Missed the Quarter? How to Think About Your Sales & Marketing Funnel

In 20+ years in software, I spent about half that time in direct and indirect sales and about half in product marketing and management.  I have also consulted to other companies having different sales and marketing challenges.  Whenever confronted with many possible challenges in sales and marketing execution… I find it useful to start at the beginning.

What follows is a framework for thinking about your sales & marketing funnel process.  This framework is based on Enterprise Software or Enterprise SaaS.  The same framework customized to your business may give you some additional perspectives on your sales and marketing process.  If done right it will usually also provide some insights into problems/friction areas and/or blindspots in your process.  What is your sales and marketing funnel and how is it defined?

Most of us, myself included,  will make the mistake of designing our funnel from our point of view (the vendor).  This can be useful to design some internal processes and data flows… however, if we stop here it we will overlook our customer’s perspective.  We need to spend time looking at the process the way our buyer does.  How does she search for a solution for her business issue?  How will she approach the search and evaluation process?  Note:  I am assuming here we have solved our product /market fit, if not, I will have a whole other post on that topic later.  In the mean time, if you need help on product/market fit check out this deck from Andrew Chen: Zero to Product Market Fit

We likely have our own view of how our clients proceed through the buying process, but we are often wrong.  Solution: Solve for CX, where CX is the Customer Experience of the whole solution search process and how long it takes.  Interview 25-50 customers in your target market and walk through their process and compare that with your hypothetical process… then iterate.  After 35-50 interviews you will have a pretty good idea of how to construct your funnel from their perspective.  The total time span = ASC (Active Selling Cycle)  In general it should approximate one of the examples that follow:

Sales Funnel 1


Sales Funnel 2

The first example is more basic than the second, but consider both and see which is a possible starting basis for your business and funnel.  Customize either one to meet the needs of your business.  These are Enterprise based… consumer will be different with hopefully much shorter active sales cycles.  Two important things to remember about each example.

1) Time = ASC (Active selling cycle).  Whatever it is you will likely see a relationship develop between qualified leads, suspects, prospects, and customers.  It won’t be exactly this, but it often approximates 8 : 4 : 2 : 1 or for every 8 qualified leads you will close one customer.  Hopefully your process will be more efficient, but if you are around this ratio, it would not be unusual.  Then you begin to iterate at different pain points to improve efficiency.

2) These ratios can also be used as a leading indicator to see if you have enough qualified leads to make the quarter.  If you do not, and can identify this in the first month of the quarter, you can start to make adjustments to attempt to convert more qualified leads, or suspects or prospects.  You have time to hopefully impact the current quarter.  You also have an opportunity to start looking for friction points that may identify a chokehold in your funnel.  Perhaps you have plenty of qualified leads, but they are not converting to prospects and you don’t know why?  Perhaps you have a bunch of prospects but they are not converting to customers in the timeframe expected.  Start digging.  Reach out and talk to the prospects that did not convert and ask why?  What happened?  (Obviously this needs to be done with care and by the right individual with full knowledge of the sales team.)

Don’t stop here.  Marketing may have a mini funnel for outbound telemarketing, inbound telemarketing, social media marketing, web marketing, email marketing, drip campaigns etc.  Define and refine the processes you need to track and manage the business.  Start simple, learn, and iterate.  Don’t wait, spending months to define the perfect funnel.  Create something viable and start tracking.  The data you collect will be surprising and process adjustments will almost jump off the page.

Case Study: A few years back when I was running sales & marketing for an Enterprise Software company we had a good solid system in place for tracking marketing spend, leads, and qualified leads, all the way down to customers.  Things were progressing through a typical quarter and we started to see some deals fall out and not close when we had anticipated.  In the post mortum we discovered a problem with our reference customer.  Often in Enterprise software we are talking about large size deals $100K’s to $1M deals.  Prospects always want to talk to referenceable customers who have successfully deployed the software and seen real business benefit.  We had a number of clients who graciously volunteered to help us with this function.  However, we found that one of our references, common to all the slipped deals, was the culprit.  The surprise, it was our fault.  The reference was telling the story from his perspective, which should be expected.  Large software implementations are big and sometimes messy projects.  There are always challenges that crop up and need to be managed.  Our client was positioning himself as conquering all these challenges he helped resolve during the implementation, and in the process making the prospective customer think our software was difficult to implement.  We had not properly prepared him for what we were looking for and needed in a professional reference and why.  Once we worked with him and he understood… the next reference went off perfectly.  We only discovered this in the process of lost deal post mortum.

