Does your (sales) funnel have flow? Learn data-driven strategies that support each stage of the sales funnel, along with key performance indicators (KPIs).
What is a Sales Funnel?
The traditional sales funnel is a stage-based approach to turning prospective leads into buyers. Picture a real funnel into which you pour liquid; capturing a lot of material on top in order to direct it into a narrow, specified location at the bottom. This is a perfect analogy to what actually occurs in the sales process, where information starts out broad in the beginning and gets incredibly granular towards the end.
Implementing a sales funnel helps business development leaders understand its entire sales cycle. Through consistent processes, leaders derive quick insights on how its sales organization attacks their market.
In turn, small insights inherently uncover areas for incremental improvements within the process. This goes for everything from tactical approaches to business development research to the underlying characteristics that make said prospects qualified enough to engage in the first place. The revealed trends, both good and bad, equip leaders to identify effective tactics and expose inefficiencies.
Yet, despite obvious benefits, 68% of businesses fail to clearly identify its sales funnels, let alone measure success. Ultimately, the absence of proper guidelines for engaging leads and prospects makes it difficult, if not impossible, to clearly understand the levers that determine what turns them into actual paying customers.
For most organizations, the problems behind launching a sales funnel are central to data management. Think about how much contact and account data your sales team needs just to prospect. Then, from a managerial perspective, think about whether the actual activity and outreach happening from the sales floor is captured to measure effectiveness. As valuable as the sales funnel is, it’s only useful when paired with reliable data pertaining to each stage of the sales cycle.
Tunnel Vision: The sales funnel in the age of buyer empowerment
In our current digital landscape, change has a way of accelerating trends. The buyer’s journey is no exception to this rule. The information age has led to a dream state for procurement professionals. Similarly, buying habits change at a rate that have made tactics, once considered effective just five years ago, outdated. And such, what was once a straight path down, the sales funnel is now more of a winding road.
Bottom-line: a one-size-fits all approach to defining a B2B sales funnel isn’t likely to result in much success.
Today, every buyer is different. But the one thing that remains consistent among them is that they start their buyer’s journey with an online search.
Consider the following statistics:
- 68% of B2B customers prefer to research independently online (source)
- 60% of buyers would rather not communicate with sales reps as their primary information source (source)
- 71% of buyers begin with a generic search query (source)
- 73% of millennial workers are involved in decisions to purchase products or services for their companies (source)
- 84% of CEOs and VPs use social media to make purchasing decisions (source)
- 67% of the buyer’s journey is now done digitally (source)
Gone are the days when the salesperson can act as a gatekeeper of information, forcing the buyer to have to meet with them throughout the information-gathering stage. Prospects have access to more information than ever. B2B procurement professionals and buying groups have an endless portal to which to conduct a huge amount of research before making a purchase. And make no mistake — buyers prefer self-service.
With business development professionals seemingly in less control over the funnel, forward-thinking organizations are creating data-driven, go-to-market frameworks, and maximizing sales through accelerated, hyper-targeted outreach to the right prospects, at the right time.
Related infographic: Ultimate Guide for Sales Outreach in 2020!
Stages of a Sales Funnel: Two Perspectives
How data can help guide prospects through the sales funnel
While typically depicted as a simple four step visual, modern sales professionals should be simultaneously thinking about two different funnels in various snapshots that account for the different perspectives of the buyer and the seller, respectively.
1. Awareness Stage
At this stage, potential customers have diagnosed pain points and are beginning to conduct preliminary research about available solutions in the marketplace.
As the widest section of the funnel, the main purpose of this stage is to improve the visibility of a brand and demonstrate expertise by accommodating prospects value-centric, top of funnel resources. The focus is visibility and domain authority.
For business development professionals, moving a prospect from the Awareness stage to Interest stage requires sales intelligence that goes beyond standard firmographic data points, like management level, job function, alongside firmographic classification, like company size.
Instead, deeper insights about a target account are required:
- Does the organization outsource key components of its business?
- What technologies does the organization use?
- How many employees sit in the particular job function a solution supports?
- Does the organization have multiple locations?
Access to sales intelligence will inherently categorize business dependencies, pain points, and ultimately help establish segments. Its made up of the following:
- Total Addressable Market (TAM): The entire spectrum of prospective buyers who could potentially use a product — even the outliers. Once you’ve calculated your TAM, you can start to narrow it down.
