I’ve discussed in the past that an assumption that underpins the design and management of most sales processes is that conversion (rate) is the primary driver of sales.
The Sales Process Engineering method recognises this assumption as erroneous.
In most all sales processes, opportunity flow (volume) is the primary driver, not conversion.
It’s quite easy to see why.
Imagine a typical salesperson who processes about 10 opportunities a month and assume that this salesperson wins 50% of those opportunities. Now, consider how much potential there is for this person to increase sales by improving conversion.
Perhaps, with significant effort, this person could increase conversion rates by a percentage point or two. Let’s be generous
and assume 10 points. Now, this person is generating 6 sales a month.
Now, consider the potential to increase sales by improving opportunity flow. If this person divests of low-yielding activities
and dedicates their time to business-development appointments they will easily process 10 times the volume of sales opportunities each month (yep, that’s 100).
Let’s assume conversion rates drop by half (to 25%). Obviously, this person is now generating 25 sales a month.
So, opportunity flow should have primacy over conversion. Or, to express the relationship in TOC terms, opportunity flow is the goal and conversion a necessary condition.
But the relationship between conversion and sales is even more complex than this.
The reality is that small increase in conversion is likely to actually come at the expense of a *huge* decrease in opportunity
flow.
The traditional approach to conversion improvement is for the salesperson to assume responsibility for more and more activities. The salesperson schedules and conducts every appointment; prepares every document; designs the solution; walks the client’s job through production; supervises implementation; and even manages the account on an ongoing basis.
Obviously, as the salesperson assumes responsibility for an increasing activity load, more and more of their capacity becomes unavailable for business-development activities.
It’s not just that the activities themselves consume the salesperson’s capacity, the fact that the salesperson has to
synchronise numerous disparate tasks across multiple opportunities adds a significant overhead (one of the evils of multitasking).
So the relationship between conversion and opportunity flow is non-linear. An incremental increase in conversion will result in a geometric decrease in opportunity flow.
All the more reason to shift your focus from maximising conversion to maximising opportunity flow.