Lost deal Post Mortum:  Always, always, always conduct lost deal post mortum.  This is the best way to refine your process and your funnel.  What worked for the prospective client?  What did they like?  What did they hate?  Was your value proposition understood and believed?  What were the leading factors they chose the competition?  Was there anything that you could have done that would have changed the outcome?  Document this and then conduct a review with the whole team.  Brainstorm areas where you think a change in process or message or tools would help yield a different outcome.  Rinse and repeat.

Below are some additional resources you should have on your go to list for additional tools, stories, and examples.

Additional Resources:

David Skok Matrix Partners Funnel Presentation on SlideShare

David Skok has a great blog for entrepreneurs called forentrepreneurs: forentrepreneursblog

Andrew Chen Blog: Andrew Chen Blog

Andrew is worth reading… if you don’t read everything he writes… you’re not doing it right!

546 vs. 300,000,000 What’s it coming to folks?

The following was written by Charlie Reese, a retired reporter from the Orlando Sentinel from 1971 to 2001.  He wrote several versions of this and published it several times.   I believe the version below was published in 1985.  Since he refers to 235,000,000 people that would be about right.    Since today our population is closer to 300,000,000 I use that figure in the title.  But it is amazing to me that if both republicans and democrats are against deficits…. Why do we have deficits.  It is time to hold Congress accountable.  It is their fault, their responsibility, and their job to fix all the damage they have created.  435 members of the House of Representatives, 100 Senators, 9 Justices of the Supreme Court, 1 Vice President, and 1 President for a total of 546.

Today’s debt is $12 Trillion – Who’s fault is it?…. Congress…. PERIOD!

See current debt Here http://www.usdebtclock.org/

Here is Charlie’s article…….

Politician are the only people in the world who create problems and then campaign against them.

Have you ever wondered why, if both the Democrats and Republicans are against deficits, we have deficits? Have you ever wondered why if all politicians are against inflation and high taxes, we have inflation and high taxes?

You and I don’t propose a federal budget. The president does. You and I don’t have Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president and nine Supreme Court justices — 545 human beings out of 235 million — are directly, legally, morally and individually responsible for the domestic problems that plague this country.

I excused the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to

provide a sound currency to a federally chartered by private central bank.

I exclude all of the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million in cash. The politician has the power to accept or reject it.

No matter what the lobbyist promises, it is the legislators’ responsibility to determine how he votes.

Don’t you see the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits.

The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes.

Those 545 people and they alone are responsible. They and they alone should be held accountable by the people who are their bosses — provided they have the gumption to manage their own employees.

End of Charlie Reese Article….

This was written around 1985…. Today it is April 2010…. and we still put up with this nonsense?  Think about this before you go to the polls in November!

Economics in One Lesson! Required Reading For Congress!

It amazes me just how clueless our representatives in Congress really are. I mean it… the left, and the right; are equally guilty of the mess that exists inside the beltway. As a country we often forget some of the wisdom of our founding fathers and why the branches of government exist as they do. The House of Representatives with its 435 members are very powerful and are instrumental in the creation and implementation of new legislation. The speaker of the House is third in line to the Presidency right behind the Vice President. That gives the House tremendous power over legislation. The Senate, even more powerful in some ways, is there to help keep a check and balance on the House of Representatives. Our founding fathers called it “The cooling saucer from which the hot tea of the house is poured into.” This is why most legislation requires three fifths majority, 60 votes, to pass.  The Senate does not work on a majority vote, but on what is often referred to as a super majority. Think of the genius in that. Our founding fathers had the foresight to make it very difficult to pass legislation. There is a very good reason for that. They wanted to make it difficult to get bills through Congress.  The net effect is that made it difficult to get legislation passed, which is genius!  The more I become a student of history I realize how brilliant these men were!  They created a form of government that has served us tremendously well.  It has created the greatest country this Earth has ever known. We should be proud of our heritage, proud of our form of government. We should also be required to learn how it operates so we become more active participants in it.

Unfortunately both houses of Congress rarely remember that they are supposed to represent their constituencies, and do what is right for the country. All to often they represent the leadership in their party. They didn’t mention that when they were campaigning to get your vote did they?

