How you can apply funnel analysis to become a management consultant at McKinsey, BCG or Bain

Video transcript:

What is a Sales Funnel Analysis?

Have you ever heard about funnel analysis? No? Never mind. Today you will learn about it and how you can utilize it in the process of becoming a Tier 1 or Tier 2 Management Consultant.

Gabriel Goldbrain SUCCESS Training

Before we start, I'm Goldbrain, Gabriel, Goldbrain, and I developed the Goldbrain Success Training. This training is intended for everyone who wants to break into Tier 1 and Tier 2 management consulting firms. Find out more on my website, www.gabrielgoldbrain.com. If you're one of the top 10%, send me your CV. I will check it out and get back to you if I think I can bring you into management consulting.So, what is a funnel analysis? It basically starts out top-down.

What is a Funnel Analysis? 

So, you first look at the whole problem, and then you break it down step by step into the piece of the problem that is relevant to you and most beneficial for you. To make it easier, we will have a look at a slide that I prepared where you see the funnel and where you see the steps how to reduce the problem from the overall problem to something that matters to you most and which you want to optimize.

PowerPoint Slide Presentation

On this slide, you see a sales funnel. The funnel analysis can be done for other things as well, not only sales. It can be done for your application process; it can be done for improving the product quality or reducing the failure rate. There are many applications for a funnel analysis. Once you got the idea, you can easily transfer that to other problems.Let's assume you're running a car dealership in a small town. Then what are the possible sales options? It's basically everyone in the world who wants to purchase a used car or a new car if you offer these. But to be reasonable, you think, "What are the relevant sales options?" Because you need to tailor your marketing to the relevant ones only. So, you would probably limit your marketing to those people who live in the city in which you have your car dealership. Then, in the next step, you would be interested in who are the identified or what are the identified sales options. So, these could be people expressing interest in many ways. It could be people walking on your parking space and looking at cars that you own and that you're about to sell. Could be people calling you, asking questions about the cars you sell. Could be people writing you messages asking about features of the cars. So, these are all identified sales options.Of these identified sales options, a big portion are also sales contacts because they got in touch with you, they talk to you, they wrote you messages. So, these are sales contacts. And as a business owner, you're interested in converting as many sales contacts as possible into persons to which you can give an offer or where you can talk about conditions. And this step is very important where you think about, okay, how can I increase the ratio of offers to contacts? So, in the sixth step, you would be interested in how many of the offers you made. In how many cases did you start a negotiation with a potential customer? Because that, in the end, is important if you want to finally make a sale. And that is the seventh step; How many of the negotiated offers will you actually turn into sales, which are relevant for you?When you analyze the sales funnel, you can easily deduce some generic strategies. For instance, let's look at number two, the relevant sales options. It does only make sense to spend money for advertising on your relevant sales options. Then the next thing, number three, the identified sales option. It does not make any sense that you let them pass. So, if there is a customer out on your yard, try to go out, talk to them, engage with them, and ask them, 'Hey, how can I help you? Which car are you interested in?' And try to engage them and try to find a nice and good solution for their needs. The same applies to submitted offers. Once you submitted an offer, you got the contact details of the person. Then follow up, ask them, 'What do you think about my offer? Do you like my offer?' Because that will bring people into a negotiation. They will tell you, 'Hm, the car is too expensive. I like this color. I prefer that color. If it had this kind of equipment, I would buy it,' and things like this. So, maybe you will be able to convert a certain percentage of these customers or talk them into a product which is suitable for them based on the negotiation and the concerns they have. The same applies for negotiated offers. So, once you made a good offer or a counteroffer based on the negotiation, also follow up. You will see the conversation into your sales into paying customers will increase if you follow up properly with people.How would you now utilize this funnel analysis for your recruiting situation in management consulting? I think it's quite easy. So, if you look at the possible options, every consulting firm in the world is a possible option for you to apply. But in the end, you will come to a conclusion where you say, 'Okay, I'm living in the US. I'm willing to relocate, but only within the US or within Canada.' So, you may define the relevant market or the relevant options for you as the US and Canada.

How to utilize the Funnel Analysis

Similarly, if you live maybe in Spain, you may limit your market or your relevant options to Spanish-speaking countries or to Spain because there is not so much Spanish-speaking countries around Spain. Or, like if you're in the German-speaking regions, you may say, 'I'm fine with consulting offers in Germany, in Switzerland, or in Austria because they speak German.'You may not be able to identify all relevant options because there may be a consulting firm where the partner group decided to break up the firm and split it into two different companies. So, if you apply at the one company, you may miss the opportunity with the second one, which is just in the formation but maybe it's not yet announced on the website. Number four, these are the consulting firms which you contacted. Maybe you spoke to them just to get some information, maybe you sent them a CV. Number five would be the ones where you made an offer, which means you sent your CV. You may have left out some of the companies because you say, 'Yeah, in the conversation with them, I didn't have a good impression. They have a wrong focus. They don't do what I like. Maybe you consider them not as Tier One or Tier Two, so you didn't make offers to everyone. You may change your mind later if you see, 'Okay, in the later stages, there is too little results,' so you have to add Tier Three or maybe Tier Four consulting firms to your funnel to have enough outcome. But still, you have the lever; you have the power to decide if you adjust here later.Number six, that would be the step when the consulting firm likes your offer. When they say, 'We invite you for interviews,' and you perform interviews with them. And in this step, you have another lever. You may decide to get training. Maybe you enroll in the Goldbrain Success Training to optimize your chances of receiving an offer. You will find all the information about the Goldbrain Success Training, by the way, on www.gabrielgoldbrain.com. And then the final step would be the sales step or when the consulting firm makes you an offer to start with them.One of the key takeaways of the funnel analysis is that you have a couple of different levers. As you see on the right, on the left, you see the percentages associated with each step of the funnel. You can influence the percentages on the left by optimizing the levers. This often includes that you change things, that you approach things differently, that you maybe extend certain options, so you optimize the process of getting the appropriate and desired results.

PowerPoint Slide Summary

If you ever optimize a problem using a funnel during a case interview, focus on those levers first where you see the biggest drop in options because these are the ones most worthwhile spending time on thinking about how to improve these levers.

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