Youâ€™ve just started getting leads coming in, or perhaps youâ€™ve set all your marketing in place to turn the lead spigot on. But, what are you going to do with those new leads? Just because someone requested more information or a demo doesnâ€™t mean theyâ€™re ready to sign on the dotted line. The steps and processes you take from this point on can be the difference between stellar customer conversion ratesâ€¦or just okay ones.
This is where a sales funnel comes in. As a key framework for building effective sales teams, sales funnels help organizations cleanly see how potential customers behave while considering making a purchase and therefore offer clear processes for what must happen to increase the chances of a customer conversion.
What Is A Sales Funnel
A sales funnel is the visualization of the path a prospect takes to purchase a product or service. Unlike customer journey mapping, which is leveraged more in B2C contexts, sales funnels are used by B2B sales teams to delineate the key steps that must happen for someone to make a purchase, and therefore help inform the activities and behaviors sales team members should take to support a prospectâ€™s purchase decision.
By developing a structured sales funnel for your business, youâ€™ll not only help you and your team sell better but youâ€™ll also give your organization a way to measure sales performance and identify opportunities to improve the sales experience.
The Common Stages In The Sales Funnel
Sales funnels are in place to help move prospects towards a sale. As youâ€™ll see from the discrete stages below, each stage provides black and white clarity around where a prospect is in the buying cycle and helps your team determine the best activities to move closer to being a customer.
Marketing Qualified Lead
Definition: Someone considered more likely to become a customer than other individuals or contacts. This is often triggered by someone requesting a trial, demo, or more product information. Or, it can be determined by a certain level of engagement with your business or brand (e.g. visited a pricing page on your website).
What Do You Do Next: Just because someone has converted to being an MQL doesnâ€™t mean theyâ€™re a good customer for your business. Maybe they have needs your product or service doesnâ€™t address. Maybe their budget is too low. Once someone has rung your proverbial doorbell, the next step is to see if they meet the minimum criteria to do business with you. Develop qualification criteria, which are the minimum thresholds a prospect needs to meet to continue with a conversation. Typical qualification criteria can include:
Specific problem being addressed
Title or role of the individual involved in the buying process
Existing software/solutions in use
A good way to develop criteria is to look at your existing customers and assess what attributes make some customers good and others less valuable to your business. Youâ€™ll likely start seeing trends that will help you develop strong qualifiers.
Sales Qualified Lead
Definition: A prospect that has completed the qualification criteria and has been found to meet the minimum thresholds needed to be a customer.
What Do You Do Next: At this stage, youâ€™re working with a prospect that you would likely want to have as a customerâ€¦but they may not be sure they want to buy your product or service just yet. This means itâ€™s time to work on convincing them to consider you further. This can mean sharing additional information about your product or service, or encouraging them to do more in depth evaluations. Behaviors at this stage can include:
Sharing installation documentation
Distributing case studies to show product use cases
Scheduling follow-up calls with prospectâ€™s managers
Inviting them to complete an evaluation criteria matrix
Definition: A prospect is actively kicking the tires, defined as bringing in other stakeholders, requesting product and software specs, or engaging in additional activities that indicate they are investing time and resources in making additional evaluations.
What Do You Do Next: This is the opportunity to get a prospect and fellow colleagues excited about what your product can really offer. Youâ€™re aiming to get broader buy-in to consider product evaluation as well as start learning more about the prospectâ€™s buying process. Typical activities youâ€™d do at this stage include:
Creating custom installation specs
Developing tailored product demos
Syncing with buyer/procurement personnel
Trial / Evaluation
Definition: The prospect has begun an active demo of your product or service.
What Do You Do Next: This is the stage where prospects will really be able to test drive your product and assess if itâ€™s better than their current solution or your competitorsâ€™ offerings. As a result, this is the time to make sure that theyâ€™re getting the most out of their experience and can easily see the value theyâ€™ll enjoy by buying your solution. Common activities during this stage include:
Customizing the software to their specs
Scheduling follow-up calls to make sure theyâ€™re using the most valuable features
Sharing product marketing to help them get the most out of the solution
Purchasing / Procurement
Definition: A non-enforceable commitment has been made to make a purchase. This can include being told by phone or email that they are planning to buy.
What Do You Do Next: Youâ€™re almost at the finish line, so now is the time to dot the iâ€™s and cross the tâ€™s to make the sale happen. Depending on the size of the organization youâ€™re looking to sell into, this can be a quick stage or a lengthy drawn out process. As a result, the typical activities in this stage can be quite varied, and can include:
Sending online forms to capture credit card info
Completing new vendor paperwork
Signing Master Service Agreements (MSAs)
Definition: The prospect has paid, or has made an enforceable commitment to pay. This could mean a credit card number has been received, a purchase order (PO) has been submitted, or youâ€™ve received some other black and white signal that payment is happening.
What Do You Do Next: Keep them! Itâ€™s not enough to just get someone to buy. Now comes the long-term work of retaining your shiny new customer. We wonâ€™t go into this here but thereâ€™s a host of work that goes into keep customers satisfied, including regular check-in calls, ensuring that theyâ€™re continuing to leverage new features youâ€™ve released, and assessing short- and long-term business goals so you can help customers meet their goals.
How To Tailor The Sales Funnel To Your Business
Of course, no sales funnel offers a one-size fits all approach. Youâ€™ll still need to do several things to make the funnel fit to your organizationâ€¦
Customize It: We laid out a fairly standard sales funnel above. But now itâ€™s time to customize it. Youâ€™ll need to evaluate your unique business and the must-happen steps any prospect takes before converting to being a customer. Youâ€™ll also want to explore past customer sales experiences. Look at the ones that went smoothly and the ones that didnâ€™t. What made them different?
By evaluating your unique business needs and comparing them to the standard sales funnel we just mapped out, youâ€™ll be able to develop a custom funnel that aligns properly with your organization.
Measure It: As weâ€™ve spoken about in the past, building a strong backend marketing and sales operation means being able to measure exactly what is happening with the day-to-day activities that ultimately impact business performance. Your sales funnel is no exception. Being able to measure the number of prospects in each life stage and how well you convert prospects to new life stages tells you not just how effective your sales team is but also where you need to focus your attention to improve on sales performance.
Improve Sales Activities: Once youâ€™ve created your custom funnel and youâ€™ve begun measuring whatâ€™s actually happening, itâ€™s time to make things better! Pinpoint areas where you have weak conversion rates between life stages, or where you have limited processes or collateral oriented to moving a prospect to the next step. If youâ€™ve gotten someone to enter the funnel, the onus is now on you to get the right processes in place to make them excited to buy.