I find it humorous… and sad… when any politician gets up and says the American people want X. Let’s be candid, the American people have rarely been on the same side and in relative agreement about much of anything.  Perhaps four or five times in the past century we as a country have been truly united, usually as the result of a great tragedy.  A few that I can think of… The latter part of World War I, perhaps The Great Influenza Epidemic of 1918, The Great Depression, World War II, The Korean War, the assassination of JFK, and September 12, 2001. It takes monumental danger and fear to get this country to have one voice. This is both good and bad. Generally when things are at there worst… our country and it’s citizens are often at their best. The rest of the time you really have to work hard, very hard to dig through the noise to find truth and agreement. It would do us well that, if before we blindly support an issue, any issue; or jump on a cause for our friends, our group, or our party… we owe it to ourselves to do our homework. Research the issue. Get a clue and think for ourselves! Question the assertions and assumptions. Think! Organize your point of view with facts and data. Not talking points and spin. If Congress took this one piece of advice, we would be living in very different world.

So before you believe any of the current nonsense coming out of Washington spend a few minutes and read this… Economics in one lesson find it here…https://fee.org/resources/economics-in-one-lesson/

This was originally published by Henry Hazlitt in 1946 and should be required reading for every member of Congress. Especially members of House Ways and Means, Senate Appropriations, House and Senate Banking Committees. In fact it should be required reading for anyone that wants to vote. The lesson is short, concise, and accurate. The application examples are tremendous. If you agree send it to your Representative. let me know what you think America.

Social Networking – This is Big!

I have been interested in the Social Networking space since about 2003. In early 2004, I joined LinkedIn the first social network targeted at business professionals. I signed up created my profile and said this is really pretty cool. I sent out invites to 20-30 friends and approximately 40-50% signed up. It then sat there for several years and really didn’t do much. It reminded me of the early days of the internet when I said to a colleague “hey does your company have a website?” he responded, “yeah your company?” I replied, “Yes”… then I queried “Yours doing anything?” He replied… “No, …yours?” …. In those early days websites were not much more than electronic brochures. The parallels to the early days of social networking are striking to me.

I am speaking primarily of those of us over 30, the kids got it right away… both the web, IM, and now social networking. For those of us over 35, I think it is more challenging. Beyond being a tad overwhelmed at the 300 or so emails per day, the IM’s, the text messages, phone calls, phone messages, meetings, con calls…. we wonder when and how are we supposed to work? Well I can only tell you the one conclusion I am absolutely sure about, get used to it, they are here to stay.

Oh yes there will be winners and losers, consolidations, acquisitions, combination’s, new technologies and the like. But social networking is here to stay and it will change the way many of us choose to communicate, work, market, and yes, even socialize. This definitely falls into the category of lead, follow, or get left behind. The reason I am sure about this is that I totally ignored the beginnings of IM. In general I am against interrupt driven technologies. I see them as productivity killers. I thought this for a long time. I was wrong, dead wrong. In actuality they can be either productivity killers or enhancers depending on how used. Much like the web itself.

In the early days of the web, companies were really restrictive on who could access the internet and kept many employees from access at all. I was against these policies and was pushing for access for everyone. However after I saw how many people wasted time shopping on eBay, useless surfing, etc, I was ready to change my tune. I finally came to believe the answer is allow access but educate on expectations, policies, and do’s and don’ts. I was amazed at how many people fritter away their time with surfing nonsense.

This week I am attending the twitter conference in LA. Six months ago I was definitely in the camp of “Really? A 140 character messaging platform… we really need this??” Well, again I was dead wrong and I have come around.  Twitter has crossed the chasm and is going mainstream. I believe this for several reasons…
1) The platform is based on mobile… not the web. I think the phone will win the battle for the ubiquitous platform of the future. Don’t get me wrong pc’s are not going away anytime soon, but the phone will be the platform for information on the go. It is also the leading candidate to be the electronic wallet and payment device.
2) Most of the world does not have high speed internet (and due to infrastructure limitations likely will not have anytime soon); but they all have cell phones. There are 100’s of millions of people in China and India that leaped right over land lines to cell phones. They bypassed a 100 years of technology and went right to mobile and are therefore more reliant on it, and more accepting.
3) Growth Rates Twitter usage is growing very rapidly and looks like it could reach 1 Billion by the end of 2010 or mid 2011. That is significant.  Roughly 15% of the population… truly approaching the pulse of the planet.

