Did you notice that sales language is chock-full of metaphors? Sales is a journey, and leads are fuel. A sales funnel, as another metaphor, has become so widely accepted that it has started to shape the way we see the sales process.
Metaphors can help us visualize some aspects of our life, and they give us simple mental shortcuts that are easy to understand and use. The inverted funnel metaphor captures how customers pass through each stage of the sales process – Awareness, Consideration, and Decision – but it implies a linear progression. Today, “sales loops” is a better marketing model as it accounts for all the ways marketers become involved in the customer journey and emphasize interconnectedness over linearity. It considers that once a prospect makes a purchase, they are not lost from view, but rather remain an essential part of your strategy.
Just as the marketing landscape has changed in recent years, so too must our mental model for navigating it. At Folderly, we keep using traditional sales vocabulary and visualization, yet infuse it with our new understanding of what modern customers want and seek in the B2B sales process. This article will examine why the traditional sales funnel doesn’t work anymore and what you should do to build a powerful sales funnel.
So, what’s wrong with that funnel stuff?
Let’s keep in mind that while initially metaphors intend to improve our understanding of complex phenomena, their brevity and visual language cut down on complexity and precision. The problem is when people start using a truncated version of complexity as if it’s reality.
Let me explain it with a quick example. Did you know that famous US psychologist Abraham Maslow never used a pyramid or triangle to illustrate his Theory of Human Motivation? The pyramid didn’t appear in the original paper. It wasn’t Maslow who created it, and it wasn’t even a truthful representation of Maslow’s ideas. But it was memorable and easy to understand. Now, in the public mind, Maslow’s triangle-shaped hierarchy of needs is a staple, from college courses to mass media pieces, because its elegant visualization fits our need for simple explanations so neatly. It appeals to the human need to reduce uncertainty and ambiguity through rational explanations.
We can apply the same penchant for simplicity to sales funnel visuals. That’s an easy way to illustrate complex processes that happen daily in the lives of sales and marketing. And it has a certain appeal. But as more information becomes available, we should change or update metaphors. And the most recent data shows that the sales process is now circular. An effective sales funnel that implies linearity is no longer valid and can be misleading.
There are many ways to show that the sales process defies linearity. Some advocate for a flow diagram (Sankey) where the widths of flows are proportionate to their values. Others prefer to use a flywheel or a loop to represent the circular nature of the buying journey. Before you tackle the challenges of the sales process, let’s look at the traditional sales funnel.
Let’s clarify the terms
Given how deeply hardwired the metaphor of a sales funnel is in the minds of modern sales professionals, we’ll keep using it throughout the article for the sake of brevity. In some sense, many of us use ‘sales funnel’ without implying its linear nature and just use it as a traditional marketing term. At the same time, we need to clarify other terms to make sure we’re on the same page.
If we choose ‘funnel’ as a shape of choice, a ‘marketing and sales funnel’ would be a more precise term because marketing and sales are equally active in converting leads to customers, they just do it at different stages. A marketing funnel is the beginning of the sales process where marketing is the most active. Marketers provide regular pieces for the company’s blog, share relevant content on its social media platforms, and put product information in front of its potential customers through organic search and paid ads. Usually, the marketing funnel corresponds to demand growth and lead generation. In contrast, the sales funnel starts where warm leads start considering the product or service, and sales teams help them with rapport building and objection handling.
Many sales professionals use a pipeline interchangeably with a sales funnel. These terms are very similar in stages, but they visualize different aspects of the sales process. A pipeline is simplified progress of prospects from the Awareness Stage to the Purchase Stage. A funnel represents the number of leads at each stage, underlining that a lead flow trickles down to a rivulet of deals. Both visualizations help process optimization.
Suppose you analyze your pipeline and notice that you can shorten sales cycles by extending the time between the first outbound email and a proposal. Or, you analyze the number and the quality of leads in the sales funnel and see that ROI from email marketing gets higher if you invest more time and effort into lead research and have fewer yet better-quality leads at the top of the funnel.
What does a traditional sales funnel look like?