- Ideal Customer Profiles (ICPs): An ICP is a categorical description of a potential buyer that would benefit significantly from an offering. The micro-segment inside a TAM represent prospective buyers that are likely to hold the high Customer Lifetime Value (CLV).
- Buyer Personas: The average size of a B2B purchasing committee is quickly approaching double digits. Needless to say, while accounts buy, ultimately, people decide. And just like an ICP can be segmented into various cohorts, go-to-market teams should understand how to engage various stakeholders, influencers, decision makers and – gasp – gatekeepers involved in the purchasing process. Keep in mind, each may represent a different department, with various — or even competing — agendas.
2. Interest Stage
At this stage, the prospect is actively looking for solutions to improve business outcomes. Understanding just how active a prospect is can be measured through third-party intent data, such as surges in online search and consumption of content related to specific topics related to a product or service.
Conversely, first-party data reflects activity directly in response to internal sales and marketing efforts, such as surge in anonymous traffic to web domains from specific companies, and the ability to capture and map behavior to conversions such as downloading an eBook or signing up for a webinar.
Remember, at this point in the funnel, a buyer is already aware and actively looking for a solution in the marketplace. The interest stage is all about driving the continued interest of a solution. Success at this stage requires go-to-market teams to decipher which channels and messaging turns prospects into customers.
Understanding these conversion points is imperative because it can determine how and when salespeople should intervene.
In order to optimize sales activities during the interest stage, sales reps should understand the data that qualified the lead in the first place. In other words, the lead is qualified and going through an education process, heavily rooted in how to buy. Get in their head with the following data-driven insights:
- Intent data: When it comes to intent data you can analyze either internal or external.
- Internal intent data refers to the campaigns a company is running, and who is responding to them. What actions has a prospect taken on your company website? What kind of content are they downloading?
- External data, on the other hand, refers to the relevant topics a company is researching online.
- Social Media Data: Another kind of data that often gets neglected is social media behavior. Has your prospect followed you on social channels? What content are they engaging with and how can you then use that information to tailor content that matches their interests?
Related blog: What is intent data?
3. Consideration Stage
In the consideration stage, leads are officially converted to sales qualified opportunities and are viewed as prospective customers. They have a clear understanding of what their problem is, the solutions that could solve it, and what their budgets are.
Data is imperative to progressing through the consideration stage because it’s when sales is finally actively engaged with a prospect and identified an open opportunity. The heavy lifting happens here. So the more data they can get a business development can get their hands on, the better prepared they can be to guide qualified leads through this process.
Deeper Company org charts and intelligence
You may have done top of funnel outreach to various buyer personas at the outset of the qualification process. More homework is often required at the consideration stage.
It’s not just understanding the challenges the various personas within a sales opportunity face, but rather, conveying the tangible business value a solution can offer to alleviate those specific challenges and achieve desired results.
The light at the end of the sales funnel tunnel — at this final stage of the funnel, qualified leads know everything there is to know about their pain point, the best solution for the problem, and are ready to select the provider to buy from. At the consideration stage, questions are mostly vendor-driven, as they are trying to decide what’s going to give them the best bang for their buck.
For business development professionals, the bottom of the funnel is when they must reaffirm trust and reinforce the fact their solution can in fact solve a prospect’s problem better than competitors in the marketplace. Regardless of outcome, with sound data-driven practices, your funnel can improve exponentially through the following:
- Product Data: As prospects consider purchasing, an implementation plan will be discussed. Here is where prospects will start asking the nitty gritty questions, trying to find holes in the solution. Extensive product knowledge is a given for business development professionals, but here is where you can identify blind spots hidden further up the funnel.
- Final Proof of Concept Content: While moving prospects from the top of the funnel requires content, the bottom funnel should take the same approach — with even more hyper-targeted messaging. Presumably, the sales side will have a sound understanding of what the prospect needs. Forward-thinking business development teams marry fact finding exercises with proof of concept content to underscore how its solution helps the prospect.
- Feedback Loops: The decision stage is when organizations must take the time to synthesize data amassed at the preceding stages of the funnel in order to recognize trends that can influence future performance. By connecting insights from closed won and closed lost sales, you can 1) identify similar accounts to go after and 2) recognize what led to a closed loss decision.