Yes it is true that there is a ton of what I consider useless drivel that occurs, in fact, I would argue that useless noise is a high level of current traffic…but as the search capability grows and you can more easily find the topics that you are interested in you start to see the value. I find it interesting what many people follow, you know the old saying “One mans trash is another mans treasure.” Don’t miss this trend… thus far it is worth digging through the trash.  The value will only grow.
– John

The Alternative Minimum Tax – A Brief History

The Alternative Minimum Tax, or AMT, as it is known came into existance in 1969 with the Reform Tax Act of 1969. As usual our representatives in Congress (remember it is an antonym for progress) created this wonderful piece of legislation to catch approximately 155 taxpayers who made more than $200,000.00 in 1968; yet due to loopholes (again created by Congress) did not pay any taxes. By taking advantage of loopholes they minimized or eliminated their tax burden. Joseph Barr was Secretary of the Treasury and brought this scandalous fact to light. Here is the great part… now most sane human beings would just say “hey let’s eliminate the loopholes!”; well not our Congress, rather than eliminate the loopholes Congress creates a whole additional tax system called the AMT. Just for excitement they don’t index it for inflation. Now in 1969, $200,00.00 was real money… in fact it is equivalent to $1,237,649.43 in 2009 purchasing dollars. Today $200,000 is a lot of money, but a long way from $1.2 million in purchasing power. Yet because Congress has not done anything to fix it, many middle class Americans are getting hit with the AMT. Congress hasn’t fixed it because they like the revenue.

Think about this, there are many middle class Americans that if both are working could easily make enough money to become subject to this tax, thus increasing their tax burden, often significantly. This was a bad piece of legislation created in 1969 and here we are 40 years later and it still has not been fixed. Congress has touched it several times, once in 1978, 1982, 1984, 1986, and 1990 and finally the Revenue Reconciliation Act of 1993. In 1993 the AMT was raised to 26% for those making between $100,000 and $175,000 and 28% for those making more than $175,000. You could have a police office and fireman married and working a little overtime that are going to be in this bracket. Instead of ever repealing it it has always been altered to raise taxes and revenue. Both sides of the aisle have failed on this big time. Republicans and Democrats love to spend our money. But they rarely spend it wisely.

The reason it is important to understand how your representative votes is because it will tell you a lot about how you should vote. If you like they way your representative votes on spending your money you should continue to vote for him/her. If you don’t then you should vote them out of office. I don’t care what party you support in general I believe they have both hurt our country with their poor management of our money. Get beyond ideology and follow the money. Follow the money.

I want to know what you think America!

Ben Stein – A Great American

Ben Stein is one of my favorite authors. He is also a great American. From his writings on politics, economics, finance… or life; to his humorous TV show “Win Ben Stein’s Money”; here is a funny, serious thinker. Here is a man worth reading. You can learn more about Ben Stein at his website http://www.benstein.com/stein2.html

Ben Stein first read this on CBS Sunday Morning on December 18, 2005. It is well worth a re-read and hopefully we will remember.

Ben Stein quote begins here:

Here at this happy time of year, a few confessions from my beating heart. I have no freaking clue who Nick and Jessica are.

I see them on the cover of People and Us constantly when I’m buying my dog biscuits. I still don’t know. I often ask the checkers at the grocery stores who they are. They don’t know who Nick and Jessica are, either. Who are they? Will it change my life if I know who they are and why they’ve broken up? Why are they so darned important?

I Ben Stein don’t know who Lindsay Lohan is either, and I don’t care at all about Tom Cruise’s baby.

Am I going to be called before a Senate committee and asked if I’m a subversive? Maybe. But I just have no clue who Nick and Jessica are. Is this what it means to be no longer young? Hm, not so bad.

Next confession:

I am a Jew, and every single one of my ancestors was Jewish. And it does not bother me even a little bit when people call those beautiful lit up, bejeweled trees Christmas trees. I don’t feel threatened. I don’t feel discriminated against. That’s what they are: Christmas trees.

It doesn’t bother me a bit when people say, “Merry Christmas” to me. I don’t think they are slighting me or getting ready to put me in a ghetto. In fact, I kind of like it. It shows that we are all brothers and sisters celebrating this happy time of year. It doesn’t bother me at all that there is a manger scene on display at a key intersection near my beach house in Malibu. If people want a crche, it’s just as fine with me as is the Menorah a few hundred yards away.

I don’t like getting pushed around for being a Jew, and I don’t think Christians like getting pushed around for being Christians. I think people who believe in God are sick and tired of getting pushed around, period. I have no idea where the concept came from that America is an explicitly atheist country. I can’t find it in the Constitution and I don’t like it being shoved down my throat.

Or maybe I can put it another way: where did the idea come from that we should worship Nick and Jessica and we aren’t allowed to worship God as we understand Him? I guess that’s a sign that I’m getting old, too. But there are a lot of us who are wondering where Nick and Jessica came from and where the America we knew went to.

End of Ben Stein quote.

There are different versions of this floating around, I believe this to be accurate to the best of my knowledge. It was taken from SNOPES who cites a transcript from CBS Sunday Morning.

Thank you Mr. Stein!