20 years ago I learned a technique for analyzing product line sales transactions known as the moneywheel. This approach helps product managers understand the dynamics of sales transaction types for their product lines. It can also be used to estimate demand generation requirements for each stage of the sales cycle. This supports the development of effective and focused sales development campaigns.
A Moneywheel consists of a number of spokes. Each spoke represents a repeatable type of sales transactions. Most sales forces recognize that there is a common pattern underlying the deals they close. Some of these patterns deal with buyer personas; others deal with events that occur in the marketplace that trigger a prospect’s interest in a solution. Consider the following table for a mythical marketing automation vendor:
| Category | Spoke | Description |
| Net New Customer | New VP | A new VP of Sales or Marketing starts at prospect |
| Net New Customer | Merger/Divestiture | Prospect has undergone a merger or divestiture |
| Net New Customer | Bad quarter | Prospect had a bad quarter sales result |
| Net New Customer | Competition | Competitors have launched an aggressive, modern marketing/sales program |
| Add On Product Sale | Advanced Analytics | Prospect is interested in acquiring new advanced analytics add on |
| Add On Product Sale | Org Chart Data | Prospect is interested in new offering that provides org chart info for potential customers |
| Expansion Product Sale | Seats | Customer adds more seats to an existing installation |
| Expansion Product Sale | Organization | Customer expands existing installation to new department/division |
| Customer Migration | DOS – Windows | Customer migrates from legacy DOS app to current SaaS solution |
| Financially Driven Sale | BSA Audit | Customer has experienced an audit from Business Software Alliance and has unlicensed users |
| Financially Driven Sale | Universal License | Customer upgrades to a global license for entire company |
| Financially Driven Sale | Disaster Recovery | Company wants a disaster recovery solution in place |
Each spoke on the Moneywheel has its own dynamics from a marketing and sales perspective.
To start Moneywheel analysis begins with an analysis of past sales transactions. Consider this table that describes a portion of a year’s worth of sales activities:
For each sales transaction the customer, sales rep, sales region, product, quarter, annual contract value, Moneywheel category, and Moneywheel spoke are identified. The following table summarizes a full year’s worth of transactions using pivot tables:
Using Pivot tables you can slice the data a number of ways:
You can even see what reps are more effective at selling specific Moneywheel spokes:
This type of data can help you identify who are the best sales performers and where they are succeeding the most. You can leverage that information to help lower performing reps increase their sales.
You can also use Moneywheel data to plan demand generation requirements. Most organizations establish sales targets each year by region, sales manager, and sales rep. You can take the target number and break it down by Moneywheel category and spoke based on historical performance. The process begins by establishing rough targets for sales by Moneywheel category and spoke:
The next step is to develop an estimate of the demand generation requirements to hit these targets. You first begin by estimating conversion rates between each stage in your sales funnel:
Every company’s sales funnel is unique and has its own conversion rates between stages in the sales process. Once you have established the conversion rates, you can reverse engineer what types of demand you will need for each part of the Moneywheel:
This information can serve as the foundation of your design for the years marketing and sales campaigns. You can also use it to check the reasonableness of achieving specific sales targets.
The Moneywheel is not a magic bullet that will solve all of your marketing and sales challenges. It is a tool, however, that helps you better understand the dynamics of sales transactions. It also helps you plan, from a fact based perspective, effective marketing and sales campains.
If you are interested a copy of the spreadsheet containing the models and analyses for this post is available for download below.
MoneyWheel Spreadsheet