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:
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.
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!