Picture this – you’re in a pipeline review meeting. Your team is discussing deals in various stages of your funnel. And as you compare different opps to your forecast, you see this gap:
Why is there such a gap between how stage 2 and stage 4 are being used?
This is a very common problem for revenue organizations. There are many articles on designing your sales stages around a sales methodology (i.e. MEDICC) and your buyer journey. In this post, I want to take a Revenue Operations approach to stage design, starting with asking a few core questions:
What is the point of having deal stages? Who are they for? What questions should they answer?
For me, deal stages need one priority: for sales reps to communicate internally about their funnel in a consistent way.
Think about all the ways stages are used:
Many of these questions become difficult to answer when stages are abstract and inconsistently used. The problem comes in with stage design.
In many cases, sales stages are driven by the preferences of the VP of Sales or driven by external “best practices” to create uniformity across companies. In many cases, this advice is driven by the sales process instead of the need to communicate effectively internally. The same is true when sales stages are driven entirely by the buyer journey. It’s important to understand your buyers journey, and not to jam them into your process – but it’s equally important to be able to communicate across multiple types of sellers, segments, and buyers internally.
There is no best set of stages that every company can use. In fact, you may need different sets of stages for different types of selling done internally (i.e. new business vs renewal, or SMB vs enterprise). It’s entirely dependent on your business.
To figure out what’s right for you, you need to interview your sales reps to understand your sales motion:
From here, you can create entrance and exit criteria for each stage.
Construct your new stages into some shared language with enough granularity that you can get visibility into where things are stuck.
Let’s dive into a specific example. Should the top of funnel have very specific stages for the discovery call? Personally, I love having disco/demo scheduled, disco/demo completed as early funnel stages. Why?
Let’s compare this to using a single stage called “Qualifying”:
It’s abstract. It’s difficult to have a shared understanding of. It’s hard to enforce consistent behaviors or measure the behaviors of that stage. Use the thought process of this example against your own stages.
Another problem that crops up is having too few stages. If you have too few stages in your funnel, for the length of your sales process, then the stages aren’t going to be valuable to evaluate where deals are stuck. For example, you only have 4 stages – stage 1 is owned by the SDRs, stage 2 is where the sales process is done, and stages 3 and 4 are about contracting. How do you evaluate or understand where your sales process is broken?
Frequently this happens when you have too many transactional stages (send agreement, verbal, legal review) for your bottom of funnel stages.
Once you define new stages, share the language with your team before building it out. Ask a bunch of folks – what does this stage mean to you? When would you move a deal into this stage? Do you get the same response, or does everyone think “Selecting” means something completely different?
Lastly, a few other RevOps lessons learned over the years:
Your sales stages are about managing your internal sales process so that you can communicate about and troubleshoot your business internally. That’s priority 1. If your sales stages don’t answer those questions, it’s time to refactor them.