The Sales Funnel: It’s just too one-sided!
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 more.
- 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.
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.
Focusing on each of these three steps should help you to invest in sales opportunities that drive profitable, long-term revenue.
Your article expresses a very interesting point.
The concept of 1900’s selling being outdated is very appropriate. Buyers expect to see the old style and are immediately turned off unless there is an instant gain (i.e. lower price). Tomorrow’s process is a simple process but requires patience and a fair amount of investigating. In sales, we need to help the buyer understand their problems and provide the correct solutions sometimes at our cost. They rarely know the true challenges as they scramble through their “work cycle.”
While it is understood to an extent funnels, investing, and profitability, these are theoretical concepts when the sales approach is actually very practical. These same terms in practice are “solutions based selling” and “value-add,” and “ROI.” Every day, we should ask ourselves, “what can I do today to deliver my product or service better, more efficiently, more consistently that also sets us apart from competition. Your idea of marketing and sales getting closer is well said because they are integral in that equation.
Your last point about training the sales teams are something every sales management group should be considering in this environment of cuts and downsizing. It is an absolute home run because the old standard of quick selling gains gets almost only quick results, rarely long term growth. It encourages lazy selling from the sales force and degrades the value that management and marketing are investing in brand building and most importantly, its mission.
Best Regards,
Gordon Thorsby
Eric thanks I found this a thought provoking piece on a number of levels and will comment on one aspect: the sales funnel from both perspectives.
At ENS we would tend to view both selling and buying as part of a negotiation (NB NOT just the face-to-face ‘formal’ part!!!). There are different views of phases in negotiation just as there are in selling. Ours happen to be Introduction (build common ground); Differentiation (explore differences and DON’T try to solve or trade concessions!); Integration (solving) and Settlement (formalising agreements and monitoring post-agreement behaviors).
One way to address your concern about the funnel is to classify opportunities based on which phase they are in, AND carefully assessing whether the buyer’s view and the seller’s view of which phase they are in is the same!
Awesome article. I would add that the role of a sales person has dramatically changed. What you say, do, deliver is key and what your company can do say and deliver doesn’t always add up in the math!. Corp America have lost that basic principle along with keeping good employees and not making decisions based on corporate politics. You need to address this in your article.
Hi Eric, great article. I would imagine that good sales people in the past were still gauging the buying process – just implicitly. The problem with the traditional funnel is not only that it is focused on the seller’s perspective, but that the seller must assess where the buyer is at within the sales process. And a sales exec must trust the assessment. So even if we marry the selling process and the buying process, if the sales person is the only one who determines where everyone is at in the process – it may be a flawed assessment. Hence the only reason why commissions are given on closed deals only – it’s clear at that point that the buyer and seller are in fact on the same page (ideally).
I think to address that issue the new funnel must allow the customer to assess where there are at, or at least take an action that demonstrates that they agree. In solution selling there are a couple of tools sales people can use to create a custom step by step process that needs to take place in order for the deal to close. You agree on those steps with the customer and each time you finished a step you contact the customer and get them to verify that yes in fact they are on the same page. Now, ask any seals exec if they would like to have a report of both where their sales people think they are at in the deal and where the customer thinks they are at – and I bet the answer would be a resounding yes!
Eric,
Thanks for the great read. I am part of a sales organization that is railroading its players into the outdated, activity based model. Our sales force is not supported by marketing endeavors and our allocation of resources is way off base. I feel like a broken record when I voice the fact that our ability to qualify opportunities quickly is poor at best, which in turn is countered with ramping up sales activity.
We have seen a downturn in the economy which has resulted in longer sales cycles and less willingness to agree to longer contractual commitments. As such, mapping your product to the buyer’s business needs is the end all, be all to selling in a tough economy. Happy selling to all!
Nice article. A combined funnel gives me something new to wrap my head around. While I like (read love) the idea of defining ideal customers and sales opportunities that are profitable, my only concern is someone who might be a marginal customer that you would not want to pursue based on “sales potential” still might be someone you would absolutely want to connect with from a networking perspective to help connect you with other key prospects in your market.
Check out Kevin Davis’s “Getting into Your Customer’s Head: 8 Secret Roles of Selling Your Competitors Don’t Know“, which looks at the sales cycle from both the buyer’s and the seller’s perspective
Hi Eric, great article. I would imagine that good sales people in the past were still gauging the buying process – just implicitly. The problem with the traditional funnel is not only that it is focused on the seller’s perspective, but that the seller must assess where the buyer is at within the sales process. And a sales exec must trust the assessment. So even if we marry the selling process and the buying process, if the sales person is the only one who determines where everyone is at in the process – it may be a flawed assessment. Hence the only reason why commissions are given on closed deals only – it’s clear at that point that the buyer and seller are in fact on the same page (ideally).
