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It's a funnel, not a waterfall, etc...
Despite what some people say, The Sales Pipeline is best visually represented by a funnel as opposed to any other visual representation of the process being touted by some marketers, i.e, waterfall. The funnel best describes the process of filtering out contacts from initial inquiry to a sales qualified and ready to purchase state. Leads come in from a variety of sources and are taken through each stage of the qualification process until they are either dropped or moved to the next stage with the final stage being the purchase. The funnel is the lead qualification process and steps you take a lead through.
The Sales Funnel
6 Stages of Lead Management Process - Lead Generation, Qualification, Nurturing...
Although we're describing this sales funnel as a linear process, it doesn't necessarily have to be. Prospects can skip stages as we've described them, based on their qualification and expressed needs. Prospects can enter the funnel/process at different points. For example a prospect could avoid most of the marketing qualification process by calling in and speaking directly to a company telemarketer or telesales person. Based on what information the telemarketer is able to get from the prospect about their needs and qualifications, they could be turned over immediately to the Sales organization and worked by the in-house telesales group or the external field sales force. This person would completely bypass the automated lead nurturing and qualification system.
The Sales Funnel that we use has prospects and eventual buyers going through these six steps – Inquiry -> Lead -> Opportunity -> Qualified Opportunity -> Buyer (Closing and Closed Sale). This model includes a closing stage which is the proposal, quote and / or demonstration stage before a sales qualified lead becomes a closed sale or won business. These stages are applicable to most B2B complex sales and some higher ticket B2C sales, for example home sales.
Keep in mind that this is the lead management (generation, qualification, nurturing...) process that we have defined and found most effective over time working in B2B sales environments involving complex sales. Whether you choose to call it a sales funnel or waterfall or by any other name all sales go through this process. You may choose to define fewer steps, for example you might choose to combine the lead and inquiry stage and call them leads, depending on your definitions. Click on the links below to expand each stage of the process that we have defined.
Why is this important?
From a marketer's perspective knowing and understanding each stage/phase is important because it affects your promotional and offer strategies that you apply to move the potential buyer through each stage of the buying process. From a messaging perspective, you need to understand this and also the role the person or persons play involved in the buying process. Are they just information gathers, or influencers, users, decision makers or the actual buyer? Once you have defined the roles and the stages, you can develop your contact (messaging) and offer/content strategies, determine what aspects of it can be automated and which stages require human interaction; and when a prospect can be turned over to the sales organization by marketing.
Why do so many organization have problems with lead nurturing and conversion and the answer is that they have not taken the time or effort to lay out this detailed process and road map. In fact, many think that by automating the process, they can basically sit back and let the system do the work for them. Creating lots of content and automation is not the answer to developing a successful lead nurturing and management program whether you call it the sales funnel or waterfall.
Review the steps below, then sit down and layout your road map. It's a very detailed process. We offer a range of tools to assist marketers in developing lead management programs and supporting marketing communications programs.
Stage 1: Inquiry
Defintiion - An "Inquiry" is someone who has made themselves known to your company, typically through a response to an advertisement or promotional effort or they have filled out a form requesting some information. They have requested a white paper, information about your company, solution, etc.
Stage 1 begins with the inquiry coming in from both inbound and outbound marketing activities. This is a marketing generated inquiry. It may come from a web form, an email campaign, a direct mail campaign, a magazine advertisement, a TV commercial, or any other channel and media within the channel.
We distinguish inquiries from all sources, and all inquiries are tracked via their original source code. We not only want to know where the inquiries come from down to the medium within a channel, but we also want to know the cost of acquisition by source, the conversion rates of each source, the actual costs of converting that inquiry all the way through to a closed sale. We want to be able to tell which source produces the lowest acquisition cost, lowest conversion cost, highest conversion rates, highest revenue and best ROI. You can’t do any of these things if you don’t know when and where an inquiry came from. The number of businesses using tools like Salesforce.com that don’t do this is appalling.
Stage 2: Lead (Marketing Qualified)
Definition - 2. A "Lead (marketing qualified)" has a definite interest in your solution, which might be appropriate for their company. Appropriate may have several meanings, but one example would be that they need a financial software package and you offer one that is a good fit for their business model.