Funneling Success: Using KPIs to measure effectiveness of the funnel
New ideas, strategies, or campaigns often fail when there are no efforts made to actually track how well they impact overall quota attainment — and the sales funnel is no different.
While the funnel is important to understand, it’s even more important to recognize if it’s working or not. That is, are prospects moving through it, or do they get stuck somewhere in the middle and fizzle out?
What are key ways to track sales effectiveness at every stage of the funnel?
Regardless of tracking source, activity metrics quickly provide sales leaders an understanding of how much work it requires a business development team to generate revenue:
- Total Unique Prospects Worked → Connections/replies made: How many prospects do you have to reach out to in order to make a connection?
- Total Connections → Demos Created: How many connections does it take for one of them to ask for a demo?
- Demos Scheduled → Demos Completed: How many demos that were scheduled actually happened, in other words, what were the quality of demos booked?
- Demos Completed → Pipeline Created: How many demos completed resulted in someone moving into the sales pipeline?
- Pipeline Created → Closed Won: How many prospects who entered the sales funnel resulted in a closed won sale?
Sales & Marketing Alignment
Alignment between sales and marketing is critical to the success of a sales funnel. What does good look like? Baseline metrics can give an organization a clear picture:
- Marketing Qualified Leads→Sales Accepted Lead: Marketing Qualified Leads (MQLs) are leads that marketing deems are qualified and ready to be contacted by a sales rep, based a response or multiple responses to campaigns. This could be filling in a web form or downloading an ebook. So how many MQLs are successfully converted into sales accepted leads?
- Sales Accepted Lead→Sales Qualified Lead: Sales Accepted Leads (SALs) are MQLs that have been passed on to sales reps, who should contact them as high-priority leads and convert to a business opportunity. The question then becomes how many SALs turn into sales qualified leads (SQLs)?
- Sales Qualified Opportunity→Closed Won/loss: Sales qualified leads (SQLs) are prospects that have been contacted by a sales rep to explore their interest and actual capability to purchase. Leads become sales qualified once they have a clear idea of what they need in a solution, know their budget, and have been nurtured by marketing and sales. Once they’ve been qualified, they can move down the sales funnel, eventually either closing a deal, or not. How many SQLs end up making a purchasing decision?
Outbound Sales KPIs
Outbound sales refers to the process of initiating customer engagement without leads having expressed any kind of prior interest — so your classic cold calling, mass email kind of outreach.
- Number of accounts contacted→Total Targeted Universe: The number of accounts contacted refers to the total number of companies that our outbound SDRs have prospected to. One company might have multiple points of contact. How many accounts contacted resulted in the right people getting informed about the product?
- Number of accounts engaged→Total Number of Accounts: The total number of companies that have responded to our outreach. It’s critical that the SDR and AE teams agree on what level of contact is required before the account is converted to a sales opportunity. At this stage, many companies become obsessed with tracking sales activities, especially if they’re doing outbound sales. While there is value in tracking activities like the number of calls made or emails sent, you can’t hang your hat on a seventeen-part cadence and having your SDRs call it 17 activities. Your SDR leaders need to be able to put these key inputs in the context of driving the right outcomes.
- Number of accounts engaged→Total Pipeline Created: Based on the number of accounts engaged, how many actually entered the sales pipeline?
- Total Pipeline Created→To Closed: Of the accounts that entered the pipeline, how many were closed won or closed lost?
Related blog: 3 Key Sales Productivity Metrics
How do I create a sales funnel?
Creating your own sales funnel entails getting to know your audience, and then creating informative and engaging content that will demonstrate the value of your product/service.
Below are some steps you can take to start developing a sales funnel that works for your company.
1. Research your audience
Casting a wide net and hoping for the best is a marketing tactic of the past. Though the top of the funnel should be wide and aimed at attracting a range of potential customers, audience research is imperative to success at the bottom of the funnel.
When you understand who your audience is, you learn about their pain points, interests, expectations, and social media behaviors — all things that will determine how you position your product and how you’ll address their pain points.
2. Create buyer personas
Everyone buys for a different reason, so creating several accurate personas based on:
- Why they want to buy?
- How they can benefit from the product/service?
- How they can use the product/service?
- What will motivate them to buy based on their pain points?
When you understand who your buyers are, you can create personalized and relevant content that caters to individuals’ specific needs and concerns.
