Funnel Chart Mastery: Improving Sales Conversion Rate

Every salesperson has had the experience where they’re just about to close a deal and the prospect decides not to move forward. When it happens once, it’s an event. When it keeps happening, it’s a problem. A funnel chart is a tool company can use to identify what parts of the sales process are stopping prospects from buying.

If your company can fix a specific blocker your team has identified in their process, you can add hundreds of thousands into your business with a couple of changes.

This article will walk you through what a funnel chart is, why it matters, and how to build one quickly.

Introduction to a Funnel Chart

A funnel chart is a way to visualize how opportunities and leads are moving through your sales and marketing process to close.

Let’s take a situation where your pipeline includes the following five steps:

Appointment Scheduled
Qualified
Pitched
Contract Sent
Closed Won

Now you have 4 separate events that occur across the path to a sale.

A meeting happens and the customer is a good fit so they are moved to qualified.
A qualified opportunity comes to the presentation meeting and is presented with the company’s offerings.
The opportunity wants to move forward and see pricing and a contract.
The opportunity signs the contract and the revenue is won!

At each point along the sales process, there is a natural level of dropoff that will occur. A funnel chart’s objective is to show you visually what that dropoff is so you can adjust your process accordingly.

In this case, we can see that our weakest points are our transition from pitched into a proof of concept. We can then make the decision that we need to improve our pitch decks. We can move down the funnel to ensure we are solving the biggest bottlenecks at the top. It is better to focus on the top of the funnel as that will have a compounding effect on the rest of it.

If you simply solve for better contracts and improve the conversion from contracts sent from 57% to 70%, you go from 16 customers to 20. If you improve the conversion from pitch to proof of concept from 40% to 63% ( the same percentage difference ), you will go from 16 new customers to 26 new customers.

This can help your team identify where to start in improving their sales conversion.

Why Your Funnel Chart Conversion Rate Matters

For every lead that you bring into your funnel, you are spending a certain amount of money to acquire it. This is the customer acquisition cost of that lead. It includes advertising spending, sales labor, and marketing salaries. By increasing that conversion rate, you can reduce your cost of customer acquisition. This means acquiring customers is cheaper so you can increase your budget knowing it has a higher ROI. This allows your team to hire more salespeople, increase the marketing budget, and outspend your competitors.

Conversion rate is critical to a healthy sales and marketing process. If you have big blockers in your funnel, your sales team will get exhausted by not closing deals and your topline will never improve.

Luckily, with a funnel chart, you can identify the exact spot in the sales process where you are missing out on revenue. Keep an eye on the early big dips in percentage and ask yourself how you can fix that.

How to Fix Different Stages of the Funnel Chart

If you feel like you wouldn’t know where to start to improve your conversion, I’m going to provide you with several examples of scenarios that I’ve seen in companies before. This way, you can understand what tools you can use to solve specific problems in your funnel.

Improving Show Rates

If your conversion from appointment set to pitched is lower than 50%, it would be smart to start improving there. You are wasting a lot on people simply not showing up which can slow down your salespeople’s days and stop them from closing other deals.

There are two ways to improve show rates. The first version is to send more email reminders and a nurture sequence before the meeting. Another option is to create a process to call 30 minutes before the appointment to ensure the prospect is still attending. Over time, you may see that some sales development representatives are setting more appointments, but fewer actual shows because they are being avoided by the prospect. This can be a situation where it seems like one person is performing better, but is actually performing worse once you look into the details.

Improving Qualification Rate

If your qualification rate is low, it means that you are setting appointments too early with prospects. Your sales development team is trying to pack vanity metrics of appointments and is not focused on closing leads. This is a great situation where you may want to compensate for both appointments shown and closed revenue.

The most common solution is to set a vetting appointment before scheduling a meeting with an account executive. These are typically 15-minute screening calls to figure out if the client is a right fit before spending your account executive’s time on an hour-long call.

It may also make sense to ensure your sales development representative has an ideal customer profile that they need to fill out before setting an appointment. This would include employee count, title, seniority, and annual revenue. This could help them avoid setting appointments with companies that will never be good customers.

Improving Pitch to Contract Rate

Typically after a pitch, your prospect will give a verbal commitment that they would like to see pricing and contract terms. At higher ticket offers, this could be a formal presentation custom-made for them. If you are not giving the verbal commitment to schedule a contract review call, then your pitch may be the issue.

In this case, you will want to edit two items: your pitch deck or your sales script. Your sales script is the easiest and most impactful one to test. First, you will want to record your sales presentations so the team can identify spots for improvement. From there, you want to review what questions you are asking to identify fit and drive the prospect to the sale.

If you do not see any improvement after the sales script is changed, your sales deck may be the squeaky wheel. You may want to give it a facelift to appear more professional or include more testimonials.

Improving Contract Signature Rate

If your contract sent to a closed won rate is low, you may want to improve your proposals to showcase value. This is a fun one because there are a lot of ways to balance the value of your product versus the legal terms. Some options that may make sense are the following:

A facelift to the proposal – Good design inspires confidence and trust
More details into the process after signing
A Return on Investment calculator
Case Studies
Testimonials
Discounting

Any of these options could help your sales team win the deal. I would recommend that if you resort to discounting, you bake the discount into the default pricing’s margin. Additionally, make sure your sales operations team is approving discounts before they are sent to the prospects.

How to Create a Funnel Chart

If you’re excited about using a funnel chart, but don’t know where to start, don’t worry. I’m going to show you how to create a funnel chart quickly inside HubSpot, my favorite CRM tool.

You will first want to make an account on HubSpot.
You will need to create a sales pipeline.
1. I recommend using the default one for now.
Once your pipeline is ready, navigate to the reporting part of HubSpot.
Click on “Add a Report” in the top right corner and select “From the report library”
Search for “Deal stage funnel”
Click add.
Start tracking your conversion rate!

Conclusion

A funnel chart can be a powerful tool to discover what are the easiest opportunities to increase revenue in your organization. If you are not already looking at how your conversion rates are across the pipeline, you are missing out on a major opportunity for your company and its topline revenue. I highly recommend taking the time to build one.

Funnel chart example that shows dropoff along the sales process