This Selling Power article title made me laugh – Are You Using a Funnel or a Sieve?  I laughed because my son is a hockey goalie so the word “sieve” carries a special horror.  That horror is compounded by the fact that we just returned from a hockey tournament in Winnipeg where I expected to hear some rowdy crowds and perhaps a sieve chant towards my son.

My fears were unfounded as the Canadians were extremely pleasant.

Hockey colloquialisms aside, this article makes many excellent points before turning into an advertisement.  This entire graph is valuable:

It’s an issue that makes sense from a cost standpoint as well. Karam says it costs about one-sixth the amount of money to nurture a lead that has fallen out of the funnel than it does to find a brand new one. Most sales managers know this but are so quarter-driven that funnel leakage tends to hold a low priority on their to-do lists. And until recently, that’s worked just fine. Prior to the recession, sales teams could “focus on the hot stuff and they’d make their numbers. Well, now there’s not enough hot stuff,” says Karam. In light of all this, he adds, “there’s been a lot of attention recently on recovering leakage and re-mining or re-farming leads.”

Finding qualified leads is an expensive process which is why I focus extensively on qualifying ability.  When you are hiring salespeople, there is no greater urgency then to discover the candidate’s qualifying ability.  It is the backbone of successful selling.

I couldn’t agree more with the statement that most sales managers are aware of “funnel leakage” due to their quarterly revenue responsibilities.  I would go further and say a percentage of the forecast error is funnel leakage and the other is blue-sky forecasting.  Many a rep has been known to submit an inflated forecast in the hope of keeping their job for another quarter.  I suspect the salesperson is simply buying time with the hope that they will close a large deal during that bonus time.  It rarely happens.

Re-farming leads is a valuable exercise for any sales department in any economy.  Again, the costs associated with new lead development are far greater than re-farming leads.  One question I often ask sales candidates is for them to provide me with an example of when they went back to close a “dead” lead.  This question provides some insight into the candidate’s tenacity, strategy and ability…and it is easy to spot a fabricated story.

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