I think to address that issue the new funnel must allow the customer to assess where there are at, or at least take an action that demonstrates that they agree. In solution selling there are a couple of tools sales people can use to create a custom step by step process that needs to take place in order for the deal to close. You agree on those steps with the customer and each time you finished a step you contact the customer and get them to verify that yes in fact they are on the same page. Now, ask any seals exec if they would like to have a report of both where their sales people think they are at in the deal and where the customer thinks they are at – and I bet the answer would be a resounding yes!
Your article expresses a very interesting point.
The concept of 1900’s selling being outdated is very appropriate. Buyers expect to see the old style and are immediately turned off unless there is an instant gain (i.e. lower price). Tomorrow’s process is a simple process but requires patience and a fair amount of investigating. In sales, we need to help the buyer understand their problems and provide the correct solutions sometimes at our cost. They rarely know the true challenges as they scramble through their “work cycle.”
While it is understood to an extent funnels, investing, and profitability, these are theoretical concepts when the sales approach is actually very practical. These same terms in practice are “solutions based selling” and “value-add,” and “ROI.” Every day, we should ask ourselves, “what can I do today to deliver my product or service better, more efficiently, more consistently that also sets us apart from competition. Your idea of marketing and sales getting closer is well said because they are integral in that equation.
Your last point about training the sales teams are something every sales management group should be considering in this environment of cuts and downsizing. It is an absolute home run because the old standard of quick selling gains gets almost only quick results, rarely long term growth. It encourages lazy selling from the sales force and degrades the value that management and marketing are investing in brand building and most importantly, its mission.
Best Regards,
Gordon Thorsby
Hi Eric, great article. I would imagine that good sales people in the past were still gauging the buying process – just implicitly. The problem with the traditional funnel is not only that it is focused on the seller’s perspective, but that the seller must assess where the buyer is at within the sales process. And a sales exec must trust the assessment. So even if we marry the selling process and the buying process, if the sales person is the only one who determines where everyone is at in the process – it may be a flawed assessment. Hence the only reason why commissions are given on closed deals only – it’s clear at that point that the buyer and seller are in fact on the same page (ideally).
I think to address that issue the new funnel must allow the customer to assess where there are at, or at least take an action that demonstrates that they agree. In solution selling there are a couple of tools sales people can use to create a custom step by step process that needs to take place in order for the deal to close. You agree on those steps with the customer and each time you finished a step you contact the customer and get them to verify that yes in fact they are on the same page. Now, ask any seals exec if they would like to have a report of both where their sales people think they are at in the deal and where the customer thinks they are at – and I bet the answer would be a resounding yes!
Nice article. A combined funnel gives me something new to wrap my head around. While I like (read love) the idea of defining ideal customers and sales opportunities that are profitable, my only concern is someone who might be a marginal customer that you would not want to pursue based on “sales potential” still might be someone you would absolutely want to connect with from a networking perspective to help connect you with other key prospects in your market.
Hi Eric, great article. I would imagine that good sales people in the past were still gauging the buying process – just implicitly. The problem with the traditional funnel is not only that it is focused on the seller’s perspective, but that the seller must assess where the buyer is at within the sales process. And a sales exec must trust the assessment. So even if we marry the selling process and the buying process, if the sales person is the only one who determines where everyone is at in the process – it may be a flawed assessment. Hence the only reason why commissions are given on closed deals only – it’s clear at that point that the buyer and seller are in fact on the same page (ideally).
I think to address that issue the new funnel must allow the customer to assess where there are at, or at least take an action that demonstrates that they agree. In solution selling there are a couple of tools sales people can use to create a custom step by step process that needs to take place in order for the deal to close. You agree on those steps with the customer and each time you finished a step you contact the customer and get them to verify that yes in fact they are on the same page. Now, ask any seals exec if they would like to have a report of both where their sales people think they are at in the deal and where the customer thinks they are at – and I bet the answer would be a resounding yes!
Eric thanks I found this a thought provoking piece on a number of levels and will comment on one aspect: the sales funnel from both perspectives.
At ENS we would tend to view both selling and buying as part of a negotiation (NB NOT just the face-to-face ‘formal’ part!!!). There are different views of phases in negotiation just as there are in selling. Ours happen to be Introduction (build common ground); Differentiation (explore differences and DON’T try to solve or trade concessions!); Integration (solving) and Settlement (formalising agreements and monitoring post-agreement behaviors).
One way to address your concern about the funnel is to classify opportunities based on which phase they are in, AND carefully assessing whether the buyer’s view and the seller’s view of which phase they are in is the same!