There are three essential sales funnel stages that can be further divided into more steps, but to simplify, let’s refer to them as the start, middle, and end of the sales process and consider them in detail.
TOFU (top of the funnel), also referred to as Awareness
This is the very start of the sales process (also known as a marketing funnel). Prospects just learn about your business through online ads, organic search, shoutouts on social media, or your appearance on a podcast, and become aware of your product or service. It’s not at the Interest Stage yet, and not all prospects will necessarily have the potential to become loyal customers. Still, they can interact with content on your website, stumble upon your landing pages, and even download an eBook or a checklist. But getting prospects to sign up for a lead magnet doesn’t qualify them as a hot lead. They may not fit your ICP, so you won’t have to nurture them. That’s why the top of the funnel is so easy for capturing leads.
MOFU (middle of the funnel), also referred to as Interest
The middle part of the sales process can stretch for some time as there are many variables. Prospects find out more product information, compare your services and pricing pages to competitors’, and consider a deal with you. Some single out several steps within the MOFU – Interest, Consideration, Intent, and Evaluation – and carry out certain actions that can prompt prospects to move along the funnel. In any case, marketing and sales see the middle of the buyer’s journey as an opportunity to nurture prospects through personalized content, demos, free trials, and email marketing.
BOFU (bottom of the funnel), also referred to as Decision
Once prospects make sure the company’s values and solutions align with their pain points, they make a deal. At this stage of the sales process, it can also take some time as the buyer and the seller compare prices and terms, looking for the best offer. Knowing what the prospect is looking for, sales reps try to win them over with the most effective solutions, price tiers, discounts, free shipping, etc.
This description is the most basic sales pathway that fits any business model. However, there can be various sales funnel stages because businesses strive to re-sell and upsell their services, and customers come back for more if they like what they get. That’s a reminder that a circular or loop-like shape is more suited to illustrate the typical sales process.
Inbound vs. outbound
The Information Age is the major disruption for the linearity of the traditional sales funnel. B2B customers get more independent and don’t need permission from gatekeepers of information to learn about products and services. As a result, many B2B customers circle between three or four sales funnel stages on their own, without the assistance of sales reps. Marketing puts out content but has little control over how prospects consume it.
Here’s where the significant difference between inbound and outbound sales funnels comes in. Digital transformation has affected both types of sales, forcing marketing and sales to consider customers’ needs, pain points, challenges, and expectations. Customers are now legitimate participants in the buying process. They are buying rather than being sold to, and they are active agents rather than passive consumers. Inbound sales are aware that if they fail to earn users’ permission to provide content aligned with their needs, they will market and sell nothing.
Similarly, outbound sales found out that users have no intentions to see outreach not aligned with their needs. Users have developed banner blindness and wield ad-blocking tools to shield themselves from unwanted advertising messages. These changes certainly affect the sales funnel.
“The length of the sales funnel depends on what kind of leads goes into it,” explains Michael Maximoff, Founder and Managing Partner at Belkins, at Belkins’ How to Close Outbound Leads Webinar. “Referrals take one to two touches to convert because they come from someone you know or worked with, and there is trust already there.”
The inbound sales funnels can have a long lead nurturing time because before leads opt-in for a newsletter or on-site forms, they can consume your content on the website, blog, or LinkedIn indefinitely. Inbound leads come from content (the website, social media, advertising), but once they have a buying intent, the budget for it, and are decision-makers, they start looking for a deal. “If you send them an interesting proposal, they are highly likely to close,” says Michael (fig. 1).
Outbound leads can take the longest to move through the funnel. “It’s just the nature of outbound,” explains Michael. “You have a prospect who might be a good fit for you based on the industry, company size, and a title you’re talking to, but you have no idea whether they have a need, a budget, or an intent right now. If they fit your ICP, you put your foot in the door and try to make a sale.” However, because outbound is an interruption, prospects don’t expect you and your proposals. That’s why it will take you extra steps and more stages to convert. As a result, the outbound sales funnel is the longest based on closing time, number of touches, and sales approaches.