In Stage 2 the prospect/inquiry is entered into a marketing lead nurturing program which may be automated. At any point during this process, the prospect can opt out and chose to receive no further information or sales offers. They can also opt to move to the next or any following stage by initiating contact with telemarketing, which will do further qualification and determine if the prospect should be turned over to sales, or remain with marketing for continued nurturing and qualification. Or they may be dropped from the process automatically based on their failure to initiate some action that is part of the nurturing and qualification process. An example would be failure to respond to invitations to participate in webinars about the product they expressed interest in, or continually signing up for these events and then not attending.
Once the prospect has been qualified as a valid lead by virtue of their going through the automated nurturing system and providing additional qualification information, telemarketing initiates outbound calls to the prospect to further qualify the prospect for moving to the next stage or subsequent stages. At this stage they determine if the prospect meets the appropriate B.A.N.T. criteria. If they do, they may be moved to the next step and turned over to sales for further nurturing, relationship building, and qualification. Telemarketing may also decide to drop the prospect from the prospect list completely.
Stage 3: Opportunity (Sales Accepted)
Definition - A "Sales Accepted Lead" or "Opportunity" is the decision maker, has the budget, need, authority, but maybe not the timeframe. They’re going to purchase yours or a similar solution, but just haven’t finalized on the actual purchase date. It may be months or more off in terms of actually executing the purchase. Based on your own criteria, you might include prospects in this category that aren’t going to execute a purchase in the next three to six months. Anyone who is going to execute a purchase in the next three months would move to the next category, a qualified opportunity.
During Stage 3 the prospect has now been turned over to sales and is worked by sales from this stage on. They now meet at least three of the B.A.N.T. criteria. The prospect has the need, the budget and the decision makers on their end are involved in the discussions. The only factor missing at this point is a solid time frame for the purchase. The prospect will remain an opportunity until such time as they lock in the purchase time frame and also if that time frame falls outside of your desired closing time frame. The prospect could also drop out because they decide to purchase elsewhere. The nurturing and relationship building process is managed by the sales team from this stage forward.
Stage 4: Qualified Opportunity (Sales Qualified)
Definition - A "Sales Qualified Lead" or "Qualified Opportunity" is the decision maker, has the budget, has the need, has the authority to make the buying decision and has a time frame in purchase that falls into your budget/sales cycle for a specified period. The specified period might be the sale has to occur in the next 3 months of this calendar year. If it falls outside of that, then it would still be an opportunity, but not a “qualified opportunity” because it is outside of your time frame. You might define a “qualified opportunity” as one that has to close in the 2nd quarter.
At this stage the prospect meets all of the B.A.N.T. and other criteria that you have established and they have selected you as the supplier of choice or one of the suppliers of choice. At this point, the sales process moves into the next stage, the closing stage. Now in some models, you will see that this is not treated as a separate stage, but we believe that in B2B marketing, it absolutely needs to be included, because we’ve seen to many supposed closed deals hit the proverbial rocks during the closing stage.
Stage 5: Closing Stage
Definition - The "Closing Stage – quote, proposal, demo stage" - not all B2B transactions involve a formal quote, a proposal and demonstration of the product. It depends on your product offering. It’s not unusual for tech sales to involve demonstrations, testing and evaluation of software and hardware before the purchase is finalized.
The Closing Stage involves the proposal, price quoting, terms and contract / purchase order negotiations, and if necessary the demonstration and testing stage. We’ve seen deals collapse based on not being able to come to agreement over terms and pricing. We’ve seen deals collapse because the buyer and seller couldn’t come to agreement over support issues. We’ve seen deals collapse because of failed or poor product performance during demonstration and testing phases. A qualified opportunity may meet all of the necessary buying criteria and they may want to buy from you, but the closing stage is not a done deal until the contract or order is signed and approved.
Stage 6: Closed Sale
Definition - "Closed Sale" – is the final stage, the actual sale.
The last stage is not really the last stage of the engagement or the end of Sales involvement. The order/contract is signed, but now delivery and implementation have to take place. And, Sales needs to stay involved through the process to make sure the buyer is happy with the product and service. They will also need to maintain the relationship with the buyer post purchase, not only to keep the customer engaged for future purchases, but also to make sure they are a happy customer that will buy again and ultimately be a good reference and possible source of referrals.