3. Engage potential leads within your market
Getting audience attention and actually engaging them with content are two different feats. The ultimate goal of engagement is to inform them about how the product/service will benefit them and their company and to get them interested in your brand. You can engage your audience in a host of different ways, including:
- Blog posts: Highlight your domain expertise by sharing internal and external content related to your messaging!
- Case studies: Show, don’t tell! Use relevant customer testimonials to provide proof of concept to prospects.
- Promoting content on social media: Stay in front of prospects by not only staying active, but providing valuable exchanges via social media.
4. Convert leads
The last stage of the funnel is all about converting leads into paying customers. In order to optimize this step, you should make the actual purchasing process easy and accessible. Additionally, after leads convert to customers, make sure to continue nurturing those relationships to ensure the long term satisfaction of your customers.
What tools are people using for sales funnels?
In order to get people into the sales funnel in the first place, business development teams have to generate a healthy amount of leads. And as well all know, leads don’t just appear out of nowhere.
Rather, they are qualified through outbound prospecting efforts or attracted by marketers who use a host of tools in an effective and strategic way. Below are some of the most important tools that salespeople and marketers can use to generate leads and drive conversions.
1. Sales Intelligence
Often conflated with prospect or lead lists, sales intelligence combines advanced prospect data with real-time buying signals that empower business development teams to connect with the right buyer, at the right time. Included data provided by sales intelligence includes:
Individual information includes data essential to B2B prospecting, including:
- Verified contact information
- Job function
- Management level
- Professional certifications
- Employment history
Insights about a target account universe, including real-time updates related to:
- Organizational reporting structure
- Product launches
- Funding rounds
- Year-to-year revenue growth
- Company initiatives
- Personnel moves
- Installed or removed technologies
- Surges in online consumption of relevant topics/keywords
Want to learn more? Visit the ZoomInfo learning hub for Sales Intelligence
2. Sales Automation
In terms of productivity, sales automation software is the sales team’s holy grail. All of those annoying tasks that sales development reps and managers have to take time out of their days to perform can be made a part of sales automation — leaving more time for prospecting and lead nurturing.
The core components commonly included in a sales automation solution include:
- Dialer capabilities
- Email service (personalized templates, automated A/B testing)
- Activity management (automatic task creation, communication logging and more)
- Multi-touch, multi-channel sales sequence builder with the following capabilities:
- Triggered based on custom needs
- Create cadences across phone and email channels
- Measure performance of sales activity
3. Customer Relationship Management (CRM)
Adoption rates of CRMs since the turn of the century have skyrocketed. As businesses grow, leadership needs to understand historical trends, current projections, and capture everything that happens in between
CRMs help marketers and salespeople track sales from the very first touchpoint with a prospect, all the way to the final sale. It’s the foundation that houses much, if not all, of the data you can use to guide prospects through the sales funnel. Using that data, salespeople can easily segment prospects, making the entire sales process easier and more effective.
4. Social Media
Social platforms are great places to grow and nurture customer relationships. And what’s more, you can track these interactions with CRM softwares. Social channels, along with Google searches, are key lead drivers. In terms of the sales funnel, social media automation is imperative to the success of the overall strategy. You can align social media posts and marketing content so that prospects receive cohesive, consistent messaging.
Gamification, or the application of game playing elements, is a great way to make marketing content fun, and forces users to engage with it. It’s a great way for sales and marketers to evaluate the level of engagement they are garnering with visitors.
People are more likely to remember content if they are actually experiencing it, and therefore gamification is a great way to generate brand awareness.
What is the difference between a marketing funnel and a sales funnel?
The terms “marketing funnel” and “sales funnel” are often used interchangeably — and for good reason. They are, essentially, the same thing. In the current sales milieu, sales support marketing strategies are permeating the industry, making sales and marketing two sides of the same coin.
A marketing funnel serves as a guide for potential customers, leading them through the entire journey and more than anything, helping prospects get to know the brand. Typically, the marketing funnel serves two purposes: lead generation and lead nurturing. Once leads have expressed interest in the product or service, they enter the sales funnel. In essence, the marketing funnel turns into the sales funnel once leads become qualified.
The biggest difference between the two is simply context. Marketing content is used to guide potential customers through the sales funnel, so the two really work in tandem to achieve one common goal: turning prospective buyers into paying customers.
Read more about moving prospects through the sales funnel!