Figure 1. Difference between leads from the referral, inbound, and outbound channels
The difference in the lengths of the funnels for different sales channels only highlights that there’s hardly any linearity left in the sales process. There is almost no sales funnel for referrals as they need only one to two touches to convert. However, qualified leads from inbound can jump right to the bottom of the funnel stage simply because they have done all the groundwork on their own: they studied available materials and decided to buy without assistance.
However, access to information doesn’t imply that businesses cannot tweak their sales funnels and leverage prospects’ decisions to buy. It gets all the more urgent for sales professionals to figure out how they can assist prospects in their highly independent journeys.
Building a sales funnel
Regardless of how you visualize your sales process (linear or circular), the sales funnel stages do not change: Awareness, Consideration, and Decision. Even when prospects learn about and consider your product independently, you still can take certain steps to help them make a decision in your favor. Once you put all the elements of a powerful sales funnel in place, you can shuffle them according to your needs and the situation at hand.
Know thy people. Researching your target audience is Step One for any effective marketing and sales activity. No one should expect a spray and pray approach to work these days. Quite the contrary, if you learn who is more likely to buy from you and what their traits are, you will know what content they respond best to and what it will take to convert them. Whereas inbound channels use tailored lead magnets and marketing campaigns, outbound sales rely on well-researched cold email outreach and cold calls.
Act upon evidence. Ideal Customer Profiles and Buyer Personas are the guiding lines for your inbound and outbound sales. Reps can reach out to leads of any quality. It’s easy to build up a lead list with website visitors and prospects who leave their data in exchange for a valuable product (an eBook, checklist, or a webinar), but only an ICP helps you decide who to reach out to, whereas different buyer personas give insights about how to approach prospects, what motivates them, and how they can use the product. You can’t personalize your outreach and put out relevant content if you are unaware of the audience’s specific needs and pain points.
Engage your target audience. Inbound marketing attracts prospects by putting out relevant content. You research the issues and challenges of your audience and engage them through social media posts and discussions, blog posts, case studies, webinars, sales pages, and other forms of content. Depending on the stage they are in, prospects find your expertise supported by relevant content and endorsed by other players in the industry, obtain a proof of concept by hearing customer testimonials and reading reviews, and discover answers to their questions in blog pieces. Outbound marketing reaches out to prospects with personalized messages through cold email and cold calls. If there’s contact and rapport is being built, then reps nurture prospects into closing by providing the same content inbound marketing does (how-to articles, testimonials, case studies, etc.).
Close deals. After reps nurture prospects with email marketing and sales calls, it is time to try to convert them. Demos, free trials, and discounted quotes help prospects decide whether the product or service you offer is what they need at the moment in terms of their budget, intent, and challenges. Closed deals are just the beginning of new relationships between your business and your current customers. Whether a prospect made a deal then or now, they remain in your pipeline or database to stay in touch and upsell or cross-sell later. A need for customer retention highlights the loop-like sales process.
Optimizing your sales funnels
The new information tells us that customers are now at the center of buying decisions. Create a sales funnel that reflects it and see the better outcomes for you. In the webinar, Michael suggests that predictability should be at the center of our sales funnel building. Here’s how you can make a more powerful sales funnel.
Choose funnels easy to set up. There are so many elements that go into effective sales channels. A business needs a well-functioning website that converts and is mobile-responsive. A marketing team should include content writers, designers, SEO specialists, and marketers that create relevant content and run marketing campaigns with ads. And it takes months to set up and get going. “But for outbound to be effective, you need to have a hand-curated list or a database, a good sales page or message, and an SDR who can hit the phone or an inbox and send messages, book appointments, and generate interest,” says Michael. Manually or using automation tools, a handful of reps generate interest and bring you short-term results.
Make your sales funnel more predictable. Although inbound leads learn a lot about your product on their own, outbound allows reps more control in many aspects. If you put yourself in front of prospects who have little knowledge of your services, you help them start a buyer’s journey at the top of a solid sales funnel. Using average conversion rates and tracking your customer conversions across the board, you will know how many emails and touches it will take you to be able to close this many clients. Michael explains, “For example, I had 100 contacts in my database. I sent 500 emails, converted five appointments, talked to five decision-makers, closed one deal, and made this much revenue. So now, when I know a deal cost, I can calculate how much I need to spend to make more deals.” That’s all very predictable.
Develop an ICP and BPs. Predictability is grounded in research. Both inbound and outbound sales use an ICP to know the best client for you, but outbound delivers you a higher level of predictability. When you understand your total addressable market (TAM), you can analyze it and start working with it, keeping your ICP in mind. That’s what enables you to focus on the quality of the deals you close. If you talk to at least 35% of best-fit businesses and convert some, you get a ballpark number you can generate in sales. Michael elaborates, “If I know my ideal customer is enterprise SaaS companies that make over $5B in revenue and there are 250 to 500 of those, and I’m booking calls with them, then I can expect to make 7-figure or 8-figure deals.” With an ICP, you know who you’re going after. And you will be ready to spend more money to get your SDRs working with this sales channel because you know that you'll generate this much revenue at the end of the day.
Know your expenses. With outbound, you know how much money you spend on your BDRs and SDRs, sales execs, sales tools, payroll, etc. You know how much money you generate as a result of deals you’ll close from these appointments. It gives you flexibility and allows you to scale.
Ensure short-term ROI. When you invest in marketing, you play a long game. But having an outbound component will help you generate those short-term results within 3 to 6 months. For example, you have an in-demand product or service and can convert one or two prospects from 8 appointments, which you get from talking to 10 people as a result of hitting 100 inboxes. “I can find those 100 people within a day or two days,” says Michael. “Or I can purchase a database or address someone from researchers who’s able to scrape the list or whatever. I don’t need to wait for a year to get those appointments booked again because it shows they are short-term.”
Outsource lead generation. Building a sales funnel gets even more effective if you’re able to find an acquisition partner. In other words, by outsourcing lead list building, cold outreach, and appointment setting to a third party, you can focus on identifying prospects’ pain points and truly being there for them. If you have developed your ICP and value proposition, all that’s left is to align a new team on your key principles, your value proposition, and the clients you would like to target. “Then you can spend your time helping your prospective customers with business strategy,” says Brian Hicks, Senior Sales Executive with Belkins. “You can be focusing on other areas as opposed to spinning your wheels to try to figure out the beauty of the subject lines, or the magic that you have to put in terms of content, what do I need to do to make sure that my message fits on an iPhone screen and that it’s generating the reply rate that I really want.” Outsourcing various sales funnel stages to an acquisition partner is definitely a luxury that requires financial resources and ability (ICP, value prop, etc.), but that’s what elevates the effectiveness of your sales process manifolds.
Use metrics to measure effectiveness. Metrics help understand if the steps you’re taking are converting prospects. Data-driven frameworks fuel your sales funnel success even when potential customers seem to have more control over their buyer’s journey. When a certain number of leads brings you a reasonable conversion rate, you can try to scale the result if customer value and a sales cycle are good to reproduce. Knowing your sales budget and deal size informs your ROI. “If my sales budget is, let’s say, $5K and I make $25K, that’s my return on investment. If I want to make $100K, I increase my spending by 4. That’s straightforward,” says Michael. First, you invest enough time and resources to know these metrics and numbers. Then you scale the process and work on customer retention rates.
Going through sales funnel stages
Neatly visualizing sales processes can be a challenge. A traditional sales funnel that used to imply a linear progression through marketing channels to a deal now finds its most accurate representation in loops and flywheels. But in any case, reps still need to know all sales steps and other marketing efforts that go into a conversion process. Once your outbound channel and a sales process are set up, you will see what else needs to be done to make it a great funnel. You may need to use an email test tool to increase email deliverability rates. Your sales team might need to spend more time on curating your lead database. If you realize that the bulk of high-quality leads fails to convert at the negotiation stage, you can consider tweaking a pricing page and establishing a more reasonable price. Or, maybe you should offer a free consultation or a quick demo earlier in the buyer’s journey. Overall, all elements of a sales funnel – lead magnets, content, ads, nurture sequences, CTAs, lead lists, and whatnot – need review and update from time to time. Start building your sales process and have your share of trial and error. Then you’ll figure out what can work better.