Diagnose Sales Funnel Conversion Decline

Business Context

NimbusCRM sells B2B sales software through a marketing-generated lead funnel and an inside sales team. In the last quarter, marketing lead volume increased from 10,000 to 12,000 leads (+20%), but closed-won deals fell from 1,000 to 950 (-5%), raising concerns about lead quality, funnel efficiency, and sales execution.

Metric Scenario

The CRO wants to know whether the decline is caused by weaker lead quality, lower stage-to-stage conversion, slower follow-up, changes in sales capacity, or a reporting issue. Average deal size stayed flat at $12,000, so the main issue appears to be fewer leads converting into revenue. You have one week to diagnose the root cause and recommend what to fix first.

Requirements

1. Define the primary KPI you would use to evaluate funnel performance and explain why it is the right metric.
2. Decompose the lead-to-close funnel into key stages and identify where the drop likely occurred.
3. Describe how you would distinguish between volume growth from low-intent channels versus execution problems within sales.
4. Propose 3-5 hypotheses for the decline and the analyses needed to validate each.
5. Recommend concrete actions and guardrail metrics to monitor after changes are made.

Data Available