A sales funnel is the marketing term for the journey potential customers have to go through on the way to purchase cycle. There are several stages to a sales funnel, usually known as the top, middle, and bottom of the funnel, although these steps may vary depending on a company’s sales model.
Any entrepreneur knows the pain of just missing a sale. After weeks of pitches and demos, and discussion the prospect drops out of the sales funnel without buying.
It happens in the sales process. But it happens less often when you have the correct sales funnel management help. Many small business sales funnels are more like sieves, with holes left by patched-together spreadsheets, sticky notes, missed appointments and forgotten follow-ups. There’s a better way. Marketing and Sales automation software can plug those sales funnel holes and turn near-misses into sales.
You kickoff with a lot of potential customers who may have heard of your product or service. A smaller part of that group (customers) may want to learn more, and a smaller part of that customer may actually contact you. As the process go ahead, you’re talking to fewer prospects who are more interested, until you end up with the prospect who become customers. Chart it out, and it looks like a funnel. It’s typically broken down into three stages:
- Awareness (Top-of-the funnel): Buyer becomes aware of their problem or issue. They look for solutions, discover products or services, and pursue opportunities.
- Consideration (Middle-of-the funnel): Buyer evaluates different products to address challenges, and engages with sellers.
- Decision (Bottom-of-the funnel): Buyer decides on the solution for his needs.
Components Of A Sales Funnel:
A sales funnel can be a boon for you, but sometimes it can be a bane as well. A lead looking to purchase your product or service enters the sales funnel but may or may not pass through each sales funnel stage. A well designed and proper sales funnel can simplify the entire process and help you to filter leads according to the level they are at. This will help you to know what to communicate to which lead at what point.
While each business has its own way of managing the sales process and the buyer journey, the number and name of each stage may vary based on business type and sales process. However, if the funnel becomes needlessly lengthy and complicated, that would mean that there is bound to be lead leakage. Let’s look at how sales teams approach leads in each stage of a well-defined sales funnel, and why conversion rates matter at each stage.
1. Top of the sales funnel: Marketing
At this stage, your potential customers are facing a challenge and are researching and learning more about it. They are looking for a CRM solution and are discovering products and services to solve their pain areas.
They may have either discovered your solution via advertisements, social media, blog posts, etc and are in touch with your sales people. Or, your sales rep has reached out to the prospects through cold outreach channels, i.e, personalized cold email or on a cold call.
In this stage, your sales reps are only trying to educate your prospects about their problem and are not pushing for a sale. Marketing material such as blog posts, videos, whitepapers, and infographics can help them be more informed about the topics that matter to them.
Once your sales reps get in touch with prospects, they become leads in the CRM system. It’s time to move them to the next stage—discovery—by either getting on a call with them or meeting them face-to-face to ask them questions to move them further down the sales funnel.
2. Middle of the sales funnel: Sales Process (Qualify)
At this stage, leads understand their problem and are sincerely looking out for solutions that can help them to fix the issue and achieve their goals. Your sales team initiate a discovery call, client meeting, or product demo with the prospect to identify their pain areas and explain to them how your solution can help solve the prospect’s challenges. It is this stage that it’s crucial for sales teams to impress a lead to convert.
There are various sales qualification techniques like CHAMP, MEDDIC, GPCT, BANT, and more but it’s best to choose a framework that best suits your customer journey. The most common and simple sales qualification framework used by many companies is BANT— Budget, Authority, Need, and Timeline. Only leads that meet the qualification criteria become potential opportunities and trickle down the funnel. Pushing leads without proper qualification into the sales funnel will clog your sales pipeline, and may affect lead to revenue.
Marketing content such as comprehensive guides, competitor comparisons, ebooks, how-to series videos tutorials, blogs and use cases will help leads at this stage. The lead discovers more about your products and services and the benefits of working with you. If they determine you’re right for their needs will solve their challenges, they proceed to the next stage and are considered an opportunity.
3. Bottom of the sales funnel: Decision and close (Customers)
At this stage, your lead has made a knowledgeable decision to purchase your product. In turn, your sales reps present proposals, terms of contract, and other agreements to successfully win their business. The outcome of the opportunity may either way or loss; depending on the prospect’s interests at this stage. Although sales team set the table for success—handling sales objections and negotiations, when it comes to closing the deal, win rates are quite unpredictable.
If the deal is won, your sales reps move the deal to the won stage in the pipeline and begin onboarding the new customer. Some leads may slip through the cracks for reasons that are beyond the control of your sales techniques, like budget constraints. It is important to keep a record of the lost leads too so you can track the reasons why you lost them, and nurture those prospects in the future to win back their business and build relationships. The content that will help them make the purchasing decision are feature comparisons, product video, competitor analysis, etc.
Sales funnel management
The sales funnel simply represents how leads pass through your sales process from start to close. It’s only a visual representation of the numbers game in the form of a funnel. If you analyze the number of leads who enter your funnel and the number who convert to customers, you’ll probably find that there’s a huge dip. Sometimes prospect customers drop out of the sides of the sales funnel when their needs mis-match your product or services. While it’s nearly impossible to retain every prospect who enters your sales funnel, it’s important for your sales team to make an effort to retain the ones who are ready to buy.
But, given the volume of leads that fill your funnel, sales reps have a tough time converting leads into customers because they cannot discern the hot from the cold. This results in unqualified hot leads in the top of the funnel that either drop out due to slow response times, or remain stuck in the middle of the funnel, eventually becoming cold leads. For a business, this means missing out on golden opportunities. And, that’s just one leak. There are more ways you lose leads in the funnel.
So, how can you spot and stop the leaks to take advantage of all the potential revenue in your funnel? Make use of a Customer Relationship Management (CRM) Software solution. You can qualify leads, track their activity at every stage of the buyer journey, and follow-up automatically at the right time without a miss.
Adopting a CRM software positively impacts sales teams’ performance. However, most users fail to realize is that the CRM system is not just a customer database; it’s also the most beneficial tool for managing the sales funnel and pipeline. CRM software helps you define your sales process, identify leaks in the sales-funnel, and streamline the conversion process to bring leads down to the bottom of the sales funnel.
Benefits of having a sales funnel:
An efficient sales funnel can be very beneficial to your business and help you achieve your sales goals. Here are some of the major benefits that I can think of.
- Allows you to disregard leads that do not have value to you
- Help and guide marketers to engage and nurture leads based on which stage they are in the funnel
- With an accurate sales funnels, it will help you to forecast sales for the next month, quarter or sometimes for a year
- Empowers the sales team to be more focused on their targets, and makes the entire process transparent.
Best practices to keep in mind:
- Track Movement of your leads through the funnel – CRM will help you to know where each lead is in the sales funnel. In this way, you will get to know how long it will take for the leads to move through the system and what are the factors that are helping to convert the leads.
- Ensure that your sales cycle is not too long – Longer sales cycles are not good enough in the long run and it might result in the leakage of the lead over a period of time. So, it is very important to measure the average time that it will take to close the deal and try to stick to that timeline.
- Set clear and concise goals – Before you start building your sales funnel, know first why you are doing this. Do you want to double or increase your revenue? Do you want to just target a specific audience? Or is it something else that is all together? You need to know why the sales funnel is set to make the best use of it.
- Talk different languages – Leads in the various stages of the sales funnel would like to want different things. You cannot talk about all the features of your product in each and every stage of the sales funnel. You need to try and educate the customers during the initial stages using some e-books or some white sheets, you can send demos of the products to the lead opportunities and also the pricing to the leads who are considering you.
- Measure your progress – Constantly measure all the results at each and every stage of the sales funnel. Note down how many sales are coming in and what is driving the sales for you. This way you will get to know what is working and also why.
Primary sales funnel metrics to track using a great Sales CRM
Opportunity count across stages
This is exactly what it sounds like—the total number of opportunities across each stage of your sales funnel. Here, you’ll want to ensure that you have a good balance of leads in each stage of your funnel. If you notice an excessive amount of lead in any one stage, this might mean that your reps are struggling to move them down the funnel, which is cause for concern.
Time spent on each stage
Intuitively speaking, it makes sense to try and minimize the time spent on each stage, so that you shorten the length of your average sales cycle. That said, remind your sales reps to exercise discretion when doing this—they shouldn’t rush their leads into the next stage of the process if their lead isn’t ready to move on. Remember: no one likes a sales rep who’s too pushy or aggressive, and moving your lead along too quickly can ultimately backfire on you.
Lead velocity rate
This metric refers to the growth in your qualified leads, month on month, and it measures how many leads you’re currently working on converting to customers. This metric is a real-time indicator of growth and sales revenue, so if you have a high lead velocity rate, this means that you can expect high sales revenue for the months ahead.
Measuring how well your sales team is converting leads is imperative to determine the quality of leads and individual sales rep’s performance. With a CRM software, you can create reports to know how your leads are converting through different stages by sales reps, and by campaign too. Analyzing which leads are moving down the funnel and converting allows you to plan better conversion strategies.
Smartly convert leads to sales. Use SalesBabu CRM for your sales funnel management
SalesBabu CRM is a full-fledged online CRM software designed for sales teams to manage leads from start to close. It handles every step of the sales funnel allowing you to focus on the right leads at the right time. You get complete visibility into your funnel—from real-time insights on lead behavior to how quickly your sales team convert leads to sales. SalesBabu CRM comes with built-in email, MIS reporting and you can integrate any third party application. This means all of your customer data is accessible in one central place. To add to that, you can automate tasks, create your sales pipeline, and schedule sales campaigns. Get your FREE DEMO and discover new ways to convert more leads into customers.