Updated: Apr 23, 2020
If you run a business or are responsible for business development or business growth, or work in marketing and/or sales, you probably have heard of, work with, or have even created your own sales funnel to support results.
Success with sales funnels comes down to two things:
understanding the mechanics of a sales funnel
understanding how to fill/move individuals through your sales funnel
Sales funnels that achieve results begin with a well-designed sales funnel, followed by a clear understanding of how to use the sales funnel to support your commercial goals.
If you’re curious as to what a solid sales funnel looks and sounds like, where it originates from and how it systematically unfolds to support the commercials of a business, here’s everything you need to know about creating a Sales Funnel.
Sales Funnel: The Mechanics of How it Works
A sales funnel is nothing more than a well-oiled process that clearly understands the three core phases that prospects undergo: Prospect, Marketing Qualified Lead (MQL), Sales Qualified Lead (SQL). Understanding how each phase differs, how each phase supports each other, and what qualifies an individual to belong to one phase over the other is key to having an effective sales funnel.
Here are four things to keep straight about Sales Funnels
1. One sales funnel per target market is required!
Using one sale funnel for multiple target markets yields all sorts of time/budget/resource waste. One sale funnel per target market segment is the only way to go when you’re after results that support commercial goals.
If you’re not sure what a target market is, you can find out all you need here in this article. But for the purpose of what we’re doing here, we’ll use the example of Academics, Corporates and NGOs. These would warrant 3 unique sales funnels because they are 3 distinct target markets.
2. Your sales funnel is nicely divided into thirds for a damn good reason
Prospecting: The top third of the funnel exists to bring prospects into the fold for the purpose of converting those individuals into a Marketing Qualified Lead. Content and activity for the top third of your funnel (Marketing Collateral) is designed exclusively for the target market segment and reflects their situation, opportunity, the challenge in ways that educate, inspire, and invite the target market segment to contribute their own genius on the subject.
Marketing Qualified Leads: The middle third of the funnel exists to develop marketing qualified leads to the degree that they enter into the sales qualified lead space. The middle of your funnel is where marketing wraps up its activity and sales begins to take over with its own activity. Content and collateral here tend to be more product/service-driven: Case Studies, Tech Specs, Demos.
Sales Qualified Leads: The bottom third of the funnel exists to support the sales transaction. Things like; Statements of Work, proposals, terms of engagement, letters of intent, letters of engagement.
3. To go from cold to qualified marketing lead takes ≤ 16 weeks
That means you have identified the individuals within your target market and invited them to participate in the prospecting stage. You have engaged them well enough in the prospecting stage to move them further along your sales funnel in order for them to be considered a Marketing Qualified Lead.
Once they have been sufficiently qualified, they are handed over to Sales who will have a few steps of their own to cover before considering the Marketing Qualified Lead to be a Sales Qualified Lead.
4. The maths to calculate how many in the top vs how many out the bottom
A good rule of thumb is 1:20!
For every 20 perfect for you individuals that you engage inside your Target Market, one will buy you at the yearly average transactional price. 20 in the top. on out bottom.
One size does not fit all, and this is a good place to start before you finesse it to make it right for you.
Design a Sales Funnel that works, a TABTF Guide
You have identified the Target Market(s) that have the highest probability of conversion that most closely supports the commercial goals of the organization.
For example, 100k in new revenue over the next 12 months, based on 10 clients @ 10k sale each would warrant us focusing on a target market of Corporate firms with 1 – 250 employees in the Financial Services Sector.
You have committed to the Ideal Client Profile that best represents one or more decision-makers involved in the buying process. This is typically determined by the Job Title of the person you are zeroing in on. For example, Head of ________ – Head of Compliance, Head of Risk. Having the 1-250 sized firm, in the FS sector with the Job Title of the person agreed, will allow you to easily engage the individual in the prospecting phase of your funnel with minimal resistance.
Target Market / Ideal client Profile Market Research is really more of the Target Market, Ideal Client Profile activity, but it warrants its own line. Market Research as it pertains to the Target Market and the Ideal Client Profile will reveal how best to disrupt this market.
The Problem You Solve! Alas, we can’t disrupt based on the Target Market alone – we must also have full clarity of what we want to be known for. What problem specifically we solve for our clients. This lens on you/your firm, alongside the lens on the target market/ideal client profile combined, result in 1 or 2 viable marketing options. Not 12.
The Disruption that intersects the three is the top third of your funnel activity: Target Market insights, Ideal Client Profile insights and the very problem (there could be up to 3 of those) you want to solve is where your disruptive genius lay.
That disruptive genius thus becomes the top third of your funnel activity to facilitate prospecting… individuals who will be qualified in a short set of steps as being Marketing Qualified Leads or not.
Tactical Marketing Lens:
The middle of the funnel is an activity that looks a lot like your trial or demo, it’s a splintered piece of your product/service that is used in the middle of the funnel to convert the prospect into a qualified marketing lead. This middle of the funnel activity is where you leverage content that explains, supports and highlights your product/service.
Tactical Sales Lens:
The bottom third of the funnel is (technical) sales exchange. Included in this section is an activity that includes proofs of concept, pilots, in-depth demos, and a few workshops. Further down this third part of the funnel, is all of the activity that supports the transaction itself.
Templated documents such as Terms of Business, Letter of Engagement, Project Plans, Statements of Work. And, finally, the parts of the transaction that facilitate, stimulate and encourage referrals and advocacy.
Too many businesses have not properly invested the time to clearly define what it means to be a prospect, a marketing lead, and/or a sales lead. Add a layer of qualified and the numbers of businesses that have invested time in this, go down 80%.
A sales funnel has 3 distinct phases to move someone through – prospecting, marketing, sales. The first third of your funnel is all about the target market-disrupting that segment in a way that is hyper-relevant to them.
This is not the time for your product brochures, sales collateral. Too soon. Marketing is really about delivering qualified leads on the doorstep of a trial of sorts. Sales are about optimizing that trial to have the highest probability of conversion.