I have heard over a number of blogs, books, and even television that the traditional sales funnel is dead, and is being replaced with a new funnel based on the customer buying process. The problem is, the new funnel has almost the same fatal flaw as the old funnel…..it ignores the other party involved in the purchasing process. It’s just too one-sided.
Take a step back when thinking about the sales funnel, and think about it in the context of the strategy/goals of the executives within the sales function. After all, the sales funnel is only supposed to serve as a tool to help sales executives achieve their strategy/goals. The strategy for most sales executives is simple: Invest in sales opportunities that drive profitable, long-term revenue. Broken down that means:
-Differentiate opportunities by their quality (Invest).
-Sell at a higher profitability.
-Create long-term relationships by selling to customers your company is strategically valuable to.
The traditional sales funnel was born in the mid 1900s from a process engineering perspective, defining all the sales activities that must take place [chronologically] in order for a sale to close. The funnel was used to coach salespeople on the activities they needed to complete in order to move a greater quantity of sales to close in less time (NOTE: this only achieves 1/3 of the above strategy). The steps vary for each company, but at a high level they are: initial contact, qualification, presentation, and close. The traditional sales-activity funnel made some sense in the mid 1900s, because the seller controlled the buying process click here.
More recently with the proliferation of things like retail chains, eCommerce, and social networking, buyers have taken full control of the purchasing process; selling is now about meeting the buyer on their terms and understanding the steps they take during their purchasing process. As I am sure you can imagine, this change made the sales-activity funnel obsolete and laid the foundation for the onslaught of the “new sales funnel” prophets who are changing the sales funnel from a selling-activity orientation to a buying-process orientation. The process varies for each segment of buyer, but at a high level the process is need/pain recognition, commitment to resolving the need/pain, evaluation of alternatives, and decision. There are several benefits to using the buying-process funnel that will boost the seller’s ability to move a greater quantity of sales to close in less time, and in some cases more profitably. To better understand specific benefits, take a look at BNET’s interview of Mark Sellers, author of “The Funnel Principal”.
What blows my mind about both of these sales funnel models is that they completely ignore the other person/company in the purchasing equation; the sales-activity based funnel completely ignores the buyer, and the buying-process funnel completely ignores the seller. Not to mention if either method is a rousing success, it only helps sales executives achieve part of their strategy! So until the sales funnel incorporates both the buyer and seller perspective, AND the process allows executives to better invest in sales opportunities that drive profitable, long-term revenue, the sales funnel will never fulfill its potential for transformative value to a company. As I am sure you can imagine (and maybe already thought of), I believe that there are three changes you can make to your sales funnel regardless of which orientation you use, that will help you invest in sales opportunities that drive profitable, long-term revenue…
-First, map the sales activities (traditional sales funnel) to the buying stages (new buying process) to create an integrated buyer/seller sales funnel. This will give you a sense of what both parties have to do to progress through the purchasing process. For example, while the buyer is discovering that they have a pain, the seller is prospecting and qualifying the opportunity to determine if they will be a profitable account. Both parties have agendas in this stage, and both must satisfy their requirements to move forward. Once you are able to map the selling activities with the buying stages, you should have a good sense of what both parties need in order to move sales through the funnel quickly. This should satisfy one piece of your strategy: Sell more.
-Second, the seller must make it the responsibility of the sales and marketing departments to put robust tools and processes in place to quickly and accurately qualify opportunities, instead of leaving it solely up to the salesperson. If your strategy is to invest, you need to know what opportunities will provide you with a greater return so you can allocate your resources appropriately; there is no better way to do this than quick qualification of opportunities. Sales should team up with marketing to quantitatively and qualitatively define the profile of an ideal prospect, an average prospect, and a terrible prospect. The data for this can be gathered from your best new business development salespeople (the best NBD sales guys are excellent at qualifying), focus group research, reverse presentations, strategic accounts, etc. Use those profiles to create a rating system that you can integrate with your CRM and sales funnel to better qualify your company’s prospects. This should satisfy three pieces of your strategy:
Differentiate opportunities by their quality (Invest); Sell at a higher profitability; Sell to customers your company is strategically valuable to (long-term).
-Third, train your salespeople to understand that they must satisfy both the buyer and the seller, and reward them for taking the steps to do so. I have a post called “Commission: Baby Steps” that talks about how paying someone only after they close a sale is absurd; what gets rewarded gets done and if you only reward your salespeople for selling, you’re going to get a lot of bad customers. Incentivize your people based on completing each step of your new buyer/seller sales process, while putting special emphasis on qualifying and closing opportunities.