalize the strategies outlined above and more.  Contact sales or request a demonstration